Marc Dann’s New Role: Assisting Lawyers at Doberdruk and Harshman

As of November 20 2012 Marc Dann has been suspended for six months from the practice of law by the Ohio Supreme Court. Subsequently Doberdruk and Harshman was approved by the Disciplinary Counsel of the Ohio Supreme Court to Employ Marc Dann to assist them in compliance with Ohio Supreme Court Rules.

Schwartzwald Case means that Foreclosed Homeowners Should Take A Second Look Legal Issues Related to Their Foreclosure.

By Marc Dann, mdann@dannlaw.com

Yesterday, the Ohio Supreme court issued an important decision affecting Ohio Homeowners who are now or who have recently been in foreclosure. In Federal Home Mortgage Corporation v. Schwartzwald the Court unanimously agreed with the position that our firm has been strongly advocating for the past 4 years that only someone who actually holds a homeowner’s note and mortgage may use the courts of Ohio to foreclose on their homes.

This seems obvious. But apparently not to the loan servicers and their foreclosure mill co-conspirators who gleefully sued thousands of Ohioans on behalf of entities that had no right the use the courts of Ohio.

The Court correctly held that Article IV of the Ohio Constitution limits the use of the Common Pleas Court to parties who actually have a dispute with one and other. One doesn’t need to be a lawyer to understand that A can’t sue B for a debt that B owes to C. Apparently that logic wasn’t so obvious to the lenders and loan servicers who originated millions mortgages (often predatory ones) between 2001 and 2008 and sold and resold them to each other and unsuspecting bond holders on Wall Street. For any one remembers playing musical chairs as a child, think of the notes and mortgages originated last decade as the chairs and the originators, special purpose entities, investment banks and Bond Trusts as the players.When the music stopped in 2008 when the Market for mortgage backed securities crashed, we have learned that it is surprisingly unclear who was holding notes and mortgages of Ohio Homeowners.

That is why all of the major lenders and loan servicers in Ohio simply ignored the legal requirements of owning someone’s note and mortgage and just filed for foreclosure in he name of whatever entity they “thought” was the last to buy the note. Believe it or not, thousands of lawsuits for foreclosure in Ohio were filed by entities that simply don’t have any dispute with the homeowner they were suing. In the Schwartwald Decision, the Ohio Supreme Court has said definitively that courts that granted Judgments in such circumstances were without jurisdiction to do so, and that courts that our currently deciding cases must dismiss those where the lender did not possess the note and mortgage prior to filing their foreclosure complaint.

What does this mean for Ohio Homeowners:

First, it is important to understand that courts do not have an obligation to independently review cases to determine whether or not the party suing has standing to do so. Someone who is sued by a lender or servicer that does not hold the note and mortgage must put the information about the lender’s lack of standing before the court. The Schwartzwald Decision makes it more important than ever that homeowners being sued for foreclosure in Ohio retain a lawyer to represent them. While this can conceivably be done by some one without a lawyer, it is a rather sophisticated and complicated argument and can best be put forward by a lawyer who is experienced in defending foreclosures. Our firm and others offer payment arrangements that make retaining counsel affordable to homeowners who are in foreclosure. For those who qualify, local legal aid offices have some of the best staff and volunteer foreclosure defense lawyers in Ohio.

Second, if you have been sued foreclosure over the past several years, even if the matter has been resolved by way of a loan modification or a cash for keys settlement, you should consult a lawyer about whether or not you have claims against the companies involved in suing you. Under the Federal Fair Debt Collection Practices Act and Ohio’s Consumer Sales Practices Act you may have claims for damages and attorneys fees, but they both have short statutes of limitations, therefore time is of the essence. Our firm and others will bring some of these claims on a contingent fee basis, meaning that you would not owe a fee unless we recover damages on your behalf

Most importantly, it may be possible to seek an order vacating a judgment of foreclosure particularly if the real estate has not yet been sold at Sherriff’s sale.

The critical lesson from this important decision is how important it is for homeowners who are facing foreclosure to fight back by challenging every claim that is made. Believe it our not, in thousands of cases throughout Ohio and the Country the largest banks in America and their foreclosure mill lawyers cheerfully sued thousands of Ohioans for debts that weren’t owed to them. The courage of the Schwartzwalds and the brilliant work of their superb lawyer Andy Engel has cleared the path for thousands of Ohioans to seek justice.

