Courtesy of the Las Vegas Review Journal

By John L. Smith

Gerald and Katrina Thitchener lost nearly all their material possessions thanks to an arrogant error by Countrywide Home Loans officials.

They weren’t just stripped of their furniture and clothing when a mistake by Countrywide in 2002 set in motion a foreclosure procedure that resulted in their condominium being “trashed out.” Couches and coats can be replaced.

These little people with little money and no political clout also lost precious and irreplaceable things. There were Gerald’s service medals from the Persian Gulf War and the picture he cherished of his Air Force unit’s meeting with President George H.W. Bush. There was Katrina’s wedding band and dress, and the video taken the day they were married.

Then there were the lost pictures, photos of departed family members, of high school days, of their children.

The Thitcheners lost a lot back in 2002, including some of their faith in the system; but on Thursday the Nevada Supreme Court determined that their losses, and the actions of the mortgage giant, deserved compensation in the approximate amount of $2 million.

It took a six-year fight, but Thitchener is no stranger to battle.

A Gulf War veteran, he served 15 years in the Air Force as an F-16 mechanic before being honorably discharged in April 2001. On the same week he left active duty, he signed on with Nevada’s Air National Guard.

There was little time to rest.

Thitchener quickly returned to active duty following the events of Sept. 11, 2001. He was transferred from Las Vegas to Tucson, Ariz.

Katrina, pregnant at the time, remained in the family’s condominium with the couple’s children, Kaitlyn and Steven. When it became apparent Gerald wouldn’t be returning to Las Vegas soon, Katrina made occasional commutes to Tucson and eventually took an apartment there.

Although they had missed some payments on the condo to Countrywide in early 2002, their mortgage was current in June of that year, and the family’s monthly bills were forwarded to their Tucson address.

They left their power on in Las Vegas and paid their property taxes and homeowner association’s dues. In addition to all the personal items, food was left in the cupboards and refrigerator.

But when Countrywide moved to foreclose on another condo in the Thitchener’s complex, a mistake was made that resulted in the Air Force man and his family losing almost everything. The Thitcheners lived in unit 118. Unit 10 was in foreclosure.

When the time came to “trash out” the foreclosed-upon condo, unit 118 was selected despite all the warning signs of occupancy. The result was devastating.

Not that Countrywide admitted the gravity of its mistake. The Thitcheners through their lawyers, Terry Coffing and Terry Moore, fought for more than two years before winning a $3.4 million judgment in District Court. Before trial, they had sought to settle the case for $400,000.

During trial, Thitchener wore his Air Force uniform to court. While some might have groused that he was playing up his military status during a time of heightened patriotism, it was also true that his only suit was thrown away during the assault on his condominium.

Countrywide lost, but wasn’t chastened. It appealed to the state Supreme Court.

The state Supreme Court on Thursday not only agreed with the Thitcheners that the punitive damage award in the case “was supported by substantial evidence,” but it used the case as a vehicle to “clarify” the state’s case law on the subject. In doing so, it overruled two previous decisions and refined its own legal language regarding punitive damages.

That amounts to a substantial amount of fine-tuning in this area of Nevada law. It also should mean that the Thitcheners will be compensated for their losses.

“Despite the fact Countrywide knew where the Thitcheners were, the foreclosure went forward,” Coffing says. “Despite all the red flags going up that said, ‘This is wrong,’ they went ahead and did it anyway.

“Here’s a guy, a salt-of-the-Earth, good-hearted guy who never harmed a fly, slugging it out for our country and enduring incredible hardship. And then this happens to him. It’s very fulfilling to help those kinds of people.”

It is, in fact, enough to restore your faith in a legal system known all too often for comforting the comfortable and trashing the little people.

FORECLOSURE DEFENSE NATIONWIDE.COM ANNOUNCES UPCOMING SEMINAR ON INTRODUCTORY LEVEL FORECLOSURE DEFENSE (FLORIDA BAR APPROVED FOR 9.5 CLE CREDITS)

Foreclosure Defense Nationwide.com announces its first seminar in introductory level foreclosure defense which has been approved by The Florida Bar for 9.5 Continuing Legal Education (CLE) credits. Most states with mandatory CLE requirements will accept these credits as Florida is a mandatory CLE state.

