Preparing for Default, Part 4: Consider a Loan Audit for Leverage
Disclaimer: I’m a paralegal, not an attorney and cannot give you legal advice. Nothing on this website is meant to be legal advice, and there is no guarantee that the information on my blog will work for your individual situation. Please consult with an attorney if you have questions about your individual situation.
If this is your first visit to my website, welcome! My name is Christine Springer and I'm the founder of Desert Edge Legal Services and the author of the content on this site.
It’s hard to convey the value of a property analysis (AKA “loan audit”).
In spite of what you may have heard from the government or a real estate lawyer, or from mainstream media, a loan audit or property analysis is usually one of the most powerful tools a homeowner can use to keep their home.
There are times when it doesn't make sense to get one done. It almost never makes sense to get a securitization audit. But I'll get to that a later in this post.
First, I want to tell you a story.
I saw a lot of real estate attorneys who were well meaning take money from people who were in foreclosure and got nothing done. This is because the banks were playing a completely different game than people thought they were.
It just didn't make sense that the banks would not want to give people loan modifications, and lawyers proceeded on that premise. Also, lawyers are used to throwing their weight around, telling people what to do and intimidating people.
The bankers did what they did because of securitization of home loans, and most lawyers don't understand how securitization works on the bank's side of things. So the bank did what it needed to to do manage the transfers of loans, regardless of the transparency and truth.
This is because the securitization process makes it very difficult to verify your loan's payment status or whether it's even in the pool.
This is the big secret. The system that they set up – securitized residential loans – is so complicated that it's very difficult to track the real path of your loan.
They can't say that to the public, however. So they lied. The banks told the public and regulators blantant lies and made misleading statements. Asymmetric warfare. Gaslight the public about what was happening. Deflect and then blame the vicitims.
And people believed them, because nobody wanted to believe that our banking system was this corrupt.
Banks lied to regulators, repeatedly. And, lawmakers, lawyers, politicians – all of which are part of that same system – continued to play along. Mostly because they didn't really understand what the banks were doing.
This is still an issue. Nobody really understands securitization unless you study it.
The spin campaign, which is still operating today in mainstream media, blamed homeowners. And government helped them steal people's homes.
There were strict rules on people who were helping homeowners. There were quite a few lawyers disbarred related to loan modifications. The Federal Trade Commission promulgated the MARS Rule, which prohibited upfront fees.
So, if you believe the average real estate lawyer or mainstream media, they will tell you that you don't need a loan analysis to keep your home. The average real estate lawyer will send the bank a letter or make some phone calls and try to work something out, and when they get nowhere, they don't want to do anything else. They'll tell you to file bankruptcy, or hire another lawyer.
Never mind that they blew through your $10K retainer and got you nowhere. $10K is not pocket change for many people.
The average real estate attorney also generally does not know where to get leverage for their clients. Sometimes I think it's because they have a vested interest in keeping the old system going. Other times I think it's because they don't understand the game being played by the banks.
The point is – be careful who you hire to defend your foreclosure. If you want to work with a real estate lawyer, be sure they have experience in foreclosure defense.
This is NOT your average real estate transition and a generalized real estate lawyer with no experience in foreclosure defense just does not have the experience.
A foreclosure defense lawyer will probably do their own version of property analysis. They understand the leverage in the loan and foreclosure documents.
I have a lot of legal experience as a paralegal, and the method I use developed organically out of looking for leverage against the bank for a client. I know how to convey the information in a way that helps lawyers see how the problems can be positioned as a cause of action.
Eventually I became proficient in these reviews and turned them into digital products. (You can check them out on ChristineSpringerMedia.com)
I still use the same method today. There are probably other people who offer a similar service and you may like them better. Just consider hiring someone to dig into your loan documents and tell you what is wrong with them.
The good thing about working with someone like me is that the report and conversations are with you directly. They don't come through your lawyer or another person. This is important because this process is about you, and not about what your lawyer wants to do for you, or what the bank wants you to do, or what the media says.
I think you should be mindful that lawyers could possibly steer you in a direction you don't want to go, because of their preference to do it that way. It might be easier for them. But it might not be what you want. They may believe they know what is best for you so they don't bother keeping you informed.
This is why I think it's important for homeowners to work directly with the property analyst. Once you understand what is really going on, you can make it crystal clear to anyone else you hire that you want them to do things a certain way.
I have seen clients get into arguments with their lawyers who think these arguments are not legitimate arguments. I've seen lawyers scoff at making these kinds of arguments on behalf of litigants. The lawyers were almost always wrong.
As such, it may take you longer to find the right lawyer.
So, in summary: the audit or analysis is about YOU and your empowerment. You know what is wrong with the loan and then you can make sure the people you hire are on the same page.
Many of my clients sent their reports to the Arizona Attorney General’s Office with complaints about the Big American Bank. I don't think the AG's office knew how to frame the causes of action (the legal reasons for filing a lawsuit) based on what the bank was doing. But one day they sent me a BIG check after they settled that big lawsuit. I believe they used my clients’ reports to figure out what Big American Bank was doing and why it was so harmful.
Property analysis is empowering. YOU will know what’s going on with the loan.
When we work together, it’s for your benefit. You’ll know what’s going on before anyone else does. You’ll decide what to do. This saves you time and money.
You’ll ask better questions when you hire lawyers, and you’ll find the right lawyer who will do what you want. You won’t work with a lawyer from a subordinate position and get steered into a direction you don’t want to go because you don’t know something.
I don't know about you, but I worry about making an uninformed decision. If you get a property analysis, you won't be wondering whether you had any leverage.
There are some instances where a property analysis will not work, and in the past, it did not make sense if you were not in default.
This is because the banks didn't start fabricating documents to foreclosure until the home went into default process. The paper trail in securitization (the process of transferring loans into the pool of mortgages) was non-existent.
This is partly because they began electronically tracking loans through the MERS database, and many of the transfers were never properly and transparently recorded in the local recorder's office.
Securitization audits have never been useful to any client I have ever worked with. If you need one, your lawyer will let you know and will probably arrange it.
The problem is that because the banks did not tell the truth about securitization and its complexity, the public, government, judges and lawyers often know nothing about it. It's also a complex argument and many people just don't care to understand it, so they'll scoff and tell you it's a "non-starter" or won't work.
I hope this helps you prepare further for possible default and foreclosure. If you need help, I'm here to support you! Please consider my new foreclosure defense coaching program to create your own foreclosure rescue plan :)
Christine