July 2008

31 Jul Cancel That Mortgage: The Grounds

Mortgages can be cancelled in a process called rescission. Here's an overview. Grounds for exercising this right given borrowers by Congress are found in problems with the mortgage closing documents for a residential second mortgage or refinanced mortgage. Problems include the absence of Truth In Lending Disclosures, such as the Annual Percentage Rate (APR) for interest and the amounts and schedule of payments. The absence of "monthly" in the payment schedule has been held to be a defect allowing rescission. The APR might not be calculated correctly, or the Truth In Lending Disclosure form might never have been given at all. Another problem can be a failure to give two separate cancellation notices to each borrower. For example, a married couple should get a total of four cancellation notices. Here's an earlier discussion of this. A third problem can be the use of incomplete cancellation notices.
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31 Jul Bankruptcy reform costly but pointless

The government's accountability office reports a 50% increase in the cost of bankruptcy. A large part of the increased expense can be traced to the means test, that supposedly objective measure of whether an individual has the ability to repay his creditors some of the debt he owes. On this site, Kurt O'Keefe looked at the hollow promise that reducing bankruptcies would reduce the cost of credit for those who avoided bankruptcy. We were told by the banking lobby that consumers who sought bankruptcy relief increased the cost of credit to each American family by $400. We're two and a half years into "reform" and there is no sign of the cost of credit falling. A bit of critical thinking would have told you that it is not bankruptcy that causes losses to lenders, it's insolvent borrowers.
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30 Jul Does the Hope for Homeowners Act Offer Hope for You?

The housing rescue legislation that was signed into law today is called the Hope for Homeowners Act of 2008. Sounds good, right? Hopeful, even. But the cynic in my head says "Yeah, and they called the bankruptcy amendments two years ago a "Consumer Protection" act. So let's take a quick look at what it may (or may not) do. Grossly oversimplified, the act offers government guarantees to lenders who are willing to work with you to keep you out of foreclosure.
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29 Jul Mortgage Fraud Stopped Cold In Missouri

On Monday July 28, 2008 the Attorney General for the State of Missouri filed charges against
  • St. Anthony Avenue LC, based in St. Louis County. The lawsuit was filed in St. Louis County;
  • Private Funding Solutions, based in St. Charles, and its president, Mike C. Rothweiler. The lawsuit was filed in St. Charles County;
  • Brian J. Thompson, of Springfield, who does business as "All Decked Out". The lawsuit was filed in Greene County; and
  • Access Mortgage and Financial Corp., of Lansing, Mich., and its agents, David Snyder and Josh Nowell. The lawsuit was filed in Henry County.
for a foreclosure rescue scam. The investigation was titled Operation Stealing Home. The charges are based on fraud. Unfortunately there are those among us who prey on the downtrodden and look to score a buck wherever they can.
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29 Jul What Happens To The Second Deed Of Trust If The First Forecloses?

Almost all foreclosures these days are brought by the first mortgage or deed of trust. That’s because with plummeting house values, only the first mortgage has a chance of getting some of their money back out of the house. Most seconds are usually unsecured. The normal situation is that the first mortgage on the house was equal to 80 to 90% of its value when purchased. Values went up and the homeowner borrowed against the equity in the property to get a second mortgage or line of credit. This paid off some bills, or was used for home improvements, a child’s education or new vehicle. That actually made some sense since the interest paid on this new loan was deductible, and the value of the house was just going up and up. But then the market went haywire, and the house’s value began to plummet.
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