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Foreclosure Secrets Guide

The Definitive Step-By-Step Guide To Stop A Foreclosure In Process And Keep The H o u se
The Most Advanced Foreclosure Information Ever Created Just For Mortgage-Stressed Homeowners
Reviewed, Tested and Updated on March 16, 2009

The Foreclosure Secrets Guide


WHAT TO DO WHEN YOU ARE LOOSING YOUR HOUSE

Alfonso Inclan
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Foreclosure Secrets Guide

Copyright Notice
MMVIII Alfonso Inclan and Orbis Marketing, LLC. This eBook contains material protected under International and Federal Copyright Laws and Treaties. Any unauthorized use, sharing, reproduction or distribution of these materials by any means, electronic, mechanical, or otherwise is strictly prohibited. No portion of these materials may be reproduced in any manner whatsoever, without the express written consent of the publisher. This eBook is published under Copyright Laws of the Library of Congress and The United States of America by: Alfonso Inclan and Orbis Marketing, LLC. All questions and inquiries should be directed to the contact information found on http://www.foreclosureinprocess.com/home.html

Limits of Liability & Disclaimer of Warranty


The information in this eBook is distributed on as is basis without warranty. While every precaution and the best effort have been taken in the preparation of the eBook, the author and publisher shall in no event have no liability to any person or entity with respect to any loss or damages, including but no limited to special, incidental, consequential or other damages caused or alleged to be caused directly or indirectly by the instructions contained in this book. The author and publisher make no representation or warranties with respect to accuracy, applicability, fitness, or completeness of the content of this eBook. They disclaim any warranties (expressed or implied), merchantability or fitness for any particular purpose. As always, the advice of a competent legal, tax, accounting, or other professional should be sought. The author and publisher do not warrant the performance, effectiveness or applicability of any sites or resources listed in this manual. All links are for information purposes only and are not warranted for content, accuracy or any other implied or explicit purpose. In no way should any of this information be considered a source of legal or accounting advice.

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Foreclosure Secrets Guide

TABLE OF CONTENTS
E-BOOK COVER COPYRIGHT NOTICE.. TABLE OF CONTENTS INTRODUCTION.. Chapter 1 ALL THE SOLUTIONS YOU MAY HAVE TYPES OF HOME LOANS.. UNDERSTANDING ARMS........................................ THE PROMISSORY NOTE. THE DIFFERENCE BETWEEN MORTGAGE AND DEED OF TRUST.. Chapter 2 REFINANCE. Reverse Mortgages. Hard Money Loans. NEGOTIATE. A key for successful negotiations........ ALL THE KNOWN WAYS TO NEGOTIATE........................................ Mortgage Modification.... Forbearance...... FHA Forbearance. Full Reinstatement... Repayment Plan... Acceptable Reasons for Delinquency. Hardship Letter... Hardship Letter example # 1... Hardship Letter example # 2... FHA Partial Claim... Freeze the rate.. FHASecure.. Veterans Administration Loans... Assistance for Service Members on Active Duty.... SHORT SALE... Short Refinance... Short Payoff................. How to Qualify for a Short Sale............... You Must Know about the Deficiency Liability.. DEED IN LIEU.. 19 20 20 21 23 24 25 27 28 29 29 30 31 32 33 34 37 38 42 42 43 45 45 46 47 48 9 10 12 14 15 1 2 3 6

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Chapter 3 FORECLOSURE.. The Foreclosure Process.. 1. In Default. 2. Notice of Default (NOD). 3. Notice of Sale (NOS)... 4. Foreclosure Sale.. 5. Post-Foreclosure.. Redemption Period after Auction Sale Eviction... Beware of Foreclosure Scams. Unscrupulous investors... Foreclosure Counseling Agencies... Chapter 4 LEGAL DEFENSES OF A BORROWER Predatory Lending... Signs of Predatory Lending Lender Defense The Scariest Thing Lenders They Dont Want You To Know.. Being Practical... Validation of Debt.. Sending the Request.. Disclaimer.. Validation of Debt Example.. Lender Response Notice of Insufficient Validation Example FTC and HUD Complaint.. How To Submit a RESPA Complaint Workout Proposal... Trustee Defense... Notice of Validation Example Trustee Response... Notice of Insufficient Validation Example Court Litigation... Non-Judicial Foreclosures.. Court Complaint. Complaint Example Judicial Foreclosures.. Defendants Motion to Dismiss Example Court Hearing. Court Hearing Questions and Responses Example MERS.
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53 53 53 54 55 56 57 57 58 59 59 59

61 63 64 66 69 71 73 74 75 77 79 80 81 82 84 85 88 90 91 93 94 95 96 99 100 105 107 109

Foreclosure Secrets Guide


Wrongful Foreclosure Action So, What Happens if the Lender Didnt Transfer my Loan?..................... Chapter 5 BANKRUPTCY Types of Bankruptcies. Chapter 13... Things Needed to Qualify for Chapter 13... Chapter 7. Tax Liability Exclusion Law... Things Needed to Qualify for Chapter 7 Automatic Stay Motion to lift Stay... Objection to Relief From Stay .... Defendants Objection to Relief From Stay Example...... Chapter 6 ADDITIONAL SOLUTIONS SHORT PAYOFF. IMPROVE YOUR INCOME RENT TO OWN... TRANSFER OF THE PROPERTY.. RAFFLE ALLODIAL LAND TITLE OR LAND PATENTS. Chapter 7 WHAT HAPPENS TO YOUR CREDIT.. CONCLUSION. RESOURCES

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116 118 118 118 119 119 120 122 123 123 125

130 132 134 135 136 137

142 143 144

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INTRODUCTION

Repossessions of homes by lenders are expected to go up by 50% in 2008 as a result of the credit crunch, according to the Council of Mortgage Lenders. RealtyTrac.com reported 1,285,873 properties with Foreclosures Filings in 2007 nationwide. 58% of these repos will be in 2008 from subprime loans or loans with variable (adjustable) terms. Repossessed properties are resold by lenders at foreclosure auctions. When this is done in massive transactions along with houses stuck in the market for non-selling, the market sinks drastically. Seasoned Investors are expecting a huge decrease in house prices for the next 2 or 3 years, and my personal expectations are that after we reach the very deep bottom, the house prices will start rising very, very slow the next 5 years after. So, expect at least 8 years of slow market from now. Sincerely, I really think we are going to see a relief in the real estate market maybe in 10 years at least! (That if we dont have any other national catastrophic impact in the meantime) So, if you are facing a rise in your monthly payment due to a change in your variable rate term, or simply you cant pay, first of all, dont panic. You just need to know what to do. I hope that after reading this book you can sleep better and get some understanding to this rough situation. Before you read this book, let me tell you that I am not an attorney, accountant, tax advisor or real estate guru, giving legal, tax or financial advice. This book definitively is not a substitute for the advice of a competent attorney. Although I am a Financial Educator in the State of Arizona doing Foreclosure Consulting, Residential and Commercial Loans, Mortgage Training and Consulting, Real Estate investments, Business Coaching, Marketing and Credit Counseling since 2002, I do not claim to give you legal advice in this book to your specific circumstances. What you are just going to read is what I have seen in many cases every day at my offices in Gilbert and Phoenix, AZ, working closely with clients, and even with some personal cases. All of these situations directed me to research, ask, study, learn, apply and verify step by step most of the solutions you will learn as well. Many of the strong solutions you will find in this book, Ive been using them since years before with excellent results under the protection of federal and state laws that you can enforce too in the same way.