The seminar is scheduled to be held on Friday, October 3, 2008 in the Embassy Suites in Boca Raton, Florida. Topics include contemporary foreclosure defense issues, securitization of mortgage instruments, choosing the proper course of defense for the client, client goals and objectives, initial Motion practice, substantive pleading practice, discovery and settlement strategies.

A full agenda is available upon request, as is information as to registration and cost for the seminar. Attendance is limited to 150 attendees.

Please contact [email protected] with inquiries and for further information. Please allow 5 days for response.

Foreclosure Defense Seminar I Agenda: page 1 of 2

8:30-9:00 a.m.: Registration and sign in.

9:00-9:45 a.m.: Introduction to Contemporary Foreclosure Litigation

– The old days versus now: Impact of securitization process

– Banking regulations: Compliance with Truth in Lending Act (TILA)

– The Various Stages of the Foreclosure Process

9:45-10:30 a.m.: Determining the Proper Course of Defense

– Identification of Real Parties in Interest and Indispensable Parties

– Use of third-party mortgage loan audits to validate claims

– Determination of Defenses (client objectives; stage of proceeding)

10:30-10:45 a.m.: Break

11:00 a.m.-noon: Substantive Pleadings and Motion Practice I

– Complaints to Stay Foreclosure (on Notice of Default from “lender”)

– Initial Motion practice on Procedural Defenses (existing litigation)

– “Unwinding” Foreclosure (post-Judgment or post-sale)

Noon-1:00 p.m.: Lunch: Discussion of Common Themes of Predatory Lending

1:00-2:00 p.m.: Substantive Pleadings II

– Challenging Motions for Relief from Stay in Bankruptcy Court

– Challenging relief from Bankruptcy Stay in State Court proceeding

– Federal Remedies: TILA, RESPA, HOEPA, FCRA, etc.

2:00-2:45 p.m.: State Law Claims

– Fraud-based claims

– Breach of Fiduciary Duty (including appraisers and brokers)

Foreclosure Defense Seminar I Agenda: page 2 of 2

2:00-2:45 p.m.: State Law Claims (continued)

– State Consumer Protection Statutes (e.g. FUDTPA)

2:45-3:00 p.m.: Break

3:00-3:45 p.m.: Discovery and Ancillary Remedies

– Discovery relating to standing, assignments, and parties

– Declaratory Relief, Quiet Title, Summary Judgment

– Attorneys’ Fees and Costs (e.g. Fla.Stat. 57.105, FUDTPA)

3:45-4:30 p.m.: Mediation and Settlement

– Preliminary Considerations: client objectives

– Indemnification and Hold Harmless Agreements, Bond Issues

– Requisites of Formal Written Settlement Agreements

4:30-5:00 p.m.: Representation Agreements, Fee Structures

The foreclosure crisis, along with the general state of the economy, has had far-reaching effects on many, including but not limited to schoolchildren returning to school. Sadly, as a result, many children are returning to school this year as homeless.

Hard Times Hitting Students and Schools

Tyler Bissmeyer for The New York Times

Correction Appended

LOUISVILLE, Ky. — With mortgage foreclosures throwing hundreds of families out of their homes here each month, dismayed school officials say they are feeling the upheaval: record numbers of students turning up for classes this fall are homeless or poor enough to qualify for free meals.

“We’re seeing a lot more children in poverty,” said Lauren Roberts, spokeswoman for the Jefferson County school system, a 98,000-student district that includes Louisville and its suburbs.

At the same time, the district is struggling with its own financial problems. Responding to a cut of $43 million by the state in education spending and to higher energy and other costs, school officials in Jefferson County have raised lunch prices, eliminated 17 buses by reorganizing routes, ordered drivers to turn off vehicles rather than letting them idle and increased property taxes.

