The New York Times tells us that the robo-signed foreclosure documents are rearing their ugly heads again. Back in 2010, it came to light that banks were trying to foreclose on houses without verifying the information on the loan documents. The result was a slew of wrongful foreclosures on homeowners who were good on their payments, owed money to different lenders, or worse, owned their homes free and clear. It all led to a $25 billion settlement among banks and many states’ attorneys general.
New York homeowners did better than most because it is a “judicial foreclosure” state, which means all foreclosures must go before a judge to be legal. As the article points out though, some judicial foreclosure states put together ad hoc courts to deal with the large volume of cases, and many that should not have gone through did.
The problem this time is that the government mortgage servicer Fannie Mae is hiring debt collection companies to enforce deficiency judgments on homeowners who had been foreclosed upon. The snag is that many of these foreclosures were unlawful robo-signings to begin with, making Fannie Mae’s collection efforts likewise unjust.
Fortunately for New York homeowners owing mortgages to Fannie Mae, this new wave is mostly confined to Florida (so far) because that state passed a law requiring foreclosure lawsuits to be filed this year, and Fannie Mae is contending that it only pursues borrowers who were able to pay their loans.
The New York Times article can be found here.
New Yorkers who went through foreclosure should beware that Fannie Mae’s debt collectors might pursue them as they are the Floridians. If you think this is going to happen to you, it’s best to consider bankruptcy as an option, particularly if the foreclosure wasn’t wrongful. A chapter 7 New York bankruptcy can clear a mortgage deficiency with no tax penalty and no payments to Fannie Mae or its debt collectors.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.
