Tennessee Bankruptcy Lawyer Blog

Bank of America announced on Monday that it plans to begin foreclosure proceedings again in the 23 judicial foreclosure states (Tennessee is a non-judicial foreclosure state) in which it halted foreclosures on October 9th. From this CNBC report, it appears Bank of America believes it has corrected its defects in the foreclosure documents being presented to courts in those states.

Since Tennessee is not a judicial foreclosure state, it is unclear when Bank of America will start foreclosures again in Tennessee. However, I suspect it will be sooner rather than later.

The Tennessean is reporting that the Tennessee Attorney General, Bob Cooper, has joined other AGs in their investigation into problems with pending foreclosures. However, the effect of this investigation, at least for Tennessee homeowners, is still uncertain.

As AG Cooper stated in the article above, Tennessee is a non-judicial foreclosure state and the so-called "robo-signing" of foreclosure documents does not exist in Tennessee. The alleged "robo-signing" has to do with court documents that are needed to start foreclosure proceedings in the 23 judicial foreclosure states. Since Tennessee does not require the filing of court documents to start foreclosure proceedings, Tennessee is not affected by the "robo-signing" issue.

However, it now appears that the investigation, which now includes all 50 AGs, will expand beyond the "robo-signing" issue in an effort to determine if other problems exist. Stay tuned. This should get interesting.

Well, it didn't take long for my previous post to become outdated. This morning, Bank of America announced that it would halt all foreclosure sales in all 50 states until it can verify that its foreclosure procedures comply with applicable laws. The move appears to have been spurred by the Delaware Attorney General's questions regarding BoA's procedures in Delaware (which was not one of the original 23 judicial foreclosure states included in BoA's earlier announcement to halt foreclosures). As a result, Tennessee is now included in BoA's halt (at least for now).

So, what does this mean for Tennessee homeowners who are facing foreclosure through BoA? My opinion is this is just a delay. There is no way to know whether or not BoA will start modifying loans or make any other concessions to homeowners, but at least the foreclosures should stop for now. However, if you are already in the foreclosure process, I would encourage you to get confirmation in writing that the foreclosure sale has been stopped.

Many of my readers have heard that a number of lenders, including Bank of America, Ally (formerly GMAC), and JP Morgan Chase, have stopped foreclosure proceedings in 23 states. However, Tennessee is NOT one of those states. As a result, if you have been hoping that one of these lenders are going to stop a pending foreclosure on your home in Tennessee, don't wait for that to happen.

The reason these lenders have stopped foreclosures is because some of the documents needed to foreclose in those 23 states may have been inproperly signed. Specifically, the 23 states in question are judicial foreclosure states and lenders must file a foreclosure action with the courts in those states before the foreclose can occur. Tennessee is a non-judicial foreclosure state and those documents are not required in Tennessee. As a result, the alleged problems in those 23 states would not exist in Tennessee.

However, this appears to be the first big revelation regarding the problems lenders may have with their paperwork. As this situation unfolds, I expect more problems to be uncovered.

It has been a while since my last post, but my caseload has cut down on my time to post blog entries. Nevertheless, I wanted to take a moment to mention some of the issues that I am hearing from my clients.

First, I have a pending lawsuit against a loan servicing company where the loan is in pre-foreclosure. Two major problems have occurred on this one. The private mortgage insurance ("PMI") is outrageously expensive (it is approximately 1/3 of the total monthly mortgage payment). In addition, the clients' mortgage was sold about 3 weeks before the foreclosure sale was to occur. As a result, we couldn't find anyone at either loan servicing company who could work on the issue for about 2 weeks. With a week left before the foreclosure sale date, the new servicing company said it would stop the foreclosure if the clients wired $2,700 to them. They did (although I counseled them to get the agreement in writing before wiring the money) and, SURPRISE, the servicing company did not stop the foreclosure. The clients had to file an emergency bankruptcy to stop the foreclosure and we are now pursuing a lawsuit against the new servicing company for a number of violations, which now includes fraud.

Second, I have 2 cases where the mortgage lender offered my clients foreclosure alternatives (i.e., deeds-in-lieu, loan workouts, or HAMP modifications) and foreclosed on the house before the offers expired. The clients thought the foreclosure was delayed or stopped, but that was not the case. In Tennessee, it is difficult to overturn a foreclosure (even with these types of violations), but we are pursuing the lenders for damages.

In each case, the clients simply waited too long to act, hoping that the lender or servicing company would modify the loan before the foreclosure date. Don't wait until the last minute. If you have already been notified that your lender or servicing company intends to foreclose on your home, you need to act now. Any number of problems could arise by waiting too long to deal with the issue.