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Foreclosure Secrets Guide


Take in consideration that all the suggestions written in this book are the things I would do personally in that same situation. I decided to come at this computer and write this book as a result of that so many calls I still receiving EVERY DAY asking for the very same questions every time: My payment is rising!!! Has my house drop down in value? I couldnt refinance!! Can I sell??? Can I buy another house and walk away from the one I have right now? Nobody could, but would you refinance my house??? Can I still make a profit?? What can I do??!!!

First and foremost, my first recommendation before reading this guide is to pray first with all your heart asking God for wisdom and discernment (James 1:5) to find and understand the best solution within this book. Then, read this book from the beginning to the end at once, so you can have a general idea. After that, read it again; I REPEAT, READ IT AGAIN. And at this second reading, do it very, very slow so you can better learn and understand all this Foreclosure Process, taking as many notes as you can. Then, apply what you decided the best option is for your case. Finally, dont stop learning. Keep improving your financial IQ, forever. Sincerely, Alfonso Inclan Financial Educator and Credit Analyst Gilbert, Arizona February, 2008 alfonso@foreclosureinprocess.com http://www.foreclosureinprocess.com/home.html http://www.alfonsoinclan.com

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Foreclosure Secrets Guide

Chapter 1

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ALL THE SOLUTIONS YOU MAY HAVE When a borrower is facing the monster of Foreclosure, having the power of knowledge will make him feel more secure in every step to make. For every problem there is a solution. The solutions to stop or delay a Foreclosure are the following: 1. Refinance 2. Negotiate 3. Sell 4. Give back the property (Deed in Lieu) 5. Legal Defense 6. Bankruptcy The recommended additional solutions are: 7. Short Payoff 8. Improve the income 9. Rent to Own 10. Transfer the property 11. Raffle the house It is fundamental also that the borrower study and learn every step of the Foreclosure Process. A deep understanding of the Promissory Note and the Mortgage or Deed of Trust will be crucial as well. Everything is included as never before- in this one single educational book. Good Luck.

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TYPES OF LOANS

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The lending industry has been my forte since 2002. In all these years, I have seen many different cases on people wanting to refinance their homes; but the most common thing I found in most of them, was that they DIDNT KNOW what type of loan they had their last years. Not even the interest rate! My personal interest was to proceed educating every single client to understand what he/she were doing with a home loan. Today let me share with you the first thing you must know about: The different type of loans that exists in the market. Lets start with the most well known. In the lending market, there are several types of loans, but for purposes of this book, we will see the most common:

FIXED LOAN ARM INTEREST ONLY BALLON NEGATIVE AMORTIZATION FHA SUBPRIMES 80/20

FIXED LOAN A Fixed loan is the one that its interest rate will not change. It can be amortized for 40, 30, 20 or 15 years; after that, you dont owe anything else. Here you pay principal and interest. However, this is the loan with the higher monthly payment. ARM An Adjustable Rate Mortgage (ARM) is fixed just for 2, 3 or 5 years, after that, you still owe money at a variable interest for the remaining years. For example, a 2/28 means: 2 years fixed, 28 years variable (2+28 =30 years in total amortization). The interest rate is lower than the 30 Yr Fixed loan, but just for a short period of time.

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INTEREST ONLY

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As how it says, this loan pays only interest and nothing to the principal. Most of the time, it is used in combination with an ARM, fixed just from 2 to 10 years. Because this loan pays just the interest part, it is cheaper than a fixed or a normal ARM. If you borrowed $200k, with this loan your balance will be always $200k, unless you send extra payments to the principal.

BALLON This loan is used most in second mortgages. It is amortized typically at 30 years, but must be paid off at 10 or 15 years. If you dont pay the full amount or you cannot refinance at that time, your house may be foreclosed. This type is more common with lower balances, and the interest rate is higher than a fixed. NEGATIVE AMORTIZATION This is the cheapest of all, but it is the more dangerous. This is the famous 1% interest rate massively advertised some time ago. The monthly payment is super-low because the 1%, but if you got the 7% interest rate normally, and you are just paying 1%, the other 6% is going to your loan balance month by month. In this way, your debt is growing, not decreasing over time. FHA This type of loan is secured by the Federal Housing Administration (that means from the Government). It has to comply with strong guidelines and not many qualify for this loan, although it has very good interest rates. Most of the time it is coming with a Mortgage Insurance Premium included. SUBPRIME Good credit means Prime Credit. Below good is SUBPRIME. These types of loans are designed for people lacking to fulfill the guidelines of the Fixed and FHAs loans to purchase or refinance a house. Those guideline deficiencies are not just bad credit; a borrower can have good credit, but the income is unverifiable, or lack of down payment, recent bankruptcies, collections that dont have to be paid, etc. etc. etc. Most of subprime loans worked as 80/20s 80/20 Originally, a home loan had to be an 80% of the value of the home. The borrower had to give 20% down payment in cash. In this 80/20 program, there are 2 home loans, so the borrower doesnt have to spend cash in the down payment. Usually it is an ARM in the 80% and a BALLON in the 20%. It avoids Mortgage Insurance Premiums as well, so it is cheaper than a 100% loan.

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UNDERSTANDING ARMS Adjustable Rate Mortgages (ARM) typically starts with a lower interest rate and then reset to a higher rate after a few years. After the loan matures in 2, 3 or 5 years, it must be refinanced or sold, if not, the rate will adjust automatically to a VARIABLE rate, according to that current market.

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Variable rate means that the interest rate will vary every 6 months or every year (depending in what you signed) and will adjust to the interest rate that is in the market at the time of adjusting. It can go higher, or lower. It has a cap, though. The interest rate cannot go higher or lower than that cap stipulated in the promissory note at the moment of signing. A Fixed loan is the one that its interest rate will not change. It can be amortized for 40, 30, 20 or 15 years; after that, you dont owe anything else. ARMs are fixed for 2, 3 or 5 years, after that, you still owe money at a variable interest for the remaining years. For example, a 2/28 means: 2 years fixed, 28 years variable. Now, you have to go to the documents you received from the title company the time you purchased or refinanced. I know you didnt read it!! (or maybe you dont have it anymore), but FINALLY TAKE A MOMENT TO READ IT IN DETAIL. I will help you to understand it better. Just look for THE PROMISSORY NOTE and THE MORTGAGE or DEED OF TRUST, (it may have an ADJUSTABLE NOTE addendum as well). THE NOTE is simply the most important document in that bunch of papers. Look at the Note for interest rate, prepayment penalty, date when it adjusts to variable, and your cap rate. You may find the maximum rate in your cap that would double your initial rate or more. Maybe its the one you have right now. Some people chose this type of loan (variable or adjustable) because they knew they will move in 2 or 3 years to another city or another house, and will sell the house. An ARM is cheaper than a fixed, so it makes a sense in this case. Other reason was because it was easier and cheaper to qualify for an ARM than qualify for a normal fixed loan; due to bad credit, lack of down payment, unverifiable income, etc.

