The bank wants to foreclose on my client’s home.
They claim he’s months behind.
Only the numbers in their relief from stay papers filed in the bankruptcy don’t add up.
- The mortgage balance is one thing here, and other thing there.
- They file a declaration under penalty of perjury saying they have the note, followed within hours with a declaration saying they’ve lost the note.
- The loan docs that they file in support of their claim says the principal amount of the loan is half what their motion says.
This is a bank! One of those huge, too-big-to-fail institutions who control great swathes of home mortgage debt across the country.
How is it that a bank can’t tell us the same story twice on what my client owes?
Give us more time
I tackled the inconsistencies in the bank’s story by sending them some written discovery. Bankruptcy Rule 9014 makes the discovery rules that apply to adversary proceedings in bankruptcy applicable to any “contested matter”.
What could be more “contested” that the claim of a right to foreclose a home?
Only when the bank got the discovery, requiring them to back up the various claims in their motion, they ducked.
They asked for more time.
They changed lawyers.
The new lawyer asked for more time still.
You have to wonder what information were they working from when they filed this motion in the first place.
The emperor has no clothes
It’s time we talk openly about the problem I see: the loan servicers of this world can’t tell the same story twice about what’s owed on a home loan.
Granted, I see mostly loans where the borrower has had some interruption in their payments over the life of the loan.
But, come on. None of this is rocket science. (I know, my husband was a rocket scientist). This is arithmetic.
Only the servicers seem more interested in profits and efficiency than accuracy. And the owners of these mortgage loans, seldom the entity that cashes your check and applies it to the loan balance, keep changing servicers, presumably in search of the cheapest servicer.
And every time one servicer hands a loan off to its successor, there is a danger that some of the details of the loan’s history are lost.
Defending against servicer inaccuracy
We have a complicated problem on our hands, given the number of troubled home loans and the stakes of the foreclosure “game”.
Judges need to bring with them to the bench each day a healthy skepticism for the claims of the banks.
When I first started practicing bankruptcy law, an argument that the bank’s numbers were wrong was going nowhere. Because, then, banks were usually right. It wasn’t a good use of time and energy to challenge the bank’s ability to add.
Things have changed, and far more often than is comfortable, the bank’s numbers are inconsistent.
Lawyers need to examine the numbers. Do some math. See if the numbers are consistent and tell the same story as the bank’s written pleadings.
Challenge the gaps and the inconsistencies. Do discovery. Dig a bit.
Judges also need to find a legal basis to award attorneys fees to borrower’s counsel when the bank is wrong. Bankruptcy lawyers can’t do this kind of exacting, time consuming work for their clients if there is no compensation for the effort.
Finally, when the servicers make faulty presentations to the court, sanctions are in order. As long as the cost of sloppy work is modest, these institutions, driven by profits, have no economic reason to change. And apparently no moral sense that requires a change.
Change is required.