Dann Doberdruk and Harshman can be found at http://www.dannlaw.com

Bank of America False Claims Case Is Yet Another Reason for Fannie Mae and Freddie Mac to Look to Principal Reduction Solutions

This week’s long overdue False Claims filing by the Federal Government against Bank of America over Fannie Mae and Freddie Mac Mortgages originated by Countrywide gives the most compelling reason yet why the Federal Housing Finance Agency (FHFA) should reverse its ridiculous position prohibiting the two largest owners of mortgage notes in the nation from agreeing to loan modifications that reduce principal.

Edward DeMarco, the Neanderthal director of the FHFA has consistently resisted pressure from the Obama Administration and Congress and defied common sense by prohibiting the two mortgage giants he regulates from resolving defaulted loans by agreeing to principal reductions.

The centerpiece argument to this week’s suit against Bank of America, is that Countrywide alone originated over one billion dollars worth of loans that should never have been written under the guidelines of the mortgage giants, essentially loans that were destined to fail.  There is lots of evidence that other originators sold Fannie Mae and Freddie Mac tens of billions of dollars of additional loans that should have never been written under their guidelines.

The lawsuit filed in Federal District Court in New York, provides a detailed and compelling story of a top to bottom scheme at Countrywide to originate and sell loans to the two agencies without any true effort to determine whether or not they met Freddie and Fannie’s underwriting standards.

What this means for homeowners is that the federal government has now taken the legal position that  millions of borrowers were intentionally placed in loans that were designed for failure.

What this means for the Federal Government, and we taxpayers, who now own both of the mortgage giants is that the only rational solution for minimizing our losses is to restructure these loans on an individual basis, using all available options to add value to these toxic loans.  That must include allowing Fannie and Freddie to reduce principal when doing so allows a homeowner to stay in their home, and the present value of the loan is increased by the principal reduction modification.

FHFA can no longer ignore the objective fact that reducing principal on distressed loans often increases the present value of those loans.  It is good business for Fannie and Freddie, good policy for the country and would be a lifeline to homeowners who were defrauded by Countrywide and the other mortgage boom players into signing on mortgages that were destined to fail.

Marc Dann can be reached at mdann@dannlaw.com

www.dannlaw.com

Why I Love Representing Homeowners in Foreclosure

            My mother recently asked about our practice and I told her unequivocally that representing homeowners in foreclosure is the best legal work that I have ever done. She looked at me incredulously and in her mother’s tone asked how that could be possible. “You’ve been the Attorney General of the State of Ohio, the chief legal officer for a state of 10 million people,  you were the ranking member of the Ohio Senate Judiciary Committee, you’ve brought and defended complex antitrust cases , you’ve defended criminal cases when your client’s liberty has been on the line” my mom scolded.

            I told her that the reason was simple.:

The clients.

Almost every client I represent brings into my office a story of courage, perseverance and optimism in the face of incredible odds.

 Its one thing to read in the New York Times about people who own a home where the value dropped from $250,000 to $125,000 almost overnight due to the greed of Wall Street Investment Bankers and the criminality of mortgage brokers and exploitive companies like Ameriquest, Taylor Bean and Whitaker or Countrywide. But its another thing to meet them and to see the look of determination to keep their children in the same schools and their dog in the same familiar yard.

Its one thing to read in the Cleveland Plain Dealer about those who were skilled manufacturing workers or foremen who were replaced by computers or cheap exploited labor in China. Its another thing to meet and work with men and women who have gone back to school and retrained for other jobs or who are working two and three jobs simultaneously on the chance that they can help their family retain their standard of living, They remain determined that their children have a better life than they have had.

Its one thing to read the Wall Street Journal about the failures of small and not so small businesses that couldn’t hang on the recession but its quite another thing to watch these former pillars of their community take humbling jobs or doggedly work at new business ideas to try to keep their children in college.

Our clients inspire me every day in a hundred different ways.

One client who owned a large manufacturing business is working filling milk bottles in a dairy every day.  He looked me in the eye and told me he would do what he has to do to help his wife stay in the home she cherishes. She stood by him. He is determined to stick by her.

Another client took a job paying less than his unemployment because he couldn’t stand not working for his pay.