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This was the kind of loans massively advertised; remember? YOU CAN BUY A HOUSE EVEN IF YOU HAVE BANKRUPTCY, BAD CREDIT, YOU ARE ILLEGAL IN THE USA OR YOU ARE NOT WORKING!!! DOESNT MATTER!!! COME ON!! ENJOY YOUR AMERICAN DREAM RIGHT NOW!!! Mortgage companies just advertised what the lenders were offering.

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Because of these type of loans easy to qualify- house values were going up as crazy in those times; there was too much demand for houses nationwide. Even you could make a big chunk of money in the transaction: you owed $200,000 dollars and you sold it for $300,000. Many people made a lot of money. Because it was very easy to buy a house, properties went up in value at incredible levels. An average 3 bedrooms 2 bath house in San Francisco, CA was valued at $750,000 dollars! The problem came when lenders stopped doing ARMs as easy as before, being very difficult to qualify for refinancing or purchases, causing the house values to drop down drastically. It was over-inflated something called a REAL ESTATE BUBBLE. That bubble is now shrinking to the normal pricing, loosing the equity built in all the houses of the United States. Im seeing right now so many families without a house of their own and so many people without a job. Unfortunately, this situation has happened several times before in history. Its a cycling process, and most of the people forget all of this when it happens again. Learn what you can do. Be prepared, and you personally will know by sure what would be the right decision. You will not rely again in no-brain loan officers or will not choose an exotic loan anymore if you are not 100% sure what you are signing. If you are trapped in the real estate bubble, this book will help you to choose the best option you may have.

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Before going further, any borrower must know their most important documents in the loan. PROMISSORY NOTE A Promissory Note is a legal contract in which the borrower promises to pay back a loan.

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The Promissory Note sets forth the terms and conditions that apply to the loan repayment, such as the interest rate, when payments are due, where payments are made, what happens if payments are not made, if the interest rate will change and when, etc. All the agreed conditions between a lender and a borrower, are placed in this document in writing, dated, signed and notarized. This document is governed by state and federal law, giving protection to the lender and to the borrower as well. Any problems concerning this agreement are ruled by those laws. A Promissory Note will refer to itself as THIS NOTE, meaning that any written compromise is being done on that specific physical paper with the signatures printed on INK. It is understood that a copy will not be enough evidence to proof this document or compromise. This same document establishes that The Lender may transfer THIS NOTE. So, this original document is the legal compromise itself and not any copy. Thats why this Promissory Note is a very valuable document that cannot be lost or destroyed; this is the real evidence of a compromise made between BOTH parts. In order for the lender to protect his interests, he will require the borrower to sign a security instrument to protect the Note in favor of the lender. The Security Instrument may be in the form of a Mortgage or a Deed of Trust. A Mortgage or Deed of Trust is the guarantee of a property to a lender as a security for a Promissory Note. While this document is not a debt, it is evidence of the debt. In other words, this document (Mortgage or Deed of Trust) will secure a property to the lender if the conditions made in the Promissory Note are not satisfied or paid back.

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THE DIFFERENCE OF MORTGAGE AND DEED OF TRUST

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When a Borrower gets a Home Loan, a Borrower is required to sign a security instrument in order to secure the Promissory Note. Depending in which state a Borrower lives into the United States, this document can be in the form of a Mortgage or a Deed of Trust. Mortgage Most people think that a Mortgage is a Home Loan. It is not. A Mortgage is a security interest a borrower signs and gives to the lender securing the promissory note signed for the home. This document creates a lien in the property that cannot be transferred or sold until the promissory note is paid. A Mortgage involves two parties: 1. The Mortgagor (borrower) 2. The Mortgagee (lender) The person who holds the title can be either the Mortgagor or the Mortgagee. It will depend in the state where the property is located. If the borrower defaults to the guidelines settled in the promissory note, the lender needs to file a lawsuit in court to obtain a judgment, which is called Judicial Foreclosure. This process is long, expensive and complicated. Most of U.S. states use Mortgages in their transactions; the other states use a Deed of Trust instead of a Mortgage. Deed of Trust A Deed of Trust (called also Trust Deed in some states) practically has the same purpose as a Mortgage; however, there are significant differences on: the involved parties, the titleholder and the foreclosure process. Parties: The Deed of Trust contains three parties: 1. The Trustor (borrower) 2. The Beneficiary (the lender) 3. The Trustee (the entity holding the title)

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The Title Holder

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A Deed of Trust transfers the title to the Trustee (an attorney or a title company; depending in the state) which holds the land as security for a loan; this document is available at public records. When the loan is paid off, the title is transferred to the borrower. If the borrower defaults on the loan, then the Trustee can sell the property and pay the lender from the proceeds. The Foreclosure Process If the loan becomes delinquent, the trustee has the authority to sell the property without going to court. This means faster, less expensive and easier for the lender. This is called a Non-Judicial Foreclosure or Trustee Sale. However, in some states the lender may start a Judicial Foreclosure after a Trustee sale. This is because the Deficiency Liability. If the house was sold for less than the balance, the lender may elect to file a lawsuit against the borrower pursuing any pending debt. * In Arizona is possible to use Judicial and non-Judicial Foreclosures, but cannot be used both in the same case. The lender shall elect which to prosecute, and the other shall be dismissed. If the Foreclosure was on a Deed of Trust (or non-Judicial Foreclosure), after the auction sale the lender cannot pursue the borrower for assets or wages (check your state laws, though). Also, in most states using a non-Judicial Foreclosure the Redemption Right is not allowed after the auction sale. Borrowers cannot change or choose how your loan is secured. It is completely determined by their state law.

Web Information: Foreclosure Laws by State: Foreclosure Procedures by State: http://www.realtytrac.com/foreclosure-laws/foreclosure-laws-comparison.asp http://www.foreclosurelaw.org/

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18

Chapter 2

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REFINANCE In order to keep your house, Refinancing is the first thing you must look for. Many loans were designed to refinance after a short period of time, as the ARMs.

