Trustees & Servicers owe you answers now
This commentary is required reading. Seriously.
Investors NOT paid back for Losses incurred from Deferred Debt when we highly suspect the Deferred Debt was paid back by the borrower
Although we have seen instances where the trustee has correctly paid back investors for prior losses when deferred debt is recovered at payoff/liquidation, we are also discovering loans where we highly suspect that deferred debt was recovered yet investors were never made whole. For our investigation, we focused on HAMP modifications, as our very detailed data comes directly from the U.S. Treasury, which we believe is accurate. For the loans highlighted, we see no evidence in the remittance report or in the CoreLogic LoanPerformance data that investors were made whole on the losses incurred by the deferred debt when there surely was enough money received at payoff/liquidation. In most of the cases, the properties experienced significant price appreciation making it clear that there was enough cash from sale proceeds to pay back both the interest bearing and non-interesting bearing balances that were owed. Unfortunately, it is a tedious exercise to match up loans to property addresses, then determine which properties had price appreciation from loan origination to pay off, then determine which modifications were true forbearance (not subject to forgiveness), then review the public records for the sale or refinance that corresponds to the payoff date, and finally determine if there was enough payoff cash to pay back the deferred debt. Since no one seems to be performing this verification for investors, investors are needlessly losing money. We don’t know the extent of it but it wasn’t hard for us to find many examples of missing cash. Get mad. Check your bonds each month for voluntary payoffs with losses. As always, we can help you. It is your money. Let’s go get it.
NOW WHAT? Florida Supreme Court has RULED on the Statute of Limitation on Foreclosure
If servicers review their delinquent Florida loans, a large amount of losses could be passed through to investors based on arrearages that the borrower is no longer obligated to pay. The Florida Supreme Court ruled that a servicer can seek foreclosure based on defaults occurring ONLY subsequent to the dismissal of the first foreclosure action. Those payments prior to the first foreclosure action are null and void. In the Bartram and Beauvais cases, the first foreclosure action was dismissed because the trustee failed to show up at the case management hearing. That’s sad.
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