“Does Your Foreclosing Lender Own Your Loan?”

These days just about every mortgage is flipped by a lender to another one or sliced up into pools of securitized packages that are sold on Wall Street. The financial engineering helped oil the housing boom by making credit more available. But stalled housing prices and rising defaults have revealed a mess: In the rush to flip paper, lots of the new lenders or pools don’t have the proper paperwork to show they even hold the mortgage.

A Florida attorney noticed two years ago that nearly all lenders seeking to foreclose against clients were filing “affidavits of lost notes”–essentially requests that a judge assume they own the loan since no proof is at hand.

What was found by some average snooping was that the company that filed to foreclose didn’t own the loans. The owner was actually a securitized pool of loans overseen by Deutsche Bank (nyse: DB - news - people ). In one particular case documents showing the pool bought a loan after the homeowner defaulted which is an illegal purchase for most pools, including this one.

In Kansas there was a foreclosure filing with no documents to show the bank owned the loan. In another case, ownership of a loan was recorded on a single date in the name of two different lenders. In March last year Deutsche Bank filed to foreclose on a seven-bedroom home in Worcester, Mass. but it came out that Deutsche was assigned the loan in May or June–that is, after the foreclosure filing. A U.S. bankruptcy court judge in April slammed Deutsche for its “jumble of documents” and ruled the bank could not evict the homeowner.

For the lenders, a possibly bigger threat on the horizon is that homeowners’ lawyers will bust up the “holder in due course” doctrine that makes it easier for subsequent owners of an IOU to collect. This doctrine says that certain defenses the evictee can use against the original lender (such as predatory lending) cannot be used against an innocent purchaser of the mortgage. The rule is provided for in many federal and state statutes, but a judge could nonetheless find a way to side with the homeowner, particularly if a loan is purchased after it goes into default.

There may be cases where it makes sense to challenge the lender to show they own your loan. A law firm can assist with this and keep the transaction under the attorney/client privilege so that what you submit cannot be used against you absent a direct court order which is also arguable.

We always collect the original loan documents and do a forensic audit or request that the bank show they still have them and if they don’t…guess what? We ask them who is the responsible party for a modification and that the client cannot pay someone who is not eligible to receive the payment. Many times the mortgages are even being sold during a default.

James Burns, Esq.

“Were You Dumb When Stating Your Income”

There is a lot of confusion out there about loan modification and who is going to do the best job…it isn’t a shop but a law firm where you enter into a specific attorney client relationship not a shop that claims to have attorneys they work with. Some prosecutors are now pursuing borrowers as you can read in this article.

For one, a broker shop can do no distressed borrower any good with the current situation. As you’ll read in the attached article, some prosecutors will be going after borrowers for participating in fraud by overstating their true income. What this does is make your submission to the lender vulnerable unless you have the attorney/client privilege over your submission…hence the modification process should be a legal maneuver not Joe the Modifier who may be a Pirate that has no right to take an advance fee.

If you must send your clients to a friend who is a broker – make sure they are one of the 18 firms listed on the Department of Real Estate’s website as approved to take an advance fee as many are doing it illegally and offer no real value since they can’t prevent the documents from being used against the borrower because there is no such thing as broker/client privilege.

http://www.dre.ca.gov/mlb_adv_fees_list.html

Not everyone will be a loan modification as we are seeing the abuse of the stated income loan in a gross proportion which makes there no way to modify certain loans unless principal was to be drastically reduced which is not happening although it was announced yesterday there is a plan for some principal reduction by the government to find the market bottom; only time will tell.

LIBOR, COSI, CODI, MTA – these were the indexes of the option arm and then there is the bank’s margin spread which was immense along with the prepayment penalty so the person had to stay locked in for 3 years otherwise they suffer a severe penalty that wipes out most of the equity they would be trying to tap in a refinance or the money they would be trying to save.

If you have a friend, family member or client you care about who is having trouble making their home payments due to a temporary hardship, please have them go to this site and download the questionnaire and fax it in for a FREE evaluation www.foreclosurelegalsolutions.com.

In your service,

James Burns, Esq.

Medicare Scare

Sometimes seniors are denied claims and they think there is nothing they can do and they just accept it. However, a denied or partially paid claim can be appealed and nearly half of the appeals are successful and worth the effort…might as well give it a try.

When a Medicare claim is denied or approved for less that full amount, you have 120 days to request a “redetermination” of the decision. The proper form to request is called Medicare Redetermination Request Form (Form CMS-20027) which can be downloaded at (http://www.cms.hhs.gov/cmsforms/downloads/cms20027.pdf) or you can call (800) 633-4227.

The written claim denial that you receive includes instructions on where and how to submit the redetermination form. The claim denial should include an explanation why your claim was denied or only offered partial payment. You need to object the explanation in order to be successful with the appeal. You can ask your doctor to write a letter responding to the points raised in teh denial and explain why your health care is necessary. You include a copy of this letter along with the appeals form and as always, keep a copy for your files.

Common Reasons for Denial

The treatment or prescription is unlikely to cause your health condition to improve is the biggest denial circumstance and is a little vague. Medicare is required to look at your total condition, not just a specific diagnosis or your chance at a full recovery.

There was a citizen who was denied for Lou Gehrig’s disease which is incurable and degenerative. The patient successfully appealed, arguing that with the doctor’s help, that while having a nurse visit the home would not improve the condition, it could slow the progression of the disease and was need to care for various health issues.

Sometimes patients are denied because they may require long term care. You need to point out that Medicare is not limited to treatments that work quickly. As long as your doctor continues to order this treatment for you, Medicare should continue to cover it. Include a letter from your doctor if denied for this circumstance explaining that the treatment is having some positive effect or expressing an optimistic expectation that it will.

There are several other types of denial and you want to be specific to address the denial and use your primary care physician with a letter expressing an opinion that is different that Medicare’s conclusion.

Don’t give up

Sometimes you may have to go to Appeal #2 where you’ll have 180 days from the date your redetermination request is denied. You must completed Medicare Reconsideration Request Form (Form CMS-20033, at www.cms.hhs.gov/cmsforms/downloads/cms20033.pdf). You may have to ask your doctor to write a new letter or attach the old letter. Sometimes it is about hanging in there and being determined.

You may have to take it to Appeal #3 if your second appeal is denied and the amount in dispute is over $120. You have 60 days to file a third appeal, this time with an Administrative Law Judge (ALJ) of the US Dept of Health and Human Services. The filing instructions would be included with the denial letter.

Appeal #4  If the judge turns you down you have 60 days to request that Medicare Appeals Council (MAC) review the decision. The ALJ denial will include instructions on how to file.

Appeal #5 If the MAC turns you down you have 60 days to determine if you wish to hire an attorney and file a judicial review in federal district court. The amount in dispute must be greater than $1,180 to qualify.

I hope this helps a few Seniors and empowers them to fight their fight for benefits.

James Burns, Esq.

www.jamesgburns.com

(949) 440-3243