This past week we have seen the Securities and Exchange Commission initiate a civil fraud suit against former top executives at Fannie Mae and Freddie Mac with allegations that with knowledge, misleading statements were provided to investors about higher risk mortgage loans, including subprime loans. Investors’ welfare, according to the allegations, was jeopardized with false comfort of exposure to these risky loans. Incomprehensible numbers are detailed of portfolio holdings growing from approximately $141 billion dollars in December 2006 to $244 billion dollars over the next eighteen months. Market share and ownership of this fast paced and wildly profitable investment in sub-prime loans was a driving factor in this securitization business.
To the new callers and clients in our law firm, RUBIN & LICATESI PC, these offerings and details, these background stories, all have significant relevance and impact during these challenging times of mortgage arrears and foreclosure lawsuits. The credit risks that our clients and callers assumed over the past several years were offered through mortgage products that we now read resulted in the generation of both enormous wealth to the lenders and servicers, and sub-standard models to borrowers and homeowners nationwide. Caution signs like “No Income No Asset” loans, expanding proprietary financial products all became the common and usual road signs, dramatically increasing the risks to unwary homeowners, now participating in the ill effects and shared losses of homes, savings, dignity and well being.
The lawsuit states that these risky loans were known to Fannie Mae and Freddie Mac as “contributing disproportionately to the Company’s increasing defect rate…… and “have a much higher percent of defect loans, loans that are subprime-like, loans that have very low FICO’s in referring to loans that contributed to the increasing “defect rate” at the Company.” The reduced documentation loans represent a dominating part of the discussions that develop in our law firm as we work with our clients, homeowners, borrowers and their lenders and servicers to restore the determination and pride in homeownership.
When clients visit or are recommended to our law firm, many past the point of financial meltdown and in the midst of their financial crisis are seeking the legal representation and details for the protection and preservation of their civil rights in the courts. Independent legal representation is the mainstay of this discussion which allows safety in time to engage the solutions of today and tomorrow.
As a named defendant in a mortgage foreclosure lawsuit, critical rights are afforded to you from the moment that you loan has been placed in the courts. Thousands and thousands of index numbers reflect the mountains of mortgage foreclosure actions. Nonetheless, justice is blind and two such homeowners recently received victories in the battle to save their homes. In one such recent case, US Bank v Bressler in Supreme Court, Kings County, the Honorable Justice Silber decided that the plaintiff lacked the necessary and requisite standing to bring the action and failed to make out a prima facie case for judgment due to the “defects in the documentation in their motion.” The law firm representing the plaintiff had previously agreed with the US Attorney’s Office to refrain from allowing its staff to sign mortgage assignments, yet such action was evidenced in this case. Issues involving proper note endorsement, MERS assignments, past bankruptcy of the originating lender, Fremont, all received special attention in the decision and order in this case.
For those readers who sit in silence, having been served years ago without taking action to preserve or protect their homes and rights, witness still another decision in the Supreme Court, Kings County in the recent case of HSBC Bank v. Cayo. Two years ago, the action was commenced and despite the homeowners failings in following the civil procedure of answering the complaint, settlement conferences and negotiations were exchanged. “The Federal Government, the New York State Legislature, and the Office of Court Administration have made extraordinary efforts to assist homeowners, stem the tide of foreclosures, and the attendant economic ramifications thereof. Those efforts are clearly evidenced in the plethora of recent legislative action….. to stem the spread of foreclosures and falling home values for all Americans, and do everything we can to help responsible homeowners stay in their homes…… “to preserve community housing, preserve banking funds and to help a homeowner avoid the lo9ss of his or her home.”
Despite the hard pressed opposition by the plaintiff, the Court granted the homeowner leave to file a late answer in its enforcement and interpretation of the law to aid homeowners, “not as a means to deny a defendant the opportunity to litigate.” Where there are “viable defenses alleged, and there is evidence of private or mandated settlement negotiations, a defendant should be granted leave to file a late answer.” Circumstances identified by the Court and considered in light of the facts as presented by the parties and decision in favor of the homeowner.
To some, the legacy of these two cases may be summarized by the very definition of civil rights, preserved and protected in the Courts against overwhelming odds and lenders and their law firms stated intent to foreclose in these lawsuits. Overcoming the status quo and struggling against misunderstood rights is clearly evidenced by these reported events. Our law firm is focused on the protection and preservation of civil rights and to those new callers and clients of the firm, welcome to the New Year with the enthusiasm and determination to………….KEEP HOME YOUR OWN.