Wednesday, September 12, 2012

PNC Bank: Miscommunication or Mortgage Loan Modification Fraud?

As an attorney who assists borrowers with mortgage relief, loss mitigation, and foreclosure matters, I have dealt with many mortgage loan servicers and lenders, and come across all sorts of outrageous situations.   Unfortunately, PNC may have added itself to the list of mortgage loan servicers behaving badly.   Whether this situation involves intentional fraud and deceit as opposed to shockingly bad communication skills remains to be seen.

To briefly summarize, we obtained a mortgage loan modification from PNC on behalf of one of our clients.  That loan modification offer specifically states, in writing, that accepting the modification (verbal acceptance qualifies, according to PNC) by August 2 and making the first payment by September 1 would cause PNC to “suspend foreclosure”.  The offer warned that failure to comply, however, may result in foreclosure proceedings continuing.   

PNC had been instructed to communicate with us as opposed to our client but of course, ignored that instruction and sent the modification offer directly to our client, who only received it a few days before the August 2 acceptance deadline.   On July 30, we contacted PNC and accepted on behalf of our client.  However, PNC stated that it would not acknowledge our acceptance, despite long knowing that we were involved in the case and having a properly executed limited power of attorney/third party authorization on file.  On July 31, our client called directly and accepted the modification offer.  The acceptance of the modification offer was in reliance on PNC’s specific statements in the offer that the foreclosure would be then be “suspended”.

The payment due by Sept 1 was made in full and on time, by way of certified bank check and certified US Mail, return receipt required and obtained.  However, despite the written agreement, PNC is refusing to suspend the foreclosure process, including this client’s foreclosure hearing which remains scheduled for later this month.  It should be noted that the point of a foreclosure hearing in North Carolina is for the mortgage loan servicer/lender to get final permission to sell the home pursuant to a foreclosure sale.

When confronted with the fact that it is refusing to suspend foreclosure despite making a legally enforceable offer to do so upon acceptance of the modification proposal, PNC stated “it is not our policy to stop foreclosure proceedings until a modification is final.”  This, of course, is in complete contradiction to the written and legally binding offer PNC made to the client and the client accepted.  Making a false promise in order to get an opposing party to agree to something is commonly referred to in the legal field as “fraud in the inducement”.   In other words, one party makes a fraudulent promise in order to deceive the other party into agreeing to something that otherwise might not be agreed to.

So, PNC, are you engaging in fraudulent conduct or is this simply another “miscommunication”?

McGrath & Spielberger, PLLC provides assistance to borrowers in need of mortgage relief services, such as mortgage loan modification, foreclosure negotiation, refinancing, and deed-in-lieu or other negotiated settlement resolutions.


Friday, September 7, 2012

Will a Foreclosure Start or Continue While a Modification or Other Mortgage Relief Request is Pending?

Will a Foreclosure Start or Continue While a Modification or Other Mortgage Relief Request is Pending?

One of the most common questions that I and other lawyers in my firm are asked by borrowers is weather a foreclosure action will start or commence even if the borrower is supposedly being considered for a mortgage loan modification or other type of mortgage relief such as a forbearance plan, a short sale, or a deed in lieu of foreclosure.  Of course a relevant and important follow up question is why lenders continue to foreclose even if a mortgage relief option is supposedly in the works.

Unfortunately, in almost every circumstance, a mortgage lender/servicer such as Bank of America, Citibank, Chase, GMAC, and Wells Fargo will commence or continue foreclosure activities even while representatives of such loan servicers continue to tell the borrower that they are being considered for a modification, or even on the verge of receiving a final mortgage relief offer.  Many of our clients have expressed that they feel as though the lender is dangling a carrot out in front of them with the one hand, while whipping them with the other.   Many borrowers have expressed that they feel as though lenders are intentionally leading them on about the possibility of a mortgage relief option, just so the borrower is lulled into a false sense of security while the lender continues to foreclose.

I have one very important suggestion for you. I have handled numerous cases in which the mortgage lender or servicer has actually, from its standpoint, halted or even dismissed a foreclosure action but has either failed to communicate that to its foreclosure lawyers or to the borrower or the attorney for the borrower.  If you are facing foreclosure, be sure to attempt to have direct contact with the entities who are prosecuting the foreclosure, or have your attorney do the same if you are represented.  It is important to – as best as you can – make sure that you are as well informed as possible. Yes, of course, getting information out of these lenders is almost impossible at times, but it is important that you keep making the effort. 

