In Columbus, Ohio, Bloomberg News
- Citigroup Inc., HSBC Finance Corp., and seven other mortgage companies agreed to help delinquent Ohio borrowers avoid foreclosure in the first such accord between a state and home-loan servicers, Ohio Governor Ted Strickland said. [...] The companies signed non-binding compacts agreeing to notify borrowers four to six months before their adjustable-rate mortgages reset, said Kimberly Zurz, director of Ohio's Department of Commerce. Seven agreed to lock in adjustable rates for qualified borrowers for as long as five years, she said.
- The other companies that signed agreements were GMAC RESCAP/Homecomings Financial, Carrington Mortgage Services, Ocwen Financial Corp., Option One Mortgage, Saxon Mortgage Services, Select Portfolio Servicing and Litton Loan Servicing, Strickland said in a statement.
For the rest of the story, see Citigroup, HSBC, 7 Others to Assist Ohio Homeowners.
It's hard not to believe that the loan servicers who agreed to this non-binding agreement (which, in law, is no agreement at all) are simply giving lip service to take the heat off them in Ohio. Given the facts that:
- Ohio recently announced that qualified homeowners in foreclosure may have free legal representation available to them,
- the same announcement informs us that Ohio foreclosure defense training for attorneys representing homeowners in the state has reportedly been made available through the Ohio Bar Association,
- it is no secret that foreclosing mortgage holders and servicers are having a tough time finding and filing the proper documentation in court proving their right to bring foreclosure actions,
- a recent media report informs us that an Ohio appeals court ruled last month that a foreclosing mortgage company is not entitled to a foreclosure judgment if they can't prove their ownership of the promissory note and how they came about owning the mortgage (see Everhome Mtge. Co. v. Rowland, 2008-Ohio-1282; (10th Dist. Ct. App.; March 20, 2008)), and
- other Ohio appellate court decisions also seem to point to the apparent need for a foreclosing mortgage lender to prove that it is the owner of the promissory note and, thererfore, the real party in interest to initiate the legal action (see First Union Natl. Bank v. Hufford (2001), 146 Ohio App.3d 673; 3rd Dist. Ct. App. ; and Washington Mut. Bank, F.A. v. Green (2004), 156 Ohio App.3d 461; 7th Dist. Ct. App.),
the loan servicers are obviously feeling enough pressure to participate with the Ohio governor in this publicity stunt. Everyone appears to come away looking good, but it seems to me that unless the loan servicers can physically produce the promissory note, and prove that there were no violations of the Federal Truth In Lending Act ("TILA", as well as any applicable state consumer protection law) when the loan was originated, the homeowners really have little incentive to agree to a loan workout (unless, of course, the terms of any such loan workout are highly favorable to the homeowners and reflect the fact that promissory notes are missing and "TILA" violations were committed).
Now that there are attorneys involved who are representing homeowners, it appears to me that those attorneys have now taken up the obligation to assure their clients/homeowners that all the laws affecting their mortgage loans and all the rules governing the legal procedure in foreclosure cases have been complied with. I expect that these attorneys will not let the mortgage companies off the hook on their obligations, unless of course, they are prepared to make significant concessions to the homeowners when ironing out a loan modification.
For more on mortgage companies' obligations in foreclosure actions, see Fight Foreclosure: Make ‘Em Produce The Note!.
For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, Go Here, and Go Here.
For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here, Go Here, and Go Here. undo mortgage loans TILA batallion missing mortgage foreclosure docs beta