Are my parents being scammed?

[moneymatters]

My father shared some news with my brother and I over the past week, and I'm not sure whether the news is good or bad.

He told us that the house we all live in now went into foreclosure exactly 12 months ago (Sept 2008). Mind you, my parents, along with one of my aunts, just bought the house in Oct 2007. Since my father usually handles the family finances, one day he decided to let my aunt pay the mortage for a few months because him and my mom would be traveling very often in the coming months. She was to make the payments starting in Apr 2008. Well, come to find out, she never made a payment and five months later, we were served a notice of foreclosure.

He explained that the reason we are still living in the house is because his attorney informed him that the mortgage lender has lost the note, or some important document(s) stating that my parents owe payments on the house. According to the attorney, if the lender cannot retrieve such documents within 3 years, then the house is ours. My father has been paying him $500/month to fight the case in court and has not paid on the mortgage since March 2008.

My brother and I were already planning to get our own place but now, I am having second thoughts because of my parent's situation. I do not want them to be suckered again and by some greedy attorney then have no where to live in the end.

Does this sound like a scam to anyone? Because to me, something sounds fishy with this arrangement with his attorney.

Please advise.
Thanks

[disneysteve]

I agree it sounds very fishy. I would consult a real estate attorney immediately. I'd also check into the background of the lawyer involved.

If the lender doesn't have the documentation to proceed with the foreclosure, then what exactly is the lawyer doing that is costing $500/month? What is there to fight in court?

I also find it hard to believe in this day and age of electronic records that a lender losing a document can even occur.

[moneymatters]

I agree it sounds very fishy. I would consult a real estate attorney immediately. I'd also check into the background of the lawyer involved.

If the lender doesn't have the documentation to proceed with the foreclosure, then what exactly is the lawyer doing that is costing $500/month? What is there to fight in court?

I also find it hard to believe in this day and age of electronic records that a lender losing a document can even occur.

DS, I thought so. I believe this attorney is trying to take advantage of my parents given their current situation. If my father won't take any action to contact a real estate attorney and find out if his attorney is legitimate, I will.

Thanks DisneySteve!

[Joan.of.the.Arch]

I did hear one of those nationally broadcast (radio) lawyers say that this kind of documentation is often misplaced or outright disposed of these days and that people are indeed prevailing in foreclosure cases because of lenders not being able to clearly document that they are even owed! Evidently the selling and reselling of mortgages increased the document loss and the perception that it didn't really matter.

Of course your parents know the money is owed.

(I sure am itching to comment on the situation with the aunt....My brother left his affairs in the hands of a trusted friend when he had to be out of country during Gulf War I, and came back to no money, the "friend" having used it to pay his own mortgage. )

P.S. I just googled "fight foreclosure" and see that there are quite a few references to what you are talking about. If you read them, try to judge the reliability of the source.

[moneymatters]

Of course your parents know the money is owed.

(I sure am itching to comment on the situation with the aunt....My brother left his affairs in the hands of a trusted friend when he had to be out of country during Gulf War I, and came back to no money, the "friend" having used it to pay his own mortgage. )

Yes, they do and they are not trying to get out of paying for the house. My father also misplaced his copy of the note but I'm sure he would agree to make some kind of payment arrangements with the bank until he gets current on the house. His attorney suggested that he take the lender to court since they have no proof of the note.

I am going to do as disneysteve suggested and have my dad to contact a real estate attorney to find out what other options my parents have in keeping the house.

[moneymatters]

About my aunt, my father told me he kicked her out of the house after he found out she didn't pay the mortgage as instructed. I am so happy he did because I never trusted her anyway. TG!

[moneymatters]

BTW, I just found an article doing a google search regarding mortage notes delaying foreclosures. Here's the link:

Missing Mortgage Notes Delay Some Foreclosures : NPR

[wavetide]

So let me get this straight - your father trusts your aunt to pay his mortgage for 5 months, while they go on a 5 month vaca. The mortgage has not been paid in those 5 months. They return and find this out. They decide that instead of making things right with the lender (who in good trust, lent your father tons of money in hopes that your father would pay them back), they would hire a lawyer for $500/month to see if they can get the house for free. So they have been living in the house for free, as thieves, as squatters, for over a year?

You know what else is fishy? People using fishy attorneys to ditch payments on a house that they actually owe money on. Your father has not been making payments since March of 2008 because he believes he can get a house for free, due to some possible technicality - wow, that's noble of him - imagine if all Americans acted with this much responsibility, we'd be in a mortgage crisis!