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An ARM was designated to be sold or refinanced after the maturity of the deal. You just learned it could be at 2, 3 or 5 years. Some ARM loans were fixed at 1, 7 and 10 years as well. The interest rate and the payment- can go suddenly higher or lower (you may receive 2 or 3 months before a notification for the adjustment). At this time, rates are going a lot higher, rising the monthly payments to unaffordable crazy levels. This problem is getting more aggravated because most of the houses dont have equity anymore, doing this impossible to refinance. Equity: difference between the debt and the value of a house If your house value is lower than the balance in your home loan, (there is a balance of $250,000 and the house is worth $200,000) so you dont have equity. You CANNOT do a normal refinance. Period! Go to www.zillow.com and see for free what the average of your house value is. This is just to give you an idea; other thing you can do is to call an experienced loan officer or a good realtor to give you a more accurate comparable of your property for free. The best you can do is to hire an appraiser and have a certified document showing the precise worthiness of your property. It may be the same average value that an experienced realtor or loan officer gave you already for free, although a good certified appraiser will make a deep study of the area to find the most for your house. Sometimes there are huge differences! (Normal charges for a certified appraisal are around $350 dollars in Arizona) Remember, is very crucial that you have some certified equity in your house by an appraiser in order to refinance normally. This is in addition to a good credit previously established, and some other loan qualifying factors as well. Sometimes a lender will make its own appraisal review and may discard your appraisal.

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REFINANCE WITH REVERSE MORTGAGES A Reverse Mortgage is a very convenient loan where you dont have to make a mortgage payment anymore for life! You may also have cash back and stay free at your house until you die!

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Do not matter your credit; do not matter your health; do not matter your income; do not matter if you work or not. For this loan, you only qualify if you are a homeowner with at least 62 years old and at least 50% equity in your house. The lender keeps or resells your house when you die. Thats it.

REFINANCE WITH HARD MONEY LOANS This money is provided by private investors. Typically, these loans are issued at much higher interest rates than residential or commercial loans. Hard Money Lenders do not take credit, age or income in consideration; the loan is purely against the collateral of the property. They will approve you a loan up 65% of your home value; even they can give you cash out! The interest rate will be higher; though.

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NEGOTIATE

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If you see that you cant refinance and you think that you might miss a mortgage payment very soon, call your lender. Be frank with them and explain your situation. (At this step we are in the understanding you are not late yet). Call to the Customer Service Phone that comes in your monthly mortgage bill. (Most variable mortgages give you the right to change to a fixed rate at any time. If you think the interest rise is not just a short-term fluctuation but will be a long-term trend you have the option of converting your mortgage into a fixed term). It doesnt matter if the company that is in charge of your loan is a servicing company -not the original lender-. They may have the resources to make an arrangement in your loan. Tell them about what you are expecting in the near future: the payment may increase (if this is an ARM), it will be unaffordable for you and you will not be able to refinance due to the lack in equity, your job may be lowering the hours, etc. so you are calling to make a new arrangement on your loan. Tell him/her that if this is not possible, you will have to FORECLOSURE on the house. Use the word FORECLOSURE very clear. Lenders are full of repossessed houses right now, and they are trying to avoid more of this; why? Because The Federal Reserve penalize lenders when they have many foreclosure records in their files. Therefore, this is a higher inconvenience for them than for you. Take this situation as a tool in your side, and use it! FORECLOSURE: when the property is repossessed from the lender due to non-payments on the mortgage The secret they dont want you to know is that at this moment, they are scared to death for hearing that word once again and again in every call! This is not the same situation as before, when they could take back your house as soon as possible, and resell it for a very huge profit in just one day!

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So, when you talk to the lender, be very clear about your desire to keep the house as your primary residence. Also let them know that your house has dropped in value, the trends indicate it will lower for the next 8 years and you definitely will be unable to refinance or sell. Say that you want to have a fixed rate for 40 years, keeping a lower monthly payment DON'T FORGET TO REQUEST WHAT YOU WANT. Request that your home loan needs to be changed to a fixed rate. (In a 40 years fixed, the payment is lower than 30 years fixed). IT IS POSSIBLE. DONT DOUBT ABOUT IT. It is possible to negotiate with lenders for a new loan for the price of the present home value in a fixed loan; which may be catalogued as a short refinance with the same lender. You may hear one of the most stupid answers of this negotiation: the lender will tell you that you need to be late 90 days in your loan in order to talk seriously about it and start negotiating (although many lenders are not requiring this). Anyway, try it out of court! Try it! Try it! Some lenders will play on a payments game; unfortunately, some of them will truly not allow doing this, unless you are late. (Remember that a missed mortgage payment is far more serious issue than missing any other loan or utility payment. It really affects your credit and leads you to foreclose your home) Dont forget to ask for the name of the person you contacted, direct phone, fax and address and write down in a CALL LOG all your records including the date and time you called. If the person at the phone is not helping you, ask to talk with the manager or supervisor (you may be disconnected in the transfer). If the manager is also not helping you, then, tell him/her you will ask for help in writing by CERTIFIED MAIL so it will be a written record of your call request. ASK ALSO FOR THE NAME AND ADDRESS OF THE PRESIDENT OF THE COMPANY AND SEND HIM A COPY. If you have 2 loans, you need to do the same with both lenders. Remember you can also be foreclosed if you are current in the first but in default of the second loan. I repeat: keep a record of all your calls, phone numbers, time expended, office department name at where the conversation was done, names of the people you contacted, copies of the letters you sent, copies of the certified mail, etc. (VERY IMPORTANT)

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Note: You dont want to pay a delivery confirmation when send a certified mail. The certified mail is recorded on line when it is received at www.usps.com; a copy of this record is good in any court. Print proof of this and file it.

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A delivery confirmation can be denied by the person in charge receiving all the documentation, and your letter has to be returned without being sign or read, but a certified mail without a delivery confirmation is received anyway, the same way as the other normal correspondence. If you are already having problems making your payments, DO NOT IGNORE THE LETTERS FROM YOUR LENDER, call your lender immediately. (Fees are increasing everyday when a mortgage payment is late). Clearly explain your situation. Be prepared to provide proof of your financial information, such as your monthly income and expenses. Without such information, they may not be able to help. (Yes, you must be working to be approved keep reading-). If you bought your home with a Veterans Administration (VA) guaranteed loan, call the VA office nearest you. Also, whatever it happens, stay in your home. You may not qualify for the following secrets if you abandon your property. You are not going to jail if you dont afford the payments anymore. That will not happen, my friend. Keep reading... A KEY FOR SUCCESSFUL NEGOTIATIONS In my trainings of Real Estate Investments and Business in the University of Donald Trump, Trump University, I learned something it has been very useful to me: they taught us to always negotiate, negotiate and negotiate to get what we want. Obviously, it needs to be with fully knowledge in what you are saying and not just because. Donald Trump says if we dont make a negotiation without feeling embarrassed, that is not a good negotiation. If you know that is possible, do it! Negotiate in the Trump way, and learn all you can of this temporary experience. Because it will be temporary; right?

