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untanglingwebs
El Supremo
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Mon Jun 07, 2010 1:00 pm |
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untanglingwebs
El Supremo
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Fighting foreclosure
If you need help fighting foreclosure, here are some of the resources available:
• Save the Dream program, operated by the Michigan State Housing Development Authority. Home ownership counselors are available free of charge. 866-946-7432.
• Michigan Foreclosure Prevention Project provides information and brochures on line. http://miforeclosure.mplp.org.
• HUD Housing Counseling Referral Line 800-569-4287.
If you feel you've been wrongly foreclosed upon, or the victim of an illegal trash-out, contact:
• Michigan Attorney General's Foreclosure Scams Complaint hot line 877-765-8388.
• Michigan Office of Financial and Insurance Services hot line 877-999-6442 or www.michigan.gov/ofis. |
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Mon Jun 07, 2010 1:17 pm |
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untanglingwebs
El Supremo
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Posted: June 7, 2010
Foreclosures go wrong as lenders, cleanup crews cut legal corners
BY L.L. BRASIER and JOHN WISELY
FREE PRESS STAFF WRITERS
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Some Michigan residents have returned home to find their windows broken, houses ransacked and valuables missing.
Not from burglars, but overzealous mortgage lenders and their trash-out teams: unlicensed crews hired to clean out and secure property during foreclosures. Lawsuits filed across Michigan and the nation paint an ugly picture of impersonal foreclosures bent on speed that cut legal corners without concern for homeowners who have paid up.
"Once the foreclosure train leaves the station, it's very difficult to stop," said Carlin Phillips, a Boston lawyer who represents a west Michigan family that paid cash for a house. A trash-out crew mistakenly entered the property three times to shut off utilities and remove personal property, he said.
Lawyers in other suits contend that some lenders, their lawyers and property management firms are granting salvage rights to trash-out crews, who then take TVs, furniture and other personal property.
• Related: Family photos, mementos give trash-out crews pause
"It's like the Wild West out there," said attorney William Yochim, representing a Royal Oak homeowner whose residence was trashed out even after he paid it off.
Even after making good on mortgage, owners vulnerable
Martin Powelson owned several rental homes and flip houses during the boom times.
When money got tight and the property started to slip into foreclosure in 2008, Powelson turned to his mother, who helped him redeem the house by paying off the delinquent mortgage with cash.
A few weeks later, he returned to find the front window broken, the locks changed, his new Jacuzzi removed, several thousand dollars worth of power tools missing and his new $6,000 sleigh bed -- still in its box -- gone. All told, Powelson said he lost more than $60,000 in personal items.
Wrongful trash-out
His home had been trashed out -- wrongly, it turns out -- by an unlicensed crew sent there by his lender, who had been told by the law firm that handled the pre-foreclosure paperwork that the house had not been redeemed and had been foreclosed upon.
It had not.
Today, Powelson is suing Trott & Trott, a Farmington Hills law firm that is the third-largest debt collection firm in the country; his former lender, Colorado-based Aurora Loan Services, and several small companies involved in the actual trash-out of the Sheridan house.
"I've never gotten an apology," Powelson told the Free Press during an interview outside his now mostly empty house. Nor was any of his property returned -- except for some small tools and miscellaneous items. The now-bankrupt trash-out company has admitted in court records that it kept, sold and disposed of his belongings. Powelson's suit seeks at least $180,000 in damages and reimbursement. A trial date has not been set.
Trott & Trott declined to answer questions about this case submitted by the Free Press, stating in an e-mail that the firm did not comment about ongoing litigation. But Trott attorney Charles Hahn, who has called the suit "frivolous," admitted in court May 19 that the firm had misinformed the lender about Powelson's status.
"We had an employee erroneously send a message" on a computerized record-tracking system "that the redemption period had expired," Hahn told Oakland County Circuit Judge Shalina Kumar at a hearing. "It was admitted that this was a screwup."
Hahn insists his law firm sent a corrective message to Aurora the following day, but the trash-out went forward within days. Aurora also is represented by the Trott & Trott firm. Hahn acknowledged in a recent court hearing that Powelson was wronged, but said the company that conducted the trash-out, which has since declared bankruptcy, is the responsible party.
Powelson's attorney William Yochim, of Bingham Farms, argued that Trott & Trott were the ones that made the initial error because they started the process that ended in the trash-out of Powelson's property. The firm never followed up with Aurora to see whether it had received the corrective measure, a process known as escalation, Yochim said.
"What they did here was wrong, and they know it," Yochim told the Free Press in a recent interview. "And rather than correct it, they've tried to hide it. And if they did this to Martin, my guess is they've done it to other people."
He is seeking to have the civil suit certified as a class action before Kumar, which would allow him to add additional plaintiffs.
Cutting legal corners
The Powelson case highlights a growing problem in large, foreclosure-prone urban areas such as metro Detroit. With thousands of homes in the throes of foreclosure, attorneys who represent homeowners say mistakes get made and corners cut. Although evictions require court orders -- even on foreclosed homes -- the Free Press found several cases in which court orders for evictions were never sought, including the Powelson case.