The Jefferson County system is typical this school year.

As 50 million children return to classes across the nation, crippling increases in the price of fuel and food, coupled with the economic downturn, have left schools from California to Florida to Maine cutting costs. Some are trimming bus service, others are restricting travel, and a few are shortening the school week. And as many districts are forced to cut back, the number of poor and homeless students is rising.

“The big national picture is that food and fuel costs are going up and school revenues are not,” said Anne L. Bryant, executive director of the National School Boards Association. “We’re in a recession, and it’s having a dramatic impact on schools.”

Louisville’s pain is minor compared with the woes of some cities. Detroit has laid off at least 700 teachers, Los Angeles 500 administrators and Miami-Dade County hundreds of school psychologists, maintenance workers and custodians.

Schools in many states have cut bus stops to save diesel. Districts in California and Ohio have gone further and eliminated bus service either completely or for high schools, leaving thousands of students to find their own way to school.

In Maine, officials worried about the cost of heating their classrooms this winter have restricted travel for field trips to save money. Districts in Louisiana, Minnesota and elsewhere have taken a more radical measure and adopted four-day school weeks. Hundreds of districts, responding to higher food prices, are charging more for cafeteria meals.

In interviews, educators in many states said they were seeing more needy families than at any time in memory. Two charities in suburban Detroit announced in August that they would hand out student backpacks, attracting hundreds of families.

“They went through all 300 backpacks in three hours, boom, and that was that,” said Kathleen M. Kropf, an official in the Macomb Intermediate School District. “We’re seeing a lot of desperate people.”

There were no giveaways for Jacci Murray, 28, a single mother in West Palm Beach, Fla., who said she lost her job six months ago. Ms. Murray bought pencils and crayons for her son, Cameron, who is in the second grade, from a discount bin at Office Depot. Saying she felt “cheap and broke,” she pored fretfully over her school supplies list, afraid to waste gas by making more than one shopping trip.

“It’s been tough this year,” Ms. Murray said. “I’m depressed about school.”

And so are many educators.

West Virginia officials issued a memorandum recently to local districts titled “Tips to Deal With the Skyrocketing Cost of Fuel.” Last week, David Pauley, the transportation supervisor for the Kanawha County school system, based in Charleston, met with drivers of the district’s 196 buses to outline those policies. Mr. Pauley told them to stay 5 miles per hour below the limit, to check the tire pressure every day and to avoid jackrabbit starts.

The Caldwell Parish School District, in northern Louisiana, took a more sweeping approach to saving fuel by eliminating Monday classes. The district joined about 100 systems nationwide, most of them rural, that in recent years have adopted a four-day schedule.

The district’s superintendent, John Sartin, said the move should save $145,000 in a $15 million budget. The decision, made in June, came after crude oil prices had risen for 29 consecutive days, Mr. Sartin said.

“People here worry that they won’t have enough money to last through the month,” he said.

Similar concerns in the Southern Aroostook Community School District in Maine have delayed adoption of the budget.

“We’ve tried to pass it twice, and we’re trying a third,” said Terry Comeau, the superintendent, who has restricted field trips and taken a bus off the road.

Tom Collins contributed reporting from Florida, Joel Elliott from Maine and Sean D. Hamill from Pennsylvania.

This article has been revised to reflect the following correction:

Correction: September 2, 2008

An article on Monday about the financial problems that many schools are having at the same time that some of their students’ families are struggling economically omitted the names of three contributing reporters. Tom Collins reported from Florida, Joel Elliott from Maine and Sean D. Hamill from Pennsylvania.

Courtesy of the New York Times…

Alabama county mulls bankruptcy; could be largest failure in history

With irresponsible borrowing and excessive leverage threatening the financial well-being of so many families, at least one county may be joining them in the soup line.

Jefferson County, Alabama, with a population of 662,047, according to the 2000 U.S. Census, is preparing for a possible bankruptcy filing, according to The New York Times.