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ALL THE KNOWN WAYS TO NEGOTIATE

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If you didnt had a solution to your claims negotiating with even any high level position manager and you already are behind in payments, -maybe following that ridiculous advice to be 90 days late, (well, thats what they wanted isnt?)-, now you are in the endless list of borrowers closer to foreclosure. Your lender has to give you some attention now! (They dont feel good having many people living in their properties for free!) So, lets see the following options, they are ALL THE WAYS you have to negotiate and keep your home (you may apply the best option for you):

Mortgage Modification Forbearance Full Reinstatement Repayment Plan FHA Forbearance FHA Partial Claim Freeze the rate FHASecure Veterans Administration Loans Assistance for Service Members on Active Duty

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MORTGAGE MODIFICATION

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In simple terms, a Mortgage Modification is when your lender agrees to change the terms of the loan and adds all late payments and fees to the balance. In an effort to reduce overall payment obligations to a more affordable level, the changes most acceptable for lenders are: 1. Reducing the interest rate 2. Extending the amortization (from 30 to 40 years long) 3. Accepting just the interest part of the payment (interest only) many lenders will not accept this, they will modify for a fixed loan (interest and principal)In the past, some lenders have lowered the balance of the loan in a loan modification, but this is now very hard to obtain negotiating out of court. Any borrower looking to match the present price of the house to his/her mortgage balance, may want to pursue a legal defense. Tip: Go to http://www.google.com and look for MORTGAGE CALCULATOR. A Mortgage Loan Calculator is the one which is amortizing both Principal and Interest. Make your own numbers and find out how much can be the payments in your new loan. DONT NEGOTIATE WITH THE PERSON CALLING FROM THE COLLECTIONS DEPARTMENT. NOT EVEN WITH THE MANAGER. Tell them you need to talk with THE LOSS MITIGATION DEPARTMENT; they are the only department having the real authority to make a successful negotiation with you. Nobody else. (Only if you personally know the President of the company, talk with him). THE COMMON RULE IS THAT YOU MUST HAVE 3 MONTHS LATE IN ORDER TO TALK TO THE LOSS MITIGATION DEPARTMENT. ANYWAY, TRY TO BREAK THIS RULE SINCE THE 1st MONTH. (Lenders are changing rules every month and many lenders dont require this rule). Remember your credit will be damaged if you are late. Note: Expect to wait a long time on the phone to talk with somebody at that department. There are hundreds of people in default trying to negotiate with these people every-single-day! You may qualify for a Mortgage Modification if you have recovered from a financial problem but your NET income is less than it was before the default (default = failure to pay). If you are not working you may not qualify for a Loan Modification.

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In a modification (depending in the lender), you must provide the last 2 years of W2, 2 months paystubs, bank statements, and everything needed to prove that you have a steady income. You must provide a Financial Statement Sheet (this form is provided by your lender) and also a Hardship Letter, which must disclose that you want to keep the property. Secret Tip: in order to qualify, any borrower must show that they have a surplus of a maximum of $200 dollars in income-expenses. If the borrower has an income higher than that, or is negative against expenses or has no income at all, the borrower may not qualify. For example: if the borrower has a NET income of $2,375 to $2,500 per month and the expenses (including the mortgage) are $2,300, he/she may qualify with most lenders. Lenders will accept any number given for gas and food expenses; they not verify this, although it must be reasonable. (Some lenders are now requesting to provide utility bills). If you qualify according to the guidelines of the lender, the modification will have an actual change to the Mortgage Note itself by adding past due interest and past due escrow amounts (plus other fees) to the unpaid principal balance and then re-amortizing (recalculating) it over the new term. In short words, in a MODIFICATION, all your pending payments and fees, will be added to your balance, so, you will owe more than before. If a loan has a shorter amortization period, the payment is higher. When the amortization is longer, the payment is lower. If you have a home loan amortized at 15 years, the interest rate is very low, but the monthly payment is higher. If you change your loan to a higher interest rate, but amortized to a 40 years, the monthly payment will decrease considerably. Most ARMs were amortized at 30 years. You can ask both to lower the interest rate and extend the amortization. Tips: Could your lender approve a 50-year amortization? That can be cheaper. You just need to ask for it (Remember Trump?), including a 2% INTEREST RATE! When you have to fax documents to the lender, always write down the loan number in each page at the right upper side, and always verify if they received the fax (many times they dont, even if you have a fax confirmation).

IMPORTANT NOTICE: There are on the internet several professional foreclosure negotiators advertising that they can get these Mortgage Modification plans approved even when the debtor cannot. I warn you: They will do the same what you can do over the phone! And you will know more than those guys reading this book. Many are just starting with no experience at all, showing expensive web sites or expensive advertising. Even attorneys! Keep your money safe.
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FORBEARANCE The dictionary defines Forbearance as: Act of delaying. Inactivity resulting in something being put off until a later time.

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A Special Mortgage Forbearance is when the lender is reducing the payments for a short period of time, sometimes the payments can be suspended as well. Usually a payment reduction or total suspension is allowed for less than 6 months, but it can last for some more time depending upon the lender. Your lender can allow you to not make your payments for a while or allow huge temporary reductions. But it is not that easy. Here are the catches... Forbearance is designed for borrowers who have temporary financial problems caused by unforeseen problems such as temporary unemployment or health problems. The workout agreement must be approved by your lender. Your lender is only going to be willing to consider a reduction or suspension of your payments if they believe your problems are temporary AND you can repay the back payments within a year. If your lender does agree to a workout agreement, they will expect you to repay the amount they allowed you to suspend (back payments) after the suspension period is over. What this means is, once you start paying your loan again, your re-payment period starts, too. In addition to your normal monthly payment, you will be also paying off the balance of the amount of the missed payments. When the forbearance is over, you will be entering in a REPAYMENT PLAN (more of this is explained later in detail); that means you will pay your normal monthly payment PLUS small advances of the pending balance created by the months you were in forbearance. Usually a lender will give you around a year or up to 18 months to pay off the back payments you owe. Every lender has different policies and procedures surrounding negotiations for Forbearances. Youll have to find out what your specific lender can do for you. I recommend a mortgage forbearance if you have a really small loan monthly payment and were only temporarily set back by some financial circumstances. If you had trouble covering your mortgage payment each month before this happened, this is not the option for you.

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If you have the money each month to afford to pay off the back payments and can get your lender to agree to suspend your payments for a short period, will be sort of like a short-term loan. I remind you that lenders want to work with you, trust me. Foreclosures cost them a lot of time and money. You must furnish documentation to your lender to show that you would be able to meet the requirements of the new payment plan. Investment properties, vacant homes or dwellings set for a foreclosure sale within 30 days may NOT qualify for FORBEARANCE. (Every lender is different, remember). Remember that as soon as you have a financial hardship, call your lender(s). Every day late is just acquiring new late fees. If you have 2 mortgages, you have to make the same negotiation with both lenders. If the Forbearance plan is for you, call the lender on the line for Customer Service and tell them that you are looking for this option. They will transfer you to the proper department. Dont wait. Every missed day means more fees to pay. This negotiation can allow you time to either delay/avoid foreclosure or sell your home. The technique of Forbearance is applied to student loans as well. You may also negotiate to have the missed payments transferred to the principal balance of your current loan. It will increase your future monthly payments, though, unless you extend the amortization. Forbearance policies vary from lender to lender. Evidence of your financial situation may be requested by you lender. Also, if you have not yet made any payments to your account, or if you have already received a forbearance, your lender may ask you to make one or more payments to your account as an expression of your commitment to repay. When you call your lender, find their telephone number on your monthly statement or online from their website for Customer Service. Be patient. If you dont think that a forbearance is the best option for you, review more options on this book. Federal Housing Administration (FHA) Forbearance If you have a FHA insured loan, is also possible to enter in a forbearance period which MAY be extended up to 24 months; but this ONLY apply if the homeowner had a very special circumstance to qualify, like a natural disaster, death of a contributor to the family income, or a severe disability. If you qualify for a 24 month FHA Forbearance, you may require an upfront lump sum payment.