In order to be fair, we have to consider the reasons why mortgage loan lenders and servicers may continue to foreclose even though mortgage relief options are being considered.  As in almost all legal matters which involve opposing sides, one side may wish to impose pressure on the other in order to get what it wants.  From a strategical perspective, an attorney advising the lender may very well advise the lender to keep the pressure on for a number of reasons.  Since some borrowers are unable to comply with the terms of a mortgage relief opportunity, and others simply turn down opportunities for mortgage relief, the bank may be best served by continuing a foreclosure action until a mortgage relief option is finalized.  Keep in mind that the banks can typically take a situation to the very edge of a foreclosure sale yet not execute that sale if some final resolution short of foreclosure can be reached.

Let me make one final comment on this topic.  You should be aware that there are numerous prohibitions against foreclosure under certain circumstances.  These prohibitions may be found in federal law, state law, federal government program guidelines, court orders, court settlements, etc.  Further information on this specific topic will be provided in future blog posts, including those which discuss prohibitions against foreclosure contained within the Making Home Affordable program, as well as pursuant to the National Mortgage Settlement/Department of Justice Settlement. 

McGrath & Spielberger, PLLC provides assistance to borrowers in need of mortgage relief services, such as mortgage loan modification, foreclosure negotiation, refinancing, and deed-in-lieu or other negotiated settlement resolutions.

Thursday, September 6, 2012

Attorney McGrath Comments to NC Bar on Proposed Ethics Opinions

The following letter was sent today from attorney Jason A. McGrath to the NC Bar Ethics Committee.

Regarding: Attorney Commentary Regarding Proposed 2012 Formal Ethics Opinion 6 and Proposed 2012 Formal Ethics Opinion 8  

Dear NC State Bar Ethics Committee: 

By way of background, I am a NC licensed, Charlotte-based lawyer and have been practicing law since 1996. I am licensed in three (3) states and in federal court, am a member of the American Bar Association’s E-Lawyering Task Force, and was one of the first practitioners in North Carolina to incorporate a virtual law practice in conjunction with a traditional practice.  I have a particular interest in the issues addressed in these two proposed FEOs.  I write to offer commentary with regard to the above named proposed Formal Ethics Opinions.  As always, thank you for considering this input. 

Proposed 2012 FEO 6: Use of Leased Timeshared Office Address or Post Office Address on Letterhead and Advertising 

I would ask the Bar to consider clarifying a potential inconsistency between two of the paragraphs under Inquiry and Opinion #1.  The third paragraph indicates that it would be misleading for a law firm to use such an address to infer that the law firm has an address or a lawyer located in that community if that is not the case on an ongoing basis.  The last paragraph under Opinion #1 implies that this may not be misleading as long as the disclosure is made that the law firm’s presence at the address is “by appointment only” or something similar.  By my reading of the current language, I am left with a great deal of uncertainty. 

I think that the intent is to allow a law firm without a constant presence in a community to still use an address in that community as long as the same is disclosed to be “by appointment only” or something similar (and, obviously, as long as the information conveyed is, in fact, true and not misleading).  If this is, in fact, the intent, then I completely agree with the Bar’s intent, and would respectfully suggest that the Opinion be clarified. 

With regard to Inquiry and Opinion #2, I would respectfully suggest that some clarifications be made to bring it into accord with the final language included in Inquiry and Opinion #1.  For example, if an attorney lives in Raleigh, would it be a problem for that attorney to have a post office box in Durham listed as an office address?  If the post office box is not in the same municipality in which the lawyer does the bulk of the lawyer’s actual work, must some sort of additional disclosure be made, similar to the spirit of the disclosure discussed with regard to Inquiry and Opinion #1?  

Proposed 2012 FEO 8: Lawyer’s Acceptance of Recommendations on Professional Networking Website 

I appreciate the practical and realistic approach that the North Carolina Bar seems to have taken toward the advances in technology, including communications, which are an inextricable part of our society today.  I believe that proposed 2012 FEO 8 is well written and applaud its brevity. 



                                                                                                Jason A. McGrath, Esq.