The culprit? $3 billion in bonds with rapidly escalating interest rates resulting from the exact same short-sighted financial planning that got so many home owners into trouble: adjustable rate loans (In this case, auction rate securities) that require higher interest payments as interest rates move up. The current turmoil in the credit market has sent the county’s rates as high as 10%.

Town officials told the Times that a bankruptcy filing is not a sure thing and that efforts to negotiate with the creditors, Citigroup (NYSE: C) and JPMorgan (NYSE: JPM) have “some likelihood to work.” If it doesn’t, this will be the largest municipal bond default in U.S. history, and will etch Jefferson County’s name in the annals of infamy alongside Orange County and the Washington Public Power Supply System.

More bad news: more trouble ahead for numerous banks means increased worries for homeowners

FDIC Says At-Risk Banks at 5-Year High

By MARCY GORDON

AP

WASHINGTON – U.S. banking industry profits plunged by 86 percent in the second quarter and the number of troubled banks jumped to the highest level in about five years, as slumps in the housing and credit markets continued.

Federal Deposit Insurance Corp. data released Tuesday show federally-insured banks and savings institutions earned $5 billion in the April-June period, down from $36.8 billion a year earlier. The roughly 8,500 banks and thrifts also set aside a record $50.2 billion to cover losses from soured mortgages and other loans in the second quarter.

The FDIC said 117 banks and thrifts were considered to be in trouble in the second quarter, up from 90 in the prior quarter and the biggest tally since mid-2003.

“By any yardstick, it was another rough quarter for bank earnings,” FDIC Chairman Sheila Bair said in a statement. However, the results were not surprising “as the industry coped with financial market disruptions, the housing slump, worsening economic conditions and the overall downturn in the credit cycle,” she added.

Total assets of troubled banks jumped from $26 billion to $78 billion in the second quarter, the FDIC said, with $32 billion of the increase coming from IndyMac Bank, which failed in July — the biggest regulated thrift to fail in the United States.

The $50.2 billion set aside to cover loan losses in the April-June period was four times the $11.4 billion the banking industry salted away a year earlier. Nearly a third of the industry’s net operating revenue went into building up reserves against losses in the latest quarter, according to the FDIC.

Except for the fourth quarter of 2007, the earnings reported Tuesday were the lowest for the banking industry since the final quarter of 1991, the agency said.

Concern has been growing over the solvency of some banks amid the housing slump and the steep slide in the mortgage market. The pressures of tighter credit, tumbling home prices and rising foreclosures have been battering banks of all sizes nationwide.

The FDIC has been keeping an especially close eye on banks and thrifts with high levels of exposure to the riskiest borrowers and markets, agency officials say, including subprime mortgages and construction loans in overbuilt areas.

Troubled assets — loans that are 90 or more days past due — continued to rise in the second quarter, jumping by $26.7 billion, or 19.6 percent, over the first quarter. It was the first time since 1993 that the percentage of total loans that were troubled broke 2 percent, at 2.04 percent.

The FDIC doesn’t disclose the names of institutions on its internal list of troubled banks. On average, 13 percent of banks that make the list fail.

Nine FDIC-insured banks have failed so far this year, compared with three in all of 2007. More banks are in danger of collapsing this year, agency officials say, and they expect turbulence in the banking industry to continue well into next year.

“More banks will come on the (troubled) list as credit problems worsen,” Bair said. “Assets of problem institutions also will continue to rise.”

Pasadena, Calif.-based IndyMac was taken over by the FDIC on July 11 with about $32 billion in assets and deposits of $19 billion. It was the second-largest financial institution to close in U.S. history, after Continental Illinois National Bank in 1984.

Its failure is expected to cost the federal deposit insurance fund, currently at $53 billion, between $4 billion and $8 billion.

Last week, the FDIC announced a program under which thousands of troubled home borrowers with loans from IndyMac will be able to switch into 30-year, fixed-rate mortgages with interest rates capped at around 6.5 percent, in what could be an important test case for future bank resolutions.

FDIC officials have said the agency expects to raise insurance premiums paid by banks and thrifts to replenish its reserve fund after the payout to depositors at IndyMac.