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FULL REINSTATEMENT Full reinstatement is the dollar amount (including payment, taxes, insurance, penalties etc.) required to bring the mortgage loan current.

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A reinstatement occurs when you pay your mortgage company the total amount you are behind, including any legal costs and penalties and you are permitted to make regular payments then your mortgage has been reinstated. Lenders dont ask if the money is coming from a friend, your bank account, a business, etc they just want to see the money.

REPAYMENT PLAN The repayment plan doesnt necessary applies to an adjusted ARM in default, but it can be good that you know about it, so you can maybe be creative with this. This plan immediately brings accounts up to date. It works by re-distributing delinquent payments over a period of time (normally less than 12 months). The monthly amount is then added to the usual mortgage payment. For example, if your monthly payment is $1,000 dollars, and you are 3 months late, you owe $3,000 dollars plus late fees. A Repayment Plan is to pay the normal $1,000 plus $300+ (or so) in advance, until you pay in full the pending balance. After that, you can return to the normal $1,000 dollars monthly payment. This negotiation doesnt modify the interest rate or the amortization.

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ACCEPTABLE REASONS FOR DELINQUENCY Loss of job Reduction of income of a borrower (Curtailment of income) Temporary loss of income due to layoff Other temporary loss of income Excessive obligations Distant employment transfer Inability to sell property Inability to rent property Marital difficulties Health/Medical reasons Death of borrower Death of borrowers family member Illness of borrower Illness of a borrowers family member Military service One-time repairs (home, auto, etc.) Neighborhood problem Property problem Abandonment of property Natural disaster Failed business Incarceration Divorce Adjustable Rate Mortgage Reset

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Note: The key word is Temporary. A homeowner must be able to prove that he/she can afford the home once the modification has been completed. Unacceptable Reasons Quitting a job to go back to school Quitting a job to stay at home and care for children Quitting a job for any reason Seasonal layoff job National economical crisis Co-borrower (brother) is leaving from home because getting married Voluntary reduction in hours worked, reducing pay

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HARDSHIP LETTER One of the items your lender or servicer will ask for during the loan workout or loan modification process is a hardship letter (along with other financial documents). A hardship letter is a written explanation as to what event has caused you to fall behind on your mortgage and it is vital in helping you stop foreclosure.

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This letter acts much like an outline or biography of your current life issues that are affecting your ability to meet your financial obligations. Please keep in mind that you are composing the hardship letter for your lender or servicer and because of the foreclosure crisis, they are extremely busy and back logged. So, with that in mind, do not write a book because most likely it will not get the attention of an over worked, $12 an hour loss mitigation employee. Usually 1 or at maximum 2 pages is more than enough to get your point across.. Note: Along with your Hardship letter you must provide also a Financial Statement in writing. That form can be provided by your lender. (Some lenders requires this only by phone). In your financial hardship letter you should: Keep it brief and to the point. Do not be too vague in your explanation, or too technical. Write with feeling and emotion. (Make them cry when they read your letter). Identify the reasons for failing to keep current with your monthly payments and the DATES which coincide with the delinquency period. State your offer to resolve your debt. Show them you are willing to participate in a Workout Solution or the desire to retain ownership of the house or property. Thank them for their time and consideration. Dont forget to leave your current contact information. Enclose bank statements from the past two months, late notices on your car, last year's tax returns, and anything else you can find that shows the financial trouble you are going through.

The following are 2 examples of Hardship Letters that you can modify according to your specific circumstances. (You can find supporting comparable sales for your neighborhood for free at www.zillow.com ) (The price for a possible future foreclosure sale is around a 50% of present market price)

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HARDSHIP LETTER
Name: (Your Name) Address: (Your Address) Lender Name: (Your Lender) Loan #: (your Loan #) To Whom It May Concern: This letter is to explain my hardship. I have a variable loan (ARM) that already adjusted in XXX 2008 on the property located at XXXXXXXXXXXXXXX. This is the house where I am living currently and I want to keep it as my primary residence. I tried to refinance and lower the payment, but the house value is now upside down. The debt on the loan is higher than the present value, and the value of this property is keeping down every month. Investors and economists say that it seems like this market will be fallowing down. Also, my hourly job decreased in the last months, but I understand it will be temporary. At this time, Im working also in a part time so now I can afford the payments again. Unless you modify the terms of my mortgage, default and foreclosure will be my only remaining option. Therefore, foreclosure is reasonably foreseeable. I have also enclosed my financial statement and bank statements that demonstrate how, under my present financial circumstances, I would be able to afford the following terms: Proposed 40 Yr Fixed Interest Rate Proposed Mortgage Balance according a present Fair Listing Price Proposed P+I Monthly Payment based on 480 months to pay off the loan 2% XXXXXX XXXXXX

Further, I have attached supporting comparable sales from this neighborhood demonstrating that this property is likely only worth approx. $XXXXXX and you will probably only recover $XXXXXX before fees and real estate commissions if you were to foreclose on my home and try to sell it within a year or more. With these things in mind, I request that you modify the terms of my mortgage loan. A reasonable Loan modification could allow me to keep this property, avoid foreclosure and prevent potential costly forensic accounting and litigation arising from possible irregularities in the Loan origination process and discrepancies in the promissory note assignments. Respectfully, _________________________________ XXXXXXX Date

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HARDSHIP LETTER EXAMPLE 2 (Date) (Company's representative) (Company's Name) (Company's Address) (Company's phone number) RE: (home address) Account number: (#) Dear (Ms/Mr. Brown:)

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Due to the recent adjustment to the mortgage I currently have with your company, I am finding it very difficult to afford the new payment. I have a 3 year fixed rate which is now adjustable and is schedule to adjust again in Feb. 2008. Considering my current income, there will be no way I can afford the increased payments come February. Hopefully there is way to renegotiate the terms of my current mortgage to avoid default and help stop foreclosure on my home. Is it possible to have my current adjustable rate mortgage converted to a fixed rate? If this is not possible can the next rate change be postponed to a future date to allow me to hopefully refinance? Any other solutions you could provide would be greatly appreciated. I have had no problem making my payments for over three years now and do not want that to change. My mortgage was originally written by another company and bought by Countrywide. The original mortgage terms are terrible but it was the only loan I was qualified for at the time. I was assured that refinancing would be no problem but that turned out not to be true due to the downturn of the housing industry. The main problem is that my property is now worth about 30% less than what I paid for it which is preventing me from being able to refinance. I was researching on the internet and came across the Fannie Mae Announcement #06-18 (Oct. 4th 2006) regarding the servicing of Conventional Mortgage Modifications. I believe this addresses the situation I currently find myself in along with many other homeowners. Attached are recent pay stubs showing my current income. Thanks you for your time and consideration. Sincerely, (Home Owner Name) (Co-signer Name) (Home Owner Address) (Account #)
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FHA PARTIAL CLAIM If you have a subprime loan, you DO NOT qualify for this option.

