Investors stood to make more money from homeowners defaulting on their mortgages than paying them. To make sure this happened investors flooded the mortgage market with cash to encourage riskier and riskier loans to be written.  The system was rigged to crash.

Check out the “Inside Job” podcast from This American Life.

Courts have been left to pick up the pieces.  Fortunately, Connecticut has an Attorney General who understands the practical difficulties of homeowners facing foreclosure – namely the process is confusing and speaking with the right representative from a bank can be impossible.

I was very pleased to find this press release in my inbox. If you are a Bank of America Customer facing foreclosure you need to read the following

MORTGAGE REVIEW ASSISTANCE AVAILABLE JAN. 19-21

FOR BANK OF AMERICA CUSTOMERS

For immediate release                                                                        TUESDAY JAN. 10, 2012

HARTFORD – Attorney General George Jepsen and state Banking Commissioner Howard F. Pitkin announced today that Bank of America is hosting free mortgage assistance reviews in Hartford and Bridgeport for customers who are having trouble paying their mortgage loans.

The free events are 8 a.m. to 8 p.m. Thursday Jan. 19 through Saturday Jan. 21, 2012 at both the Hartford Hilton, 315 Trumbull Street, Hartford and the Bridgeport-Trumbull-Fairfield Holiday Inn, 1070 Main Street, Bridgeport.  Free parking is available at both sites at the Church Street Garage in Hartford and Imperial Parking Garage in Bridgeport, which is adjacent to the hotel.

Bank of America mortgage customers who are experiencing financial hardship will have the opportunity to meet with home loan specialists, who can review their mortgage and discuss available options. Spanish-speaking translators will be available at both locations.

The events are free and registration is encouraged to help ensure customers receive same-day assistance. Registration can be made online at www.bankofamerica.com/homeowerevent, or by calling the toll-free number, 1-855-201-7426. The documents a customer will need to bring for a mortgage review are listed on the website.

Connecticut homeowners who are not Bank of America customers, but having difficulty making mortgage loan payments, should contact the state Department of Banking’s Foreclosure Assistance Hotline at 1-877-472-8313.  The Department assists homeowners who are attempting to achieve loan modifications and prevent foreclosure.  The Department’s website, www.ct.gov/dob, has valuable information about avoiding scams, applying for loan modifications, and navigating the foreclosure process.

I’ve represented clients facing foreclosure. No one searches for hope more than a person about to be homeless.  The stress on a parent about to have no place for their child to sleep is unbearable.  Clients in this situation uniformly break down in tears talking to me.

Recently, I was speaking with a person facing foreclosure. The bank had just filed papers. She told me that within weeks of being served she started receiving mail from attorneys seeking to defend her in the foreclosure action.  A sign of the times, indeed.

A person facing foreclosure should see an attorney. Often a consult or representation can make a difference in the outcome of a case. Even if that outcome is simply more time to move.  The earlier a person facing foreclosure sees a client the better chance an attorney has to do something beneficial for the client.  Those are words written from my chair.

From my clients chair, her thoughts were “how does everyone know” and “I’m so embarrassed”.  Those letters made her feel worse about the situation.

She asked “how do they know?” To which my response was they either got the information from the land records or court records.

Arguably such solicitations are against the rules of professional ethics. Rule 7.3 covers “Personal Contact With Prospective Clients” and the relevant sections read as follows:

(b) A lawyer shall not contact, or send, a written or electronic communication to, a prospective client for the purpose of obtaining professional employment if…..

(1) The lawyer knows or reasonably should know that the physical, emotional or mental state of the person makes it unlikely that the person would exercise reasonable judgment in employing a lawyer…..

(3) The communication involves coercion, duress, fraud, overreaching, harassment, intimidation or undue influence….

The relevant commentary to the rule reads as follows:

[1] Unrestricted solicitation involves definite social harms. Among these are harassment, overreaching, provocation of nuisance litigation and schemes for systematic fabrication of claims, all of which were experienced prior to adoption of restrictions on solicitation.

[3] In determining whether a contact is permissible under Rule 7.3 (b), it is relevant to consider the time and circumstances under which the contact is initiated. For example, a person undergoing active medical treatment for traumatic injury is unlikely to be in an emotional state in which reasonable judgment about employing a lawyer can be exercised.

The rule references the “emotional state” of a prospective client. Few prospective clients are under more duress than those just served with foreclosure papers.

Unfortunately, I did not see the letter or letters sent to the person. She did not have them with her (hence the question mark in the title of this post). The other thing here is that there are all sorts of sketchy companies that promise modifications and representation. They’re happy to collect $3500 fees and do nothing. I have no idea of these companies claim to be law firms or not. I also have no idea how widespread the practice is.

If you’ve received such letters, I’d love to read them. Please send them my way: rmckeen at lttnlaw.com .

At one point or another, most people enter a stage of denial. They stop answering the phones or opening the mail. The fear of losing one’s home becomes so overwhelming that the only way many homeowners can deal with it is to ignore it entirely. This is very dangerous.

As a lawyer who has represented homeowners facing foreclosure, the earlier someone meets with me – the more I can do for a person. If a person waits until they receive an ejectment notice to see me – my ability to meaningfully help the person is severely limited.