RIDICULOUS. I hope the lender successfully kicks your family to the curb, I have no sympathy.

[wavetide]

So let me get this straight - your father trusts your aunt to pay his mortgage for 5 months, while they go on a 5 month vaca. The mortgage has not been paid in those 5 months. They return and find this out. They decide that instead of making things right with the lender (who in good trust, lent your father tons of money in hopes that your father would pay them back), they would hire a lawyer for $500/month to see if they can get the house for free. So they have been living in the house for free, as thieves, as squatters, for over a year?

You know what else is fishy? People using fishy attorneys to ditch payments on a house that they actually owe money on. Your father has not been making payments since March of 2008 because he believes he can get a house for free, due to some possible technicality - wow, that's noble of him - imagine if all Americans acted with this much responsibility, we'd be in a mortgage crisis!

RIDICULOUS. I hope the lender successfully kicks your family to the curb, I have no sympathy.

In other words


IT IS YOUR PARENTS WHO ARE SCAMMING.

[moneymatters]

Wavetide,

Unfortunately, you DID NOT get this straight - If you would have thoroughly read all of my previous posts before leaving your discourteous comments about my family, you would have fully understood. Did you not read my post saying that my father is willing to make payment arrangements with the lender in order to bring the house payments current!? Both of my parents are the most honest individuals I know and for you to criticize them on this site, makes my skin crawl!!! If my father never made the MISTAKE of authorizing my aunt to pay the mortgage, the house would have never went into foreclosure and the bank would still get paid without any hesitation. This isn't something that he "planned" and would never plan to do. This his first home and first time going through the foreclosure process. He does not know the proper steps to take, and that is why I am asking for "professional" advice to help him correct this entire situation.

If you do not want to help, I suggest you leave your comments to yourself and request that the moderators delete your offensive post!!!!

[moneymatters]

In other words


IT IS YOUR PARENTS WHO ARE SCAMMING.

Seriously, wavetide. Don't waste anymore of your time posting on this thread. I've already received the information I needed from a true professional, which you are most certainly NOT!

[simpletron]

I find it plausible that the bank has "misplaced" the necessary documents as in the records are there, but the bank hasn't found all of them yet. because with securitization slicing up mortgages and the mass reselling and repackaging of mortgages, I can see it taking awhile to put a mortgage back together. add in the fact where there is a massive wave of foreclosures that many of the loans in this shape and the understaffing at the banks - I can see a delay occuring.

but the big question is what is the lawyer doing that is worth 500/month? from the sound of things, he is either making things worst by reminding the bank to check their records or doing nothing all.

[disneysteve]

I stand corrected about the "lost documents" thing. Apparently, that is something that happens.

I still think it is suspicious that this lawyer is charging them $500/month.

OP, while I agree that wavetide's post was inappropriate, it did make me wonder. What exactly did your father do when he discovered that the mortgage hadn't been paid for 5 months? I don't know exactly how those things work, but once the foreclosure notice was served, wouldn't it still have been possible to correct the situation by bringing the payments up to date? The lender would rather have the money than the house. Seems to me that they should have been happy to cancel the foreclosure process in return for the back payments and any fees that were due. Instead, your post makes it sound like he continued to not make payments for 7 additional months.

Again, I'm not familiar with the whole foreclosure process. Maybe lenders won't accept payments once they initiate the process. I honestly don't know.

[maat55]

I would be interested in knowing if your fathers first reaction was to contact the lender and make arrangments to end the foreclosure process.

I'm guessing that mortgage companies can stop the process when arrangments are made. If your parents went straight to a lawyer, he may have encouraged them to take the wrong path.

I personally, would have attempted to contact the lender first and do what I was thought was the right thing to do. I'm sure your parents trusted the lawyer, but at some point early on, they should have questioned his advice.

[boosami]

You say "according to the lawyer" the bank has lost the note. Call the bank and ask someone there if they can fax a copy of it for your records... then you can see if they actually have it or not and if the lawyer is scamming you straight out.

I have heard in most cases the lender is able to find the necessary paper trail and it just delays the foreclosure, not eliminate it. I would ask your lawyer what law explicitly states that you're free and clear after 3 years. Ultimately, it is up to the judge to rule either for or against the foreclosure. A missing note is not a silver bullet that will get you out of the owed debt. There are other things the bank can do to satisfy proof of ownership and your debt, but it is up to the judge to accept or reject those.