The Usual Suspects

Posted April 22nd, 2008 by Joe Kaiser

With only two days left, you can't call the lender, according to David Huey.

Dear Rob,

We talked yesterday about why someone in foreclosure would do a leaseback type deal, receiving “no money.”

Does this type of deal really make no sense, compared to losing one’s home to foreclosure?

What if foreclosure is in 48 hours or less?


“No sense”

AAG Jim Sugarman suggested the leaseback deal only makes sense because of the opportunity to rebuy the property at a later date.

sugarman.png

The only reason someone would sell their house for no money is because they were promised the opportunity to buy it back . . . because otherwise, it makes no sense at all. — Jim Sugarman

Has he really taken a long hard look at the alternative (losing your home), particularly with foreclosure 48 hours away?


Irrational behavior

Northwest Justice Project Attorney Eric Dunn, HB 2791 co-author, in his letter to the editor to the Seattle Post Intelligencer, says . . .

ericdunn.jpg

. . . no rational homeowner would knowingly enter into one of these transactions . . .— Eric Dunn

Not true.

Plenty of rational homeowners would love the opportunity to enter into one of these transactions if the alternative is they lose their home tomorrow. With 48 hours or less to solve their foreclosure problem, there’s nothing remotely unfair about this sort of deal.

What’s unfair, frankly, is telling them you know what’s best for them and in your opinion, this option to save their home isn’t a viable solution to foreclosure so you’ve decided to ban it.

They’re not rational for considering it?

Says who?

Certainly not the people facing the loss of their homes. And, even more certainly, those same people three weeks later when the sheriff shows up to toss them out on the street.


Foreclosure is better

Or, is Eric suggesting, as Representative Patricia Lantz has, that losing one’s home to foreclosure is somehow a better choice?

. . . foreclosure would be preferable to the distressed property conveyance. — Patricia Lantz

Good grief, Rob, your bill’s prime sponsor is operating under the delusion that foreclosure is better. That’s her solution?

Is it any wonder this thing has gotten so far off-track?


Workouts work?

So what do you suggest someone do with 48 hours or less to save their home?

badhairday.jpg

The other approach that we can be taking is the one that we are taking which is to set up a a program so that people who are ugh, you know, behind in their payments and maybe about to go into foreclosure or actually are in foreclosure can call and seek some counseling, some advice. — Attorney General Robert M. McKenna
KUOW Radio, March 9, 2008

Okay, except that . . .


Workouts don’t work

Attorney Melissa Huelsman argues that contacting lenders and attempting to put together foreclosure workouts is often a complete waste of time and a “very false notion”, saying . . .

. . . most lenders, not all, but most lenders and most servicers are not actually working with homeowners, they are not doing workouts, and people are going to lose their homes . . . — Attorney Melissa A. Huelsman
LegalTalkNetwork.com

And Huey confirms . . .


Don’t bother

In the recent Seattle Weekly article Sold Out, AAG David Huey suggests you should contact a U.S. Department of Housing and Urban Developmentā€“approved counseling agency before things get too bad, except that . . .

david-huey.jpg

You can’t call two days before foreclosure. — Assistant Attorney General David Huey


What to do?

So, at least according to the usual suspects, with 48 hours or less until one’s home is lost to foreclosure. . .

  • Doing a leaseback type deal, the very deal targeted by HB 2791, makes “no sense,” unless you’re guaranteed you can afford to buy it back, according to Jim Sugarman.
  • That type of deal is inherently “unfair” and any homeowner choosing a leaseback solution is irrational, according to Eric Dunn.
  • The better alternative is to lose your home to foreclosure, according to Pat Lantz, because that type of deal can only be a scam.
  • You should get consulting and learn how to work things out with your lender, according to Rob McKenna.
  • Trying to work things out with your lender is pretty much a waste of time, according to Melissa Huelsman.
  • With only two days left, you can’t call the lender, according to David Huey.

Confused?

Me too.