A third client client who told me that he takes five minutes every day to feel sorry for himself and then goes back to work to make a good life for his children. He said, “I know I’m going to feel it every day. So I look at my watch and time the five minutes that I have allocated to self pity” Then I get back to work.

That’s why I want to fight so hard when we are taking on the biggest banks in the country and their “Tall Building “ Lawyers. That’s why it is a joy to figure out ways to make reckless foreclosure mills pay under the Fair Debt Laws or hold the feet of exploitative mediation mills to the fire under consumer protection laws. That’s why I smile when a bank offers a significant reduction in principal or meaningful loan modification or when a court requires a bank to provide at least as much proof of the right to foreclose that they would require my clients to provide to cash a check.

            I can’t wait to get to the office every morning and I can’t believe that we get paid to do such important work for such worthy people.

www.dannlaw.com

Romney Accomplishes the Impossible: His Housing Plan is Worse than Obama’s

 

 

By Marc Dann

 

Those of us on the front lines of protecting the constitutional and contractual rights of homeowners spend a lot of time lamenting the failed policies of the Obama administration.  Even Obama himself, on Sunday’s 60 Minutes interview acknowledged that his efforts to address the foreclosure crisis have fallen short of his own expectations.

Lets recap a few of the highlights of Obama’s failed policies:

1. No meaningful civil or criminal enforcement efforts against Wall Street Banks for the obvious criminal fraud in the origination and securitization of millions of mortgages from 2001-2008 or the compounded felonies of document and testimonial fraud in the foreclosure process attempting to conceal their securitization failure.
2. No meaningful effort to systematically make principal reduction modifications available despite overwhelming economic evidence that the net present value of loans with rationalized loan to value ratios increases making such modifications a win/win for lenders and homeowners.
3. The administrations insistence including in the much heralded Department of Justice/Attorney General’s settlement that those servicing loans be allowed to police themselves despite a track record of incompetence and fraud, allowing no private right of action for homeowners to hold loan servicers accountable for being honest and dealing in good faith.
4. HUD the FHA and the VA continue to restrict reasonable and meaningful settlements related to loans that they insure forcing hundreds of thousands of homes to foreclosure that could have been saved had their mortgages not been insured by federal programs.  Servicers cannot collect on FHA and VA guarantees unless the foreclosure is completed insuring larger losses and an expensive subsidy to banks and servicers. Private mortgage insurers have figured out that they can mitigate their losses by participating in real modifications.

So in my mind, it was almost impossible for Mitt Romney to develop a policy platform  for housing that is even worse.

But that is exactly what he did. 

His policy simply ignores the issues of Criminal or Civil enforcement actions against Servicers and Foreclosure Mills who continue to commit fraud on a daily basis.

There is not a word about Principal Reduction Modifications or about any actual effort to keep homeowners in their homes.

Romney offers vague criticism of Fannie Mae and Freddie Mac but provides no proposal to modernize and rationalize their fraudulent and self-defeating business practices.

He offers platitudes about engaging the private sector but offers not a word about solidifying a homeowner’s private right of action to enforce the terms of the DOJ settlement or to hold cheating servicers and foreclosure mill law firms accountable.

He does say that improving the job market will take pressure off the foreclosure crisis. (I don’t think I would have thought of that if he hadn’t written it).

Slate calls Romney’s housing policy “lame”. I think that is far too generous.

A meaningful plan to rationalize the housing market by bringing home debt in line with housing values would motivate an army potential voters.

My experience in politics tells me that millions of homeowners, who were convinced  or at least encouraged by the government and its programs to put the vast majority of their net worth into their homes, and who now, at best, find themselves treading water in the current housing market can provide a potent audience for a bold leader. A leader who is willing to advocate for programs to help them, even if Wall Street Banks make a few dollars less on each transaction. 

Sadly, no one running for President has decided to be that leader.

 

 

 

http://www.cbsnews.com/sections/60minutes/main3415.shtml

http://www.mittromney.com/blogs/mitts-view/2012/09/securing-american-dream-and-future-housing-policy

http://www.slate.com/articles/business/moneybox/2012/09/mitt_romney_s_housing_policy_gop_candidate_offers_lame_ideas_on_mortgages_and_foreclosures_.html

 

www.dannlaw.com

 

Why it is Critical To Understand The Difference Between a Foreclosure Rescue Scam and a Real Lawyer

 

I received a very disturbing call last night from someone who was facing imminent eviction from her home.  The caller lives near Akron Ohio in a nice house in a nice neighborhood. Like so many people I’ve met during the foreclosure crisis, she and her husband (she says mainly her husband) were persuaded by the neighborhood mortgage broker (who, I am sure, the week before was a construction contractor or used car salesman) to refinance their home back in 2005.