Copyright 2008 The Associated Press.

This is a great article about the foreclosure-related mismanagement/abuse relfected in lawsuits being brought against lending giant Countrywide, one of several lenders recently embroiled in controversy. As the saying goes, “the bigger they are…”

NEW YORK (Reuters) – Countrywide Financial Corp, which was the largest U.S. mortgage lender before being acquired by Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz), faces a Federal Trade Commission probe into whether its loan-servicing activities violated federal law.

Countrywide in its quarterly report filed on Monday with the U.S. Securities and Exchange Commission said the FTC has issued civil investigative demands requiring it to provide documents.

It said the agency is assessing whether activities related to Countrywide’s $1.49 trillion servicing portfolio, covering roughly 9 million borrowers, violated laws the agency administers.

FTC spokeswoman Claudia Bourne-Farrell confirmed that the agency had begun a probe but she did not elaborate. Servicers handle billing and payment collections.

The FTC probe adds to legal headaches for Bank of America, which last month paid about $2.5 billion to buy Countrywide.

California, Connecticut, Florida and Illinois have all sued Countrywide over its lending practices. Countrywide also faces U.S. Department of Justice lawsuits accusing it of abusing or mismanaging the bankruptcy and foreclosure processes.

Charlotte, North Carolina-based Bank of America last week said Countrywide also faces a formal SEC probe. This concerns whether former Countrywide Chief Executive Angelo Mozilo violated insider trading laws and whether Countrywide’s financial disclosures misled investors, the Los Angeles Times said.

Separately, Countrywide is under investigation by the FBI, authorities have said. That agency last month said it had 21 corporate targets in its probe of potential corporate fraud in the mortgage industry.

Calabasas, California-based Countrywide said the Justice Department cannot confirm or deny whether the FBI is investigating the company. The Justice Department could not immediately be reached for comment.

(Reporting by Jonathan Stempel; Additional reporting by Diane Bartz in Washington, D.C., editing by Mark Porter)

Thanks to Reuters (Washington) for their coverage of this important issue.

The Federal Deposit Insurance Corp has temporarily halted any foreclosures on the $15 billion of bank-owned mortgage loans found in IndyMac’s portfolio, FDIC Chairman Sheila Bair said on Monday.

Bair has scolded mortgage lenders for being too slow to help distressed borrowers restructure their home loans.

“Modified loans will be worth more than foreclosed loans,” she said in an interview on CNBC television.

IndyMac, which the FDIC took over after it failed on Friday, had a $200 billion mortgage servicing portfolio.

Bair has repeatedly urged the mortgage industry to refinance loans rather than foreclose on properties when borrowers fall behind on their payments.

She said the “overwhelming majority” of U.S. banks are “safe and sound.”

Capital levels are strong at U.S. banks, but she warned that the industry will see the number of troubled banks and failures grow in the coming months.

“The number is going to go up,” Bair said. “Banks do fail and there’s nothing unusual about that.”

She declined to comment on a RBC Capital Markets report on Sunday that said 300 U.S. banks might fail over the next three years because of credit losses and tight capital markets.

But Bair said U.S. banks were well-positioned going into the credit crisis and will continue maintaining strong capital levels. “They’re still in a very good position to weather it.”

  (Reporting by Karey Wutkowski; Editing by Tim Dobbyn)

Back in April, we were receiving many calls from borrowers who either had been sued for foreclosure (in what are known as “judicial” foreclosure states), or where a Trustee’s Sale was in the works (in what are known as “non-judicial” states). The bulk of these calls were from borrowers who intended to represent themselves based on what they had learned from one or more blogs or other sources on the Internet, and who were seeking a legal opinion to validate what they had learned on the Web. All such callers were advised of the dangers of representing themselves in legal proceedings. However, most of these callers said that they felt comfortable representing themselves.