I suggest sorting out the confusion prior to creating new legislation to address the very problem you’re confused about might have been something to consider.


No meaningful solution

Notice anything missing?

With 48 hours remaining until foreclosure happens, your office can offer no real solution to people in foreclosure. None.

Well, none, that is, unless we accept Pat’s crazy notion that foreclosure itself is a viable solution to foreclosure. No rational person believes foreclosure is the solution to foreclosure, Rob.

And, while it would be great to be able to get people to take action much sooner in the process, they won’t. It’s a basic foreclosure dynamic your office either doesn’t understand or refuses to acknowledge.

Reality, though, is difficult to avoid, and in the end people will still be hanging with 48 hours left to go until some lender takes their home away.


Solutions o’ plenty

Since you can offer no solution, Rob, might I make a suggestion?

Maybe they could just call me?

Because we all know what happens when they give the Real Estate Equalizer a call, don’t we?

We all know those families today are snug as a bug in a rug. Yes, all 24 of them, saved from foreclosure.

I’d like to be able to help people facing foreclosure, they’d like my help, and collectively, we wish you’d get out of our way so I can save their homes.

In the arena,

Joe Kaiser


8 Responses to: “The Usual Suspects”

  1. Jim K responds:
    Posted: April 22nd, 2008 at 11:43 am

    Joe,

    I think your next post should be about educating all these lawyers about law.

    Have they never heard of the Constitution?

    I’d have them check out the Due Process clause of the 14th amendment so that they understand your constitutional right to freely contract and that they understand that it’s not a right that the state can take away.

    Personally, I’d just ignore their silly little unconstitutional law and keep on doing deals.

    What can they do, sue ya?

    Jim

  2. DaveD responds:
    Posted: April 22nd, 2008 at 5:21 pm

    I THINK JIM NAILED IT. At the end of the day, BOTH the homeowners and your constitutional rights have been stomped on. Consumer protection? Nonsense! It doesn’t get any clearer than this.

  3. Loya responds:
    Posted: April 22nd, 2008 at 10:04 pm

    Sue the bastards!

  4. Drew Hitt responds:
    Posted: April 22nd, 2008 at 10:06 pm

    Joe,

    What does Rob McKenna suggest homeowners do when talking to their bank about their loan, and their lender says give us 50% of what you owe and we’ll modify your loan. If these people had that money they wouldn’t be in this situation. Who’s going the write the big checks then? Government grants funded by tax payers? Last time I checked, investors write big checks, the government just spends them…

    God forbid the bank refuse to work with the homeowner, what’s the next step then Rob? Just let it foreclosure and ruin their credit for 7 years? I hope that isn’t legal advice…

  5. Joe Kaiser responds:
    Posted: April 23rd, 2008 at 10:51 am

    Seems like more of a “taking” issue, but I don’t know.

  6. Davido responds:
    Posted: April 23rd, 2008 at 11:03 am

    Excellent post Joe! You put it all together admirably.

  7. Ignacia Ramirez responds:
    Posted: April 23rd, 2008 at 10:09 pm

    You don’t have a constitutional right to rip people off.
    These people who’s pictures you are putting on your website — it seems they are all consumer protection lawyers. Why would they be against these foreclosure deals if the transactions weren’t so bad?
    Also, I’m not sure you should be putting their pictures on your blog. I can’t image you have their permission to do it, based on what you are saying about them. Where did you get the pictures from, anyway?

  8. Joe Kaiser responds:
    Posted: April 24th, 2008 at 11:05 am

    Suggesting all consumer protection lawyers are honest is akin to suggesting all foreclosure investors aren’t. Pretty silly.

    And spare me the “you don’t have the right to rip people off.” Equally silly.

    They’re against foreclosure rescue transactions because they have no appreciation for what happens in foreclosure.

    Anytime someone suggests, with a straight face, that foreclosure is a viable alternative to foreclosure, you can pretty much cross them off your list of people who know what they’re talking about.

    Joe


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