She told me that for the past year, she had been paying a law firm in Florida to “Represent” her by protecting her interest in the pending foreclosure and seeking a modification of her loan. She thought she was doing the right thing to protect her family home. She reported sending multiple rounds of documents to the Florida “Lawyers” and that the repeatedly reassured her, in writing, that her house would not be foreclosed on. In addition, they guaranteed to obtain a modification for her.

When I pulled up the court docket last night I was horrified.  The foreclosure complaint went to default judgment, Sherriff’s sale and Confirmation with no appearance being made by anyone on behalf of this family.  My caller read me emails from the Florida Law firm reassuring her that this would not happen. What was even more disturbing was to discover that this was a case, where the plaintiff who sued her, a securitized bond trust, could not possibly have had standing to file the foreclosure case. My quick review of the documents filed in the current foreclosure and a foreclosure that was filed in 2007 revealed that the client had a strong argument for the dismissal of the lawsuit, and failing that, this was a case that in my judgment would be very difficult for the foreclosing lender to win at trial.

Yet the Scamming “Lawyers” in Florida allowed the case to go to default judgment, sale and confirmation without raising any of the very legitimate legal issues that they could have raised in court. At a minimum, this family lost the legal leverage that could have resulted in a better modification, but its pretty clear, absent a miraculous reception for a motion to vacate the judgment (its been more than a year since judgment so we will have to convince the judge that there was fraud on the court) that we will be filing on their behalf that they will lose their home.

Ironically, for about the same cost of the modification mill in Florida, we could have provided a legitimate defense to this family that would have resulted in at a minimum a real offer to modify their loan or a dismissal of the complaint.

That’s why I am pleased that the US Justice Department and the FTC have announced this week a major effort to go after these modification mill and foreclosure rescue scammers.  Its easy to think of this as an opportunity to complain about the fact that the target of the criminal investigations are not Wells Fargo, Chase or Citicorp, but my caller last night reminded me how real of a problem this is for struggling homeowners.

In our practice we have brought several successful civil suits under Ohio’s strong Consumer Sales Practices Act against foreclosure rescue scams, many of these folks, embarrassingly for my profession are lawyers, but the bright side is that we have found that the malpractice insurance may cover the damages that can flow from abuses by modification mills.  It won’t get you back your home but we can recover some money to ease the pain of being scammed.

 

Contact Marc Dann at mdann@dannlaw.com

Dann Doberdruk and Wellen Launches New Attack on Fraud in the Foreclosure Process: New Class Action Lawsuit Seeks Damages for Those Wrongfully Foreclosed Using Fraudlent Documents in Ohio

When Linda Clark of Lakewood was sued for foreclosure, she thought that despite her struggles to stay in her home she would ultimately have to move. When we stepped in to represent her, we discovered that false and misleading documents created by the notorious Lender Processing Service on behalf of her loan servicer were being produced at the direction of the law firm who was hired to foreclose on Ms. Clark’s home.

We defended Ms. Clark and the Cuyahoga County Court of Common Pleas dismissed her claims. She remains in her home today.

For thousands of other Ohioans, many of whom thought that they couldn’t afford to hire a lawyer, or that they had no defenses to forclosure the result of such false court filings has been to have lost their home to a   Plaintiff who couldn’t prove they had standing to foreclose to begin with.

That is why we have joined with several outstanding lawyers and law firms to bring a class action complaint on behalf of Ms. Clark and others who have been the victim of fraudulent foreclosure filings in Ohio. The business practice of suing homeowners in foreclosure on behalf of alleged lenders who cannot prove they have standing to collect on the note or file the foreclosure,violates Ohio’s Consumer Sales Practices Act (“OSPCA”). Our suit, filed yesterday in Cuyahoga County Common Pleas Court, seeks to stop the defendants from engaging in fraudulent foreclosures in Ohio, and seeks damages on behalf of the tens of thousands of Ohioans who have been foreclosed on by alleged lenders who lacked the standing to sue.