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This strategy applies only for defaulted FHA loans. Maybe you are a borrower in default of this type of loans and you dont know. This is how it works: A borrower of a FHA loan in default can contact The Department of Housing and Urban Development (HUD) to work together with his lender. Under the Partial Claim option, a lender may be able to work with a borrower to obtain a onetime interest free loan from HUD FHA insurance fund to bring a defaulted mortgage current. This will bring the defaulted account up to date immediately. The lender will execute a promissory note and will be payable to HUD. This will be placed on your property until paid in full. The borrower doesnt have to pay anything until it is refinanced, sold, the borrower leaves the property or when the mortgage matures. No interests are accumulated in this note. Partial Claim terms: The note will be interest free. (0%) There will be no repayment penalty The note is payable to HUD Borrower is not required to make monthly payments Borrower can make partial payments but they must be by cashiers check or certified funds The Note will be due when the Mortgage is paid off or when the home owner sells the property The Home Owner can apply for a refund in the mortgage insurance premium when the note is paid in full

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A Borrower may qualify for a Partial Claim if:

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The loan is at least 4 months delinquent and no more than 12 months delinquent; The property is Borrowers primary residence Borrower may or may not be in Foreclosure Borrower is able to begin making full mortgage payments Borrower has resolved the hardship that caused him to fall behind Borrower have the long-term financial stability to support the mortgage debt or make the payment Borrower dont have the ability to repay the past due amount through a special forbearance or modification If filed for Bankruptcy Chapter 13, Borrower may still qualify for a Partial Claim, but the Bankruptcy Court must give approval (In BK Chapter 7 you must surrender your house).

The Process of Partial Claim: Things youll need: Proof of income Tax returns Bank statements Letter of Explanation or Hardship Letter 1. Understand what a Partial Claim is. HUD provides you with an interest-free loan that is secured by your home. You begin paying back this amount after you pay off the mortgage. 2. Call your lender to get information regarding Partial Claim. Ask for HUD contacts to help you through the application process. Your lender also will send you a list of all necessary documentation needed to proceed with the Partial Claim process. 3. Prepare a letter of explanation for HUD stating the reasons you fell behind on the mortgage and what you have done to overcome the financial hardship. 4. Provide proof of income. This is done so that HUD can be assured that you will be able to meet your financial obligations. 5. Get your tax returns for the past two years. A copy of your taxes, in their entirety, must be included when submitting for a Partial Claim. 6. Gather your bank records for the past three to six months. The length of time will depend on your lender. 7. Send the completed package to your lender. Double-check everything before you send it. This will ensure that there will be no delays in the processing of your partial claim application. Send it by certified mail. This will help you keep track of the process and give you peace of mind that it arrived at its destination. Check this on line at http://www.usps.com
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Notes: HUD will loan you the money to bring the loan current but you will have to pay all of the attorney fees upfront, though. The only way that a partial claim can be approved is if you have been turned down for another plan by your mortgage company already. Be sure the home for which you are applying for a partial claim is your primary residence. Secondary residences or investment properties do not qualify for this program

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Know how many months you are behind on your mortgage payment. You will not qualify for a partial claim unless you are at least four months and no longer than 12 months behind on your mortgage payments.

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FREEZE THE RATE On December 6th, 2007, President Bush announced that representatives of HOPE NOW have developed a plan under which up to 1.2 million homeowners could be eligible for assistance in their mortgage loans. They assembled a private sector group called "HOPE NOW Alliance".

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The HOPE NOW plan is to help homeowners who will not be able to afford a higher payment on their sub-prime loan once the interest rates goes up, but who can at least afford the current starter rate. Unfortunately, there are severe limitations of the plan. This program is voluntary, meaning lenders may offer the relief programs but its not required. The HOPE NOW (frustration later?) plan is designed to help subprime borrowers who can at least afford the starter rate on a subprime loan, but will not be able to make higher payments once the interest rate goes up. HOPE NOW members have agreed on a set of new industry-wide standards to provide systematic relief to these borrowers in one of three ways: Freezing current interest rates for five years Refinancing the existing loan into a FHASecure loan Refinancing the existing loan into a new private mortgage HOW TO QUALIFY FOR A FIVE-YEAR FREEZE: Only sub prime ARMs are eligible You MUST be up to date with your mortgage payments (not late) Your interest rate must reset between Jan. 1, 2008, and July 31, 2010 If your mortgage has already reset, you dont qualify The new payment must be at least 10 percent higher than your current payment Are eligible only ARMs made between Jan. 1, 2005, and July 31, 2007 Option ARMs or Negative Amortization are not eligible Only securitized loans are eligible for this plan, that means if your lender kept the loan on his books rather than sell it into a securitization pool. Investment properties dont qualify Meet all the above criteria and you may qualify before the initial reset. HOPE NOW has supported a toll-free hotline, 1-888-995-HOPE, which is available 24-hours a day to provide mortgage counseling in multiple languages. More information available at the following site: http://www.hopenow.com or http://www.americansecuritization.com/uploadedFiles/FinalASFStatementonStreamlinedServici ngProcedures.pdf

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FHASecure

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FHASecure, launched in the summer of 2007, is another option to help people mortgage-stressed to refinance. This program is for homeowners whose interest rates reset between June 2005 and December 2009. HOW TO QUALIFY: 1. Have at least 3 percent equity in your home 2. Dont have to be late in monthly payments 3. Have a solid employment history 4. Ability to afford the refinanced loan 5. More requirements in next page You can call at 1-800-CALL-FHA (1-800-225-5342)

Or visit www.fha.gov/fhasecure

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The Federal Housing Administration displays freely this FHASecure information in its website (http://portal.hud.gov). (They may keep posting new laws to help homeowners).

