Homehowners Struggling Against Foreclosure

Due to their role in the housing bubble and an ensuing economic collapse, several big banks have discussed large settlement deals with the Department of Justice. The historic settlements look promising on the surface but a study by Denbeaux & Denbeaux Law Firm shows why struggling homeowners need not hold their breath as they wait for relief.

The report, in the name of “Mortgage Fraud” has found that homeowners from New Jersey subject to the first Agreement made by the Attorneys General were not made aware or appraised by Wells Fargo that they had the protections as well as the right to the promised modifications that were contained in the California Class Action Settlement. The report indicates that instead, the homeowners were sent the new settlement agreement that contained promises as well as protections they already had and a check worth $178.04 in exchange for all their rights and defenses.

The report goes ahead to claim that Wells Fargo has perpetrated an endless cycle of deceptive, misleading and exploitative practices. “It’s all about enforcement by the states, and truthfully, New Jersey’s Attorney-General hasn’t made homeowners a priority,” said Josh Denbeaux, who is a partner in the firm. “Wells Fargo was allowed to revoke the terms of the original settlement for homeowners in New Jersey by brokering another deal where homeowners surrendered their rights to legal action in exchange for $178.04.”

Advocates of housing and anti-foreclosure point out that out of court settlements usually protect the banks from exposing their ill lending practices through the discovery of evidence in courts. This is the reason as to why NJ Communities United issues a series of policy recommendations that New Jersey State needs to consider so as to provide relief to the homeowners who have been victimized by predatory lending as well as doubtful foreclosure practices.

All that said, foreclosure notices do not always necessarily mean that you will lose your home. Sometime an owner only need to pay what is owed and they keep their home from being auctioned the next month. This is according to another report by Kennesaw-based Equity Depot. A precise number of the actual foreclosures are not available but Equity Depot roughly estimates that half of the properties that get foreclosure notices end up being sold.

The number of foreclosure notices, whether the homeowners end up losing their house or not, has been seen as a general indicator of stress present in the housing market, which also translates to stress in the economy. This is a signal of the trouble that homeowners are having while making their mortgage payments.