Here is a copy of the complaint:

LPS LItigation 2012 07 23 Clark Complaint

These practice are happening to others in Ohio and around the Country. If you are aware of such practices in your county in Ohio or your state, give me a call at 216-373-0539 or send an email to mdann@dannlaw.com

Why Robo Signing Matters-DDW Client Carla Duncan still pursued under Robo-signed Assignment

Today’s New York Times reports, the Federal Reserve is getting ready to fine non-participants in the recent Attorneys General Settlement for fraudulent foreclosure practices, including offenses involving Robo-signing.  The story features a client of our firm, Carla Duncan, who is still challenging a robo-signed document filed in a 2010 Foreclosure Case in Cuyahoga County Ohio.  In her case, a robo-signer purports to assign a mortgage from Indymac 9 months after Indymac went out of business.

This story and our experience representing Carla and other clients underscores the importance of verifying every link in the endorsement of note or assignment of mortgages in foreclosure cases.

Failure of Banks and Fannie and Freddie to Write Down Principal is Against Their On Interest

A column in today’s LA Times  makes a compelling case for Fannie Mae and Freddie Mac to rethink their adamant opposition to principal forgiveness. Michael Hiltzak’s analysis also highlights the hypocrisy of the still mysterious Attorneys General settlement.

The dirty little secret is that $17-25 Billion of the AG’s Settlement that is reportedly going to be devoted to principal reduction will actually provide more that $17-25 billion in value to the banks and other lenders. This additional benefit to lenders results because reducing the principal of loans increases the likelihood that those loans will paid.  As a result, the Net Present Value of the loans will be increased.

So the bulk of the “heralded” settlement is actually not a cost but a net financial benefit to the scofflaws that the AGs were supposed to be punishing.

Principal forgiveness is actually a win-win proposition for lender and homeowner when a loan is significantly under water.

Hiltzak explains it:

“The reason should be obvious. The most important factor in a borrower’s likelihood of default is the loan’s negative equity. Put simply, if you think you’re so deeply underwater that you won’t have equity in your home by the time you’re ready to sell it, or ever, then default looks more rational the more your ability to pay comes under strain.

The closer you are to breaking even or going positive, the more you’ll fight to keep the house. Forbearance doesn’t get you any closer to that point (you still owe the original principal, one way or another), but forgiveness does.”

Principal forgiveness recaptures the self-interest of the borrower to the benefit of both borrower and lender.

Even the Federal Housing Finance Agency, the agency charged with overseeing Fannie Mae and Freddie Mac told Members of Congress, that principal forgiveness can increase the net present value of underperforming loans.

So, you ask, if its good for lenders and good for borrowers, why isn’t there an effort to rewrite all under water loans in America?

One answer to the question is accountants (no offense to my brother the CPA, well, ok, maybe a little offense intended)

Lenders including Fannie and Freddie are carrying these non-performing loans on their books as if every dime promised is going to be paid.  Principal reduction requires that the lenders immediately write down those loans that will effect share prices in the case of the banks and create political risk in the case of the now federally controlled Fannie and Freddie.

The second answer to the question is a little more nefarious, servicers, including all of the big banks that have entered the still undisclosed agreement with Attorneys General charge investors, including Fannie Mae and Freddie Mac significantly higher fees when loans are in default. The percentage of loan proceeds to be paid to servicers increases, plus mortgage loan servicers have become masterful at creating other ways to pay themselves by way of forced place insurance and inspection costs. In foreclosure, the servicers get paid first and if there is not enough from the foreclosure sale, the investor pays the bill.

My hope is that as congress, shareholders and the general public figure this out sooner rather than later.

There May Not Be an AG Settlement After All

The American Banker Reports that there is not so much as a term sheet, let alone a final enforceable settlement agreement between State Attorneys General, the US Justice Department and the 5 largest mortgage servicers.

If a lawyer in my office suggested that we announce a settlement with any Bank, absent a written agreement, I wouldn’t allow it. I’m concerned that 49 State Attorneys General and the Federal Government did.

If my experience negotiating settlements with banks is any indication, the terms of settlement constantly change until an agreement is reduced to writing. There are contentious issues relating to the extent of any liability releases that State and Federal Enforcers might grant to the banks that have been described vaguely at best.

Abigail Field in her thoughtful blog Reality Check thinks the AG’s might walk.

I’m more worried that that won’t.