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Can Asserting A Constitutional Homestead Interest Avoid Foreclosure?

February 24, 2012 Leave a comment

Rule v US Bank is a recent unpublished Michigan Court of Appeals decision dated January 17, 2012 in which Parents, homeowners, raise a novel issue, albeit unsuccessfully, on behalf of their daughter in order to save their home from being foreclosed on.

The facts presented invoke a lot of sympathy, the Court of Appeals acknowledges as much and recites the facts as follows:

 “In 1985, plaintiffs Wayne and Raisa Rule, husband and wife, acquired the property at issue in this case and thereafter built their home on the property. In 1999, their adult daughter, plaintiff Wanda L. Rule, was injured in a snowmobile accident that rendered her a quadriplegic, paralyzed from her neck down. After the accident, Wanda moved into her parents’ home. She received an insurance settlement, from which a significant portion of the proceeds were used to modify her parents’ home to accommodate her physical needs…anda is now 40 years old and requires full-time care, which her mother provides.”

Those are arguably the saddest facts I have heard in someone being forced from their home.

Long story short, at some point, Mother and Father fell behind in payments, defaulted on their loan, Bank foreclosed and after redemption expired the Bank sought to evict Parents along with their quadriplegic Daughter. 

At the Eviction hearing Mother and Father filed a counter lawsuit claiming that their daughter had a protected homestead interest in the Property that prevented the Bank from foreclosing.

As the Court of Appeals explained : “a homestead is protected from forced sale, except in cases of a valid mortgage on the property duly signed by both spouses if the debtor is married. (citation omitted) Here, Mother and Father are arguing that, yes, they had signed a valid mortgage on the Property, but daughter did not, and she had a homestead interest that was protected.

How is this argument even valid? 

The Court goes on to explain that  “[t]he homestead protection ‘extends to any person owning and occupying any house on land not his or her own and which the person claims as a homestead.”  “Owning” has been liberally interpreted…to include joint tenants, possessors of land under land contracts, and a lessee who erected and occupied a dwelling on a premises.” (Citation omitted).  A homestead interest does not exist, however, in property, “the title to which is in another person.” (Citation omitted).

So in short, a person’s homestead is protected from forced sale if someone else owns the land, but you “own” the building and you haven’t signed a mortgage.  Own can mean you purchased the land under land contract, you own the home jointly, and you are renting the land but built and live in the home on the rented land. 

Not many people would fall into these categories to avoid foreclosure, and that it is why Mother and Father create quite a novel argument: 

Mother and Father concede that Daughter does not own the Property, so “if this Court determines that [Daughter] has a homestead interest, “‘it will derive from her rights as a tenant in her parents[‘] home” and her unique circumstances.'”   

You can sort of read between the lines that the Court was sympathetic towards the daughter’s scenario, it admitted the “harshness of the result”, but nonetheless the Court found no protected Homestead interest for the daugther, holding, “Her claim is one of equity based on the modifications made to the home. We are unaware of any law, and plaintiffs admit  that there is no authority, recognizing a homestead interest in these or similar circumstances.”

The Court further commented that “We decline to create new law that extends the protections of MCL 600.6023(1)(h) beyond the clear statutory language”  as if to say, we are sympathetic to your daughter’s circumstances, but you are asking us to create a new law, and we can’t do that as judges, no matter how sympathetic we feel.

If anything, this case is instructive to the homeowner who may be anticipating a hardship such as a job loss that would make it hard to make your mortgage payments. 

If you are in that situation be proactive! Don’t wait until you are being served with eviction paperwork as a holdover and then seek legal counsel, (legal counsel who then may have to raise novel legal issues in order to attempt to keep you in your home). The sooner you meet with an attorney, the more options they have to work with to help you achieve your goal.

 

 

 

 

In the end there are a lot of questions raised by this

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Was Your Home Foreclosed on in 2009-2010? – Free Independent Foreclosure Review

February 21, 2012 Leave a comment

If your home was foreclosed on in 2009 – 2010 it may be worth having the Federal Government perform its independent review of your foreclosure process and check into whether or not your lender potentially committed errors in the process.

According to a press release found on the Office of Comptroller on Currency’s website “[u]nder the enforcement actions taken in April by the OCC, the Federal Reserve, and Office of Thrift Supervision, 14 large mortgage servicers were required to correct deficiencies in their servicing and foreclosure processes and to engage independent firms to conduct a multi-faceted independent review of foreclosure actions that occurred in 2009 and 2010.”

For more information go ahead and check the OCC’s website at:  http://www.occ.gov/news-issuances/news-releases/2011/nr-occ-2011-133.html

To qualify, your mortgage loan would need to meet the initial eligibility criteria:

  • Your mortgage loan was serviced by one of the participating mortgage servicers.
  • The list of participating servicers includes:
    • America’s Servicing Co.
    • Aurora Loan Services
    • BAC Home Loans Servicing
    • Bank of America
    • Beneficial
    • Chase
    • Citibank
    • CitiFinancial
    • CitiMortgage
    • Countrywide
    • EMC
    • EverBank/EverHome Mortgage Company
    • Financial Freedom
    • GMAC Mortgage
    • HFC
    • HSBC
    • IndyMac Mortgage Services
    • MetLife Bank
    • National City Mortgage
    • PNC Mortgage
    • Sovereign Bank
    • SunTrust Mortgage
    • U.S. Bank
    • Wachovia Mortgage
    • Washington Mutual (WaMu)
    • Wells Fargo Bank, N.A.
    • Wilshire Credit Corporation
  • Your mortgage loan was active in the foreclosure process between January 1, 2009 and December 31, 2010.
  • The property was your primary residence.

according to http://www.independentforeclosurereview.com/ “Eligible customers will be mailed a letter by December 31, 2011 that explains the Independent Foreclosure Review process and a Request for Review Form that identifies some examples of situations that may have led to financial injury. The form must be completed and postmarked no later than July 31, 2012.” 

You can also call  1-888-952-9105  to request an application.

If you fall into this category – why  not fill out and return the application; what do you have to lose?  Some of my clients have retained my firm to initiate a lawsuit against their lender for allegations of abuse in lending and the foreclosure process.  I tell my clients to call 1-888-952-9105 and see if you qualify.  It could be a cost-effective way to address any problems caused by your lender.

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