Mediation suggested by the courts – like modification, is a trap. It buys time for the banks to dummy up more records and documents, while lulling the homeowner into a false sense of security and reliance that the servicer can actually perform a modification. In most cases they can’t.
The number of fraudulent assignment of mortgage documents filed in the Hawaii Bureau of Conveyances, like many other states is appalling. Compounding the assignment fraud is the gigantic number of unrepresented homeowners in these foreclosure and eviction actions. These homeowners have absolutely no understanding that an assignment of mortgage even exists or that it is fraudulent, assigned too late to a New York or Delaware trust, was filed with intent to defraud and has clouded their title.
Honolulu foreclosure defense attorney, Gary Dubin, understands the mediation game all too well. It’s a waste of time on the borrower, the bank, the attorneys and the court. Gary has written another brilliant synopsis on the Hawaii mediation principle pushed by the legislators on to the courts.
FORECLOSURE MEDIATION ALONE IS NOT ENOUGH
By Gary Victor Dubin
The Hawaii Legislature’s current efforts, coupled with those of Hawaii Courts, to further require and to expand efforts to mediate foreclosure disputes is surely a welcome development for Hawaii borrowers, but alone will result only in further false hopes for most Hawaii borrowers.
2. In reality, mortgagees have been in control of this part of the American legal system for centuries, with courts serving as mere collection agencies, and more recently as collection agencies for crooks.
3. Borrowing from Anglo-Saxon jurisprudential “I am the King and your landlord” history, there were historically few gray areas in foreclosure law – “pay your mortgage or get out!”
5. Today, most States have tried legislating “mediation” requirements for foreclosure situations for several years, which is generally acknowledged to have been proven to be a total, colossal failure — and as usual, Hawaii belatedly follows Mainland trends without learning from Mainland failures.
6. The truth is that whereas borrowers in financial difficulty are usually an open book, “mortgage holders” [except local lenders] (and in particular Mainland Wall Street clones) exist largely behind a secret and contrived paper curtain of:
- a. lost or intentionally destroyed promissory notes,
- b. hidden and proliferating unrecorded mortgage trading records,
- c. securitized trusts whose investors usually have complete discretion whether or not to approve loan modifications whether or not conforming, for instance, to HAMP guidelines, frequently simply ignored,
- d. loan servicers and their so-called negotiators who have conflicts of interest and often zero authority, whose loans frequently have already partially or even fully been paid off upon default by insurance carriers galore,
- e. federal banking guidelines limiting how many mortgages each bank can actually hold with most banks already over their regulatory limit and under pressure to liquidate and not as a practical matter able to modify many more loans, and
- f. a resulting checklist of false excuses for their needing more information from borrowers, constantly needing updated information as a result of their own delay in processing, having somehow supposedly never received or having supposedly lost information altogether, in order to drag out the process with cruel indifference or intentional behind the scenes skullduggery.
7. The results have often been that court-sponsored foreclosure mediations here and nationally that have largely gone nowhere, or that frightened borrowers occasionally grasp at any straws, signing loan modification agreements while mediators rejoice, only predictably to default again in a few months.
8. All that is achieved from all of this, as other jurisdictions have found out in the end, is a false, collective, institutional sense of dishonest comfort (‘we tried”), excusing and overlooking a failed legal system, whose conscience and case backlog are usually the only actual winners, freed from psychological guilt and from unwanted work, respectively.
9. The only way generally that foreclosure mediation works… and will ever work — as opposed to being a mere phony facade and a waste of time — is for judges in the foreclosure context to drop their centuries old and perhaps once merited respect presumptively shown to banks, and in the new secondary mortgage market era to enforce contract law, to enforce tort law, to enforce UCC law, to enforce jurisdictional standing laws, to enforce discovery rules, and instead not to send foreclosure cases mechanically to mediation without borrowers having equal bargaining strength without mortgagees knowing that otherwise our courts are going to enforce the law to the detriment of the borrowers.
10. Fortunately, my law firm has found that although not all judges in Hawaii are recognizing this overall reality, a growing number of local federal and state court judges now are, and rather than simply pushing foreclosure cases into mediation as the best and only means of getting rid of these annoying, growing number of cases, or punishing borrowers coming out of unsuccessful mediations, they are now enforcing existing law against offending mortgagees first, creating judicial precedents as, for instance, District Judge Seabright has recently done in one Hawaii case and Circuit Judge Ibarra recently in another.
11. My law firm has achieved a significant number of attractive loan modifications for deserving Hawaii borrowers in recent years, usually starting at a 2% fixed interest rate, changing to a 3% or 4% fixed rate after 4 or 5 years, with arrearages sometimes substantially reduced and always placed on the back end, sometimes as a final balloon payment without any interest charged on the arrearages, and twice recently have additionally secured principal reductions of several hundred thousand dollars off principal balances – but these victories were achieved entirely without mediation and were secured the old fashioned way, through settlement negotiations between counsel, and most importantly because the respective judges gave the borrowers negotiating leverage by denying mortgagees early court victories by enforcing the law which subjected mortgagees to an eventual jury trial, as pleasing to most mortgagees as a religious cross placed in front of a vampire.
12. Enforcing existing laws against abusive mortgagees, as well as through
- (a) new legislation that, for instance, would require proof of ownership of promissory notes at the outset of foreclosure litigation, and
- (b) meaningful judicial scrutiny of foreclosure complaints and the publishing of such case precedents, would be the best means of fostering meaningful foreclosure settlements even without mediation (or in conjunction with mediation) and reducing case backlogs, rather than meaningless robotic referrals to one-sided and therefore unproductive mediation efforts with mortgagees whose representatives (often on the telephone from the Mainland) otherwise have no incentive to mediate, whose principal may not even own the loan in the first place, and who may not even have any authority to modify loan terms.
Whatever is done now and in the future by courts and by legislatures to help borrowers in Hawaii and nationwide, foreclosure mediation alone is generally not the answer and is certainly not enough.
Gary V. Dubin
Dubin Law Offices
Harbor Court, Suite 3100
55 Merchant Street
Honolulu, Hawaii 96813
(808) 537-2300 (office) ext. 111
It’s becoming increasingly obvious that the banks really do not know who owns the notes. Thousands of fraudulent assignment of mortgages exist in Hawaii alone. Across the nation there are millions of falsified assignments clouding titles for years to come.
If you have a mortgage or refinance AFTER the turn of the century (2000), it is more than likely problematic. The entity you send your payments to is not the bank… it is a servicer (a debt collector). And where your payments go is a mystery… and likely not directly – if ever, to the holder of your note.
As for mediation or modification – there are a few questions that we’d all like answers to first…before we enter that door – because why would we mediate blindly not even knowing if the other person in mediation has an authority to make a decision at all - or if they even own the loan… and how much do they allege is owed – and is that correct? Let’s get some accounting details established first – your honor, before you subject us to anymore abuse.
How much do you really owe? Do you owe anything at all? Is your loan in a trust showing it is fully paid – with no losses? Who paid it? Where were your payments actually going – into whose account? Can the servicer provide you with an exact accounting and proof that your payments were made to the trust or the holder of your note? Were there insurance policies and annuities attached to your loan? Have you ever seen them? Are they in your name? Are there RICO actions here?
Bottom-line: If you even have a loan… where is it now (at this very moment); and who owns it, and have they ever gotten paid?