One legal step that could have prevented the Powelson trash-out was an eviction proceeding. Real estate law experts say it's a necessary step before entering someone's home.
"Just because you have a foreclosure and just because the redemption period has expired doesn't mean that the lender has the right to go in and seize personal property," said Lawrence Shoffner, a Detroit lawyer who specializes in real estate and has written educational materials on the matter for the Michigan Bar Association. "You still have to go to court and get an eviction order."
Shoffner said the eviction process is straightforward. The lender seeks an eviction order from the local district court, which typically schedules a hearing within 10 days. If no one contests the order, it's usually granted through a summary judgment. With the court order in hand, the lender can then go to the property, typically with a court officer or bailiff, to enforce it. Any personal belongings remaining in the property are supposed to be left at the curb for the owner to reclaim.
"That whole process takes maybe a month," Shoffner said.
Yochim said he is seeking to have Powelson's lawsuit certified as a class action, because other homeowners have contacted him with similar complaints. Yochim and other attorneys say court orders for evictions is a step in the foreclosure process that is routinely being skipped by lenders for expediency's sake because the foreclosure process has become so mechanized. As a result, even people who have redeemed their mortgages have had their properties trashed out.
Unregulated practice
Ricky Rought of Gowen in western Michigan claims an even stranger twist on a wrongful trash-out.
In January 2009, he paid cash for a foreclosed home with his 22-year-old daughter Hannah, with the intention of fixing it up for her to live in, according to a suit filed recently in U.S. District Court in Grand Rapids.
The suit claims that California-based Deutsche Bank, from whom he had purchased the home, foreclosed on it in August 2009 even though he had paid cash for it and did not have a mortgage.
The bank used a trash-out company, Field Asset Services, which entered the home, changed the locks and took the Roughts' possessions -- including firewood they used to heat it and an American flag and its holder the family had put on the front of the home. Field Asset Services did not return phone calls for comment.
The Roughts reported the incident as a break-in to Michigan State Police. A subcontractor returned later to shut off the water and pour antifreeze into the drains, leaving a notice that the home had been winterized, according to a lawsuit.
After a second police report and repeated phone calls and e-mails to Deutsche Bank, the bank sent a crew back a third time to remove a lockbox from the porch.
The Roughts' suit accuses the trash-out company and Deutsche Bank of wrongful foreclosure. Deutsche did not return a call Friday seeking comment.
"There has to be responsibility and accountability up the chain," said Carlin Phillips, a Boston-based lawyer representing the Roughts. He said his firm has cases of wrongful foreclosures and trash-outs pending in several states, adding that the problem is growing with the number of foreclosures nationwide.
A Nevada jury awarded a Las Vegas couple $3.4 million in damages after Countrywide Mortgage sent out a trash-out crew that took all of their belongings and destroyed personal items, including family photos and a wedding dress. Turned out the trash-out crew had the wrong address. The damages were subsequently reduced by a judge to $968,000.
"They are like vultures," Phillips said. "Whoever gets in there first takes the possessions."
Contact L.L. BRASIER: 248-858-2262 or brasier@freepress.com
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Martin Powelson, 39, stands in the master bedroom of his Royal Oak house. The home was in foreclosure, but he was able to pay it off -- only to see it trashed out. (April photos by PATRICIA BECK/Detroit Free Press)
A version of this story appears on page 1A of the Monday, June 7, 2010, print edition of the Detroit Free Press.
RELATED INFORMATION
How most residential foreclosures work in Michigan
Once a homeowner is three payments behind, the bank or mortgage company generally notifies the person that it is starting foreclosure proceedings. A 2008 law then gives the homeowner 90 days to negotiate with the bank.
The bank or mortgage company then must post the upcoming mortgage sale in a public newspaper for four consecutive weeks. On the fifth week, the property is sold at a sheriff's sale.
Homeowners have six months from the day of the sheriff's sale to redeem the property, unless the property has been abandoned, and in that case, the bank can reclaim it within 30 days. Owners of properties on three acres or more, or having four units, have one year for redemption. In order to redeem, the homeowner must pay the mortgage in full, along with fees, insurance and taxes.
If the homeowner remains in the home even after the date of redemption, a court-ordered eviction takes place. That can take 10 to 20 days. Once a judge signs the eviction notice, a 10-day grace period is allowed after that.
Source: Michigan State Housing Development Authority |
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Mon Jun 07, 2010 1:22 pm |
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Ted Jankowski
F L I N T O I D
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| If this happens to someone in FLint please call me 810-701-2424. I'd like to cover that. |
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Mon Jun 07, 2010 2:51 pm |
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untanglingwebs
El Supremo
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| Yes Ted, this has happened in Flint and that is the reason I posted the story. I hope some of the people contact you. |
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Tue Jun 08, 2010 6:44 pm |
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