My very simple advice is to save yourself a lot of stress, spinning your wheels, and perhaps money and see a lawyer when you first fall behind on your mortgage.  What do I mean by spinning one’s wheels? Unfortunately there are a lot of companies offering to help homeowners behind on their mortgages. They promise things like forensic audits. If someone is promising you something too good to be true – it probably is. These companies often ask for money up front.

A reputable lawyer should be able to advise you of your rights and options, refer you to other reputable professionals who may be able to assist you, and protect your rights in court.

You may be thinking “wow, a lawyer’s advice is to see a lawyer!” To which my response is “absolutely”.

There are options for homeowners facing foreclosure. The earlier you start addressing the problem the more options there are available to you.

Two weeks ago, I wrote about a neighbor who was about to lose her home. Once her friends found out about this, they created a website seeking donations. Through charity of Joan’s friends, neighbors, and strangers – enough money was raised to bring Joan current on her mortgage.

Flowers will continue to bloom in front of a house that a month ago was almost certainly heading into foreclosure. It’s one less case on the docket and one more family with a place to live.

Joan's House. Save it.

Sometimes, I see Joan. She may be sitting on her porch or gardening. We usually wave and say “hi” to each other.  I continue up the hill. She goes on with her life.

Throughout most of human history, we knew our neighbors well. In today’s walled and disconnected world it’s possible never to meet the people living close to us – let alone get to know them.  People could and did help their neighbors.

On the flipside we have tools like Facebook. Where we can keep in touch with lots of people who we either rarely or ever see.

These worlds collided late last week. Bill Childs, Associate Dean at Western New England School of Law and a fellow alumni board member – posted a link urging his friends to “save Joan’s house. Bill’s a good guy so I clicked on the link. The person who needed help, was Joan, my neighbor.

A few hours later, the Dean of the Hartford Blogosphere, Helder Mira posted the same link on Facebook. Joan has good friends.

It turns out that Joan was out of work for more than a year and fell behind on her mortgage. She has a job now, however, needs help in making up the $6,000 deficit.

Click here to read more about Joan and her situation. If you enjoy this site, and Joan’s cause worthy (which I trust you will), please give something to help her out. Any amount would be greatly appreciated. I’ve got miles to run. I hope to be waving to Joan for year’s to come. I ask you to help my neighbor.

The problem with mortgage documents is so bad that the head of the FDIC is proposing the creation of billion dollar insurance fund to deal with the fiasco. Forged and illegal documents are such a problem that they pose a significant threat to the broader economy.

If you’re at all involved in real estate litigation or foreclosure click here to watch an excellent 60 minutes piece.

The 60 minutes piece linked to above is shocking. People need to go to jail for this. I’m not sure that if I represented banks in foreclosure proceedings (which I don’t – I defend person’s facing foreclosure and do committee work on foreclosure sales) that I’d feel comfortable bringing actions anymore.

When a Philadelphia man became fed up with his bank for failing to respond to his mortgage questions, he took them to court and won. In a twist that will warm the hearts of millions with underwater loans, he moved to foreclose on Wells Fargo’s local office. ABC News.

Trying to deal with a super-sized “bank” like Wells-Fargo can be like talking to a wall. Patrick Rodgers encountered that wall and applied some Chuck Norris kung fu on Wells Fargo.

Patrick Rodgers story is my favorite legal article ever. The short version is that Wells Fargo tried to stick it to him. He stuck up for himself. Wells Fargo wouldn’t respond. Rodgers sued Wells Fargo for RESPA violations and won a small judgment because Wells Fargo didn’t appear. Rodgers then liened a building owned by Wells Fargo and then foreclosed on said lien.

For all of the pain brought on people by banks pedaling subprime mortgages and destroying the fabric of our society, Patrick Rodgers exacted a small amount of justice.

Patrick, if you read this, and you’re in the Hartford area, beers are on me. Cheers to you.

A few months ago, I was waiting for my case to be called on the foreclosure docket when I saw a lawyer fight back.

I’m not sure of the lawyer’s name or the name of the case but whoever he is – he pushed back against the tidal wave that is the foreclosure mess in Connecticut.

You see, when his client received the foreclosure notice he filed a counterclaim for breach of contract, negligent lending and CUTPA and he didn’t stop there.

He served the lender with discovery requests pertaining to the ownership of the note.

And much to the annoyance of lender’s counsel, he didn’t stop with written discovery, he wanted to depose the officers of the company that wrote the mortgage. The lender was a California company and all of its employees lived in California.

The lender’s attorney argued that a deposition wasn’t necessary. Judge Satter would have none of it.

Seeing this, the lender argued that a video depositon is what the court should order.

Homeowner’s counsel objected to this saying that it is important for him to “size up” a witness which is not something he could do through video conference.  Counsel for the lender responded that flying employees to Connecticut for a deposition wouldn’t be fair to the lender due to the expense.

Neither lender’s counsel nor the lawyer for the homeowner would back down.

You know what Judge Satter said to lender’s counsel? He said that they choose to write mortgages in Connecticut. Judge Satter then ordered that the lender had to make its officers available for live deposition in Hartford.

I don’t know what happened to the case or the homeowner’s claims. I do know counsel for the lender was not pleased.

At least in that court, on that day, a homeowner did the unexpected and challenged the lender. Good for the homeowner.