Moratorium on Foreclosures:
Following the recent announcement by Bank of America, and JP Morgan Chase that those institutions would be placing a halt on foreclosures in all 50 states, consumers have more questions than answers. I will attempt to address the dominant questions here.
There are 23 states that require mortgage lenders to go through a judicial process in order to perform foreclosure. California is not one of these states. In going through the judicial process in these other states, the mortgage lenders are required to submit declarations and affidavits where Bank employees swear under penalty of perjury as to the authenticity of documents and the amounts due under the various notes. (See also article: Where is the Note?).
In the haste to perform the foreclosures, the Banks have forged documents, hired people to attest to the existence and review of documents that do not and did not exist, and essentially commit mass perjury in order to expedite the foreclosure process. California, for the moment is an unintended third party beneficiary of this moratorium, but there is no judicial mandate requiring the banks to adhere to their word.
So, our national lending institutions, having just received billions of dollars in Bail Out money after having brought the US Economy to a halt, have now committed a mass fraud on the American public. Our government is sitting idly by awaiting Bank Approval on their efforts to rectify the situation.
In essence, the lunatics are now running the asylum; The inmates are now running the jail; the zoo animals are now running the concession stands.
What this Means to You:
California is a non-judicial foreclosure state. This means that the Bank does not have to go through the court system in order to foreclose on your house. You can be assured that the Bank's calculations of what you owe are erroneous, but beyond that, as there is no court mandated process, the Bank is free to foreclose on your house, subject to the following:
1. After you are three months late on your mortgage, the Bank can record a Notice of Default against your property with the county recorder's office. This is why you are getting unsolicited mail and visits from realtors who want to "short sell" your house. As well, more and more we are seeing people who want you to vacate your home so they can move in and negotiate their own "cash for keys" arrangement.
2. Three months after the Bank has recorded the notice of default, the Bank needs to send you a Notice of Trustee Sale giving you 20 days notice that they are about to sell your house. The above nuisance people will become even more aggressive at this stage.
3. After 20 days, your house can be sold at Public Auction.
In the event that you are attempting to negotiate a short sale, or modification with your bank, they may have postponed your auction sale once, twice or even three times. Here's the rub: After they have complied with the above timing, the Bank is free to sell your house at public auction at any moment. For those of you who have had your sale date postponed in the past, you will have noticed that the Bank has been unwilling to rescind the above notices in writing.
At the moment, we see that www.recontrust.com (this is the subsidiary foreclosure company of Bank of America), today, October 15, 2010 has 2,633 homes in San Diego listed as going to foreclosure sale in the next 20 days. If you have a mortgage with Bank of America, or Countrywide, please check this site for your home.
What to do?
As above, after the notice period has expired, the Bank is free to sell your house at auction at any moment. No one has missed the fact that this "moratorium" has coincided with the upcoming elections on November 2.
Seeking protection under the Federal Bankruptcy Code is the only way to guarantee that the Bank cannot sell your house at will. Please see our separate article in this blog on how Bankruptcy can save your home.