The Typical Process:
In a typical foreclosure, your loan Servicer(Eg Bank of America, Wells Fargo, etc), and the last entity that the borrower was paying, simply contacts its foreclosure company (Trustee) to issue a Notice of Default and a few months later issue a Notice of Sale and 20 days later move forward with the foreclosure process. The borrower assumes that Servicer and the Trustee have the ability to foreclose in the first place since that was who the borrower was paying recently and who the borrower may have received a notice that their loan was â€œsoldâ€ to.
These are wrongful assumptions. Because of these assumptions, most lenders, attorneys, and borrowers altogether skip or completely assume the negotiability requirements of UCC article 3 have been met during all previous transfers of the promissory note, and jump straight to the UCC article 9 security interests issues.
Look at your Deed of Trust and Promissory Note. Chances are that someone else is the original lender, not the servicing company (Bank of America, Wells Fargo,etc), and you simply received notice that your loan was sold some time ago.
There is a high likelihood that your note was securitized and pooled together with other notes into a security instrument that was then sold to a substantial number of investors on Wall Street.
Even though your servicer originated the note, the note eventually concluded its transfers and now resides in a Trust/Security. Now, the Trust owns the note, but somewhere along the note transfers, the actual possession of the note however did not made it to the Trust.
Assuming that Deutsche Bank is the Trustee now owning the note in the RRR-1234 trust the bank may have the right to foreclose but may not possess the note. Whether New York Bank actually possesses the Note is a different matter. And since possession allows enforcement rights, it is possible that Deutsche Bank may own the Note, but has no ability to foreclose.
Often, however, is that the servicer changes and the borrower concludes that the new servicer owns the note. Again, this is not true since the Trust owns the note and the new servicer is simply servicing the note on behalf of the Trust. Then, when a foreclosure action is started, another entity usually enters the scene since the Servicer typically hires an outside foreclosure entity to conduct the Trustee sale, such as ReconTrust, Quality Loan Servicing, etc.
For your to institute a valid foreclosure proceeding, they must be able to establish compliance with CCC 3-301, at commencement of the foreclosure proceeding, the recording of the notice of default, and throughout the proceedings until sale date. So then the following most basic requirements of CCC 3-301(a) or CCC 3-301(b) must be met:
3-301(a), Holder of the instrument: Was the entity filing the Notice of Default and subsequent actions, the Holder of the Note the entire time? This analysis turns on transfer and possession, and under California law, there are two requirements for a person to qualify as a Holder:
(a) ACTUAL POSSESSION: the person must be in actual physical possession of the instrument, and
(b) TRANSFER BY ENDORSEMENT: the instrument must be payable to that person where the transferor must indorse the instrument to make it payable to the transferee See CComC Â§ 1201(20); See CComC Â§ 3205(a);
But the Deed of Trust is only incidental to the underlying Promissory Note. It has no effect without the note. It is legally impossible to foreclose on any real property without the Note. The Deed of Trust is a legal nullity by itself, and means nothing without the note. These lenders entirely skip the underlying enforceability of a foreclosure which only arises upon actual Note possession and proper endorsement/obtaining Holder rights.
So if you are facing foreclose, you may wish to demand inspection of the original note. Even if the note is produced, then demand proof that possession existed when the Notice of Default was entered. And even if possession existed properly at all times, endorsement and negotiability must be proper and timely. When was the note endorsed? Who was it endorsed to. Is there an agency relationship between the foreclosing agent and endorsee? Is the endorsement in blank? If there is no endorsement, is there a purchase and sale agreement that gives Holder rights, and did it exist prior to the Notice of Default?
As always, seek a competent attorney that will investigate these issues if you are having any doubts as to the enforceability of a foreclosure proceeding you are a party to. I know of a couple of attorneys that specialize in this area of the law.
You also have a few other options to help delay your foreclosure which include filing a Bankruptcy or challenging the Trusteeâ€™s Authority to Foreclose. You will need professional help.
2% interest for the first 5 years
3% interest year 6
3.37% interest from that point out till the end of the loan
We talked it through and she's able to now swing the payments and keep her place. I told her I'd do it if I were her because the payment is closer to what she'd be paying in rent. I lose a listing but seeing her happy, surprised, and satisfied makes it more satisfying than a commission check I've ever received. Her situation sounds similar to yours in that she wanted to keep the place but the cost out of pocket was just too much, and both previous attempts at loan mods had been denied through harp and harp2.
Lesson is keep trying and stay in contact with the bank or have your agent stay in contact with them. There really is no way to predict what they will offer you, sometimes the deals are good.
That's how long I've seen many other homeowners in some stage of default as they've been on the loan mod merry go round with their lenders as they're given false hope through trial loan mod pymt plans that never go anywhere.
Don't file BK if you can help it. If you're facing an auction date, then it's likely that you first started missing payments at the very least, last summer figuring 2-3mos going by until you got your 1st Notice of Default & then another 3mos & 3wks before the auction date is coming up. You've probably already been down the road of trying to get a loan modification & it's not working. Banks aren't really interested in granting loan mods that make sense for the long term.
Have you seen all the news stories about how awesome the banks are & that they're giving out millions of loan modifications down to 2% interest & forgiving principal balances permanently for the life of the loan? Yeah, I haven't either.
If you are very underwater, your only hope is to just do a short sale. & start your seasoning period to repair your credit & then get back into the market in 2-3yrs & build your equity back up (if you're currently underwater). I have clients who got out from under their homes 2yrs ago & we're house hunting again now. I can get auction dates postponed with a short sale offer OR you can try for a 2nd or 3rd time with the loan mod application to get the auction postponed & hope they go for it.
Shoot me an email directly if you'd like to talk about this further, I don't look back on this same Trulia thread for answers posted after mine.
Emily S. Knell
Realtor Since 1996
Realty ONE Group
Short Sale Specialist - 100% success rate
If that doesn't work, speak to your lender about applying for a loan modification.
Possibly a HAMP modification
If neither works, and one should, you should hire an attorney who can attempt to stop of postpone the foreclosure proceedings. This will usually cost you some money though and can have other implications so tread carefully
To best address your question I'd like to know what your goals are regarding keeping or selling your home. Next, I need to know what information or notices you have received from your lender. The best way to assist you is for us to meet to review your options. I look forward to assisting with this important decision. You can reach me as follows:
Birgit O'Hearn, Realtor
Windermere Real Estate SoCal
There are several ways to postpone a foreclosure. You can begin a loan modification, start a short sale or file for bankruptcy. You can get the FREE book that I wrote on short sales here: http://thehomsteam.com/short-sale-info/ or give me a call for more details.
Joe Homs, Realtor