Now, in early August, many of these same borrowers are calling us frantically seeking assistance because they have gone as far as they can go in defending their foreclosure by themselves, in certain instances telling us that they were either laughed out of court or were told by the Judge to get an attorney. In other situations, borrowers who are not attorneys and are thus not familiar with court rules or Rules of Civil Procedure have impaired their defense by simultaneously filing a Motion directed to a perceived problem with the foreclosure proceeding and a formal Answer to the proceeding as well. Doing so is inconsistent, and tells the Judge that your Motion was not well grounded and that you don’t know what you are doing. This also wastes the Judge’s and Court’s time.

Judges are extremely busy people, and work in an environment where they are used to dealing with attorneys who are skilled in court procedure and the law. This permits the court system to function as a fairly well-oiled machine. Throwing a “pro se” party into the system causes delay, confusion, and aggravation on the part of those who work in the system on a regular basis. Although most Judges do accommodate pro se parties to an extent, everyone has their limits. In one case we are involved in, the Judge finally told the self-represented party that he had gone far enough and to get an attorney, period.

An additional problem with representing yourself in a foreclosure defense proceeding is that you may wind up filing something that actually hurts your case and helps the party who is trying to take your house away, or missing a procedural matter which, if properly presented through an attorney, could help your case. Attorneys have spent years developing the right kind of eyes to examine lawsuits and court filings. Dabbling in the law is like trying to dabble in brain surgery: one wrong move and the whole system winds up being disabled, paralyzed, or dead (as your defense may wind up).

Finally, bringing your case to an attorney when you may have already damaged it is going to require more work on the part of the attorney in less time, which is going to be more expensive to fix. Trying to undo a problem is always more difficult than preventing it in the first place. Foreclosure victims should thus think at least twice, and probably more, before deciding to represent themselves in a foreclosure.

Jeff Barnes, Esq.

e-mail: [email protected]

One of the popular catch-phrases being bandied about these days in the context of mortgage foreclosure defense is “my loan has TILA violations.” The acronym TILA refers to the Federal Truth-In-Lending Act, a significant body of Federal consumer protection legislation which provides detailed disclosure requirements which must be made by lenders in certain types of transactions, including mortgage loans. TILA also contains provisions relating to remedies for violations. However, TILA is only one of the many Federal laws applicable to mortgage loans, and your loan may have violations of other Federal lending laws as well.

In order to ascertain whether a particular mortgage loan complied with all required Federal lending laws, an audit of the loan documents may be performed. The audit is a detailed review of all of the transactions which were part of the mortgage loan: disclosure of fees and costs, nature and purpose of disbursements, disclosure of all necessary terms and provisions of the mortgage transaction, and the like. To properly perform such an audit requires training and experience in the examination of loan documents, a working knowledge of the Federal lending laws, and an eye for particularized violations of these laws.

These audits, if properly performed, can and have proven to be very valuable in mortgage foreclosure defense. An attorney often does not have the time to devote to an examination of a client’s loan documents and, being an attorney and not an auditor, may not have the right eyes to pick up on all of the particular violations within a set of loan documents which a trained and experienced auditor is able to see and in less time.

A proper audit can greatly assist your attorney with your foreclosure defense, saving the attorney many hours trying to find what the auditor can find in a fraction of that time. The audit also provides the attorney with pinpointed violations as to specific provisions of the detailed Federal lending laws, which will aid the attorney in drafting court papers in the defense of a mortgage foreclosure proceeding.

The problem is that there are many people who are suddenly holding themselves out as “mortgage loan auditors” who have little or no training or experience in performing such audits, having simply located some information on the Internet and now believe that they are qualified to perform an audit. Utilizing an unqualified auditor may wind up not only costing you significant dollars, but may impair your foreclosure defense as well.

Thus, before retaining an auditor, ask for and check on his or her qualifications, training, and experience. Choosing the right auditor can be worth its weight in gold, while choosing the wrong one could cause your defense to have a faulty foundation and also result in the loss of potentially significant remedies to assist you in saving your home and the loss of claims to seek recovery of money damages from the violating lender(s).

Jeff Barnes, Esq.

e-mail: [email protected]