Eligibility
How far behind can you be on a mortgage to qualify? What about more than 90 days? There isn't a limit on how far behind you can be on your mortgage or how many payments you've missed. Whether you're current, one month behind or multiple payments behind, the amount you can refinance will depend on the value of your property and how much you owe and if the lender, or another eligible source, is willing to take back a second mortgage to help bridge the gap between what is owed and your home's value. Must I be delinquent, and for a certain period of time, in order to be eligible for FHASecure? No, and FHA encourages homeowners facing reset to refinance before they fall behind on their mortgage. I have a fixed rate mortgage and have fallen on bad times. What about me? Homeowners facing financial difficulties and unable to make their mortgage payments are strongly encouraged to contact their lender. Many lenders offer assistance to their borrowers to help them bring their mortgage current. Homeowners may also want to contact a HUD-approved housing counseling agency to find out about programs that may be able to assist them, especially if communication with the lender has broken down. To find a HUD-approved housing counseling agency, please call 1-800-569-4287 or search www.hud.gov I have an interest-only mortgage. Am I eligible for FHASecure? So long as you are current on your mortgage, you are eligible for an FHASecure refinance. If you are delinquent, the default must have been due to the payment shock of an interest rate reset or, in the case of an Option ARM, the "recasting" of the mortgage to fully amortizing. Are there any programs for people already in foreclosure? It is possible that FHASecure may help homeowners already in foreclosure but each situation is unique and depends upon the value of your home and how much you owe, and if the lender is willing to offer a second mortgage. Homeowners facing foreclosure are strongly encouraged to talk with their lenders, possibly with the assistance of a HUD-approved housing counseling agency, to determine the best course of action. To find a HUD-approved housing counseling agency, please call 1-800-569-4287 or search online.

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Paying Off Your Mortgage(S) and Your Home's Value What if I have a prepayment penalty and other refinancing costs and there isn't enough equity in my home for me to refinance?

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If you do not have sufficient equity in your home to add your prepayment penalty and/or other refinancing costs into your new FHA mortgage, then you should ask your lender to consider a second mortgage to pay the difference or a short payoff on your existing loan. Offering either of these options is at the discretion of the lender. What if the average home price is above the FHA loan limit for my area? Are the FHA loan limits changing for this program? FHA's geographical loan limits and how much it can insure are established by law. Although the FHA insured mortgage cannot exceed those loan limits, when a lender is willing to combine a first and second mortgage, the amount of the second could exceed the maximum loan limit for your area. Does it matter that the value of my home is now less than what I still owe? Not to FHA but the mortgage lender considering the refinance would have to be willing to accept a short payoff on the existing loan OR to hold a second mortgage to make up the difference needed to pay off the existing mortgage and the home's value. If I have first and second mortgages can both loans be included in FHASecure? Yes, but only if the combined amount is within the FHA geographical loan limit. If the combined amount exceeds the FHA loan limit and/or the loan-to value limit, your lender could offer you a second mortgage to make up the difference. General How can FHA help homeowners stay in their homes? FHASecure gives homeowners with non-FHA adjustable rate mortgages (ARMs), current or delinquent and regardless of reset status, the ability to refinance into a FHA insured mortgage. With FHASecure, the lender will not automatically disqualify you because you are delinquent on your loan, and the lender may offer you a second mortgage to make up the difference between the value of your property and what you owe, including standard refinancing costs. Why should I consider refinancing into a FHA insured mortgage? FHA insured mortgages do not allow for prepayment penalties, teaser rates or balloon payments. They are offered at market rate with terms up to 30 years and are fully amortized, meaning that you pay towards principal and interest every month.

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Is this program going to help people who shouldn't have gotten a home loan in the first place?

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People will still have to qualify for a FHA insured mortgage, based on their capacity to make the monthly mortgage payments. Unfortunately, those who shouldn't have gotten a home loan in the first place will not be able to qualify for FHASecure or other FHA refinancing options. They should contact their lender or a HUD-approved housing counseling agency for assistance. To find a housing counseling agency, homeowners can call 1-800-569-4287 or visit http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm If this program won't help everyone, why is FHA making it available? FHA recognizes that foreclosures and vacant properties affect home values, contribute to neighborhood decline and cost local governments due to additional services and lost revenues. FHA is offering this program to help prevent that type of negative impact on a community. What is this program going to cost taxpayers? Because the borrower pays the FHA mortgage insurance premium, taxpayers do not pay for FHASecure or other FHA programs. FHA borrowers pay their own way, and potentially avoid foreclosures that contribute to neighborhood decline, property depreciation and decreased revenues to the locality. Does this program help responsible people who pay their bills on time? Any homeowner who is current on their mortgage can refinance to a FHA insured loan at any time if it makes financial sense for them to do so. And for those homeowners with non-FHA adjustable rate mortgages who are current but owe more than their home is worth, it is now possible for them to refinance into a more affordable FHA insured mortgage and the lender may execute a second mortgage at closing to pay the difference. Why isn't FHA going after the lenders who approved these types of loans in the first place? FHA was established to insure mortgages. It does not have the authority to regulate transactions that do not involve FHA financing.

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VETERAN'S ADMINISTRATION (VA) LOANS If you have a VA backed loan mortgage, your lender may be able to reduce the interest rate. They also may be able to take the past due mortgage amount added to the current principal mortgage balance, and re-amortize the new loan as a normal loan modification. This could result in a lower monthly payment. Contact the US DEPARTMENT OF VETERAN AFFAIRS (VA) at 1-800-827-1000 or http://www.va.gov

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ASSISTANCE FOR SERVICE MEMBERS ON ACTIVE DUTY If the mortgage payments are behind due to military service, homeowners should call their mortgage lender and ask about the Service Members Civil Relief Act (SCRA). SCRA allows active military members to suspend or postpone some civil financial obligations. The SCRA was designed to assist and protect important rights of active duty military members and reservists who are in active federal service. Under this statute, are recognized also National Guard Members who were called to active state duty in response to a national emergency declared by the President of the United States.

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SHORT SALE If you: Owe more than the propertys fair market value Cannot refinance Cannot negotiate with your lender in any way

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Then, you must proceed to make a SHORT SALE (If you have Equity, you can sell the property as normal) (Please dont leave the house yet!) SHORT SALE is defined as a negotiation of the loan terms for less than the existing loan balance, due to factors such as the borrowers financial circumstances, the propertys physical condition and local real estate market conditions. HOW TO SHORT SELL YOUR PROPERTY VERY QUICK If you want to sell FAST your property in a declining market, it must be following these market rules: You must need to sell it for less than you owe (certain exceptions apply). If you owe $250,000 in your loan and your house is worth $200,000, you may want to sell it at $250kthats what it is supposed to be, isnt? But you know what is happening these days? NOBODY will buy your house at this price! (Thats why there are thousands of houses in sale right now for more than 8 months in a row) The secret to sell it faster (and this is a real secret that Im giving to you, a secret not even those experienced Realtors know about it!) is to take a look in the selling prices around your property. If similar or comparable ACTIVE houses in the market are being sold by $190k, YOU MUST OFFER YOUR PROPERTY LOWER THAN THAT BY A 5%. Every week keep looking at the competition prices to keep lowering the price in order to be cheaper than them! This way, a bunch of interested buyers in your area will come to see your property and will definitely buy from you when they compare the others. They will buy from you VERY QUICK, because THE PRICE.

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This is a very clear and simple example of this:

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You are shopping apples, and in front of you, there are 3 apples of the same size, same color and same taste. However, the prices are being offered to you quite different: one apple is priced at $3 dollars, the second one is priced at $2 dollars and the third apple is priced at $1 dollar; which one would you buy? Of course, the $1 dollar apple! Theres no sense on this Unfortunately, the same rule applies for your home. In the beginning of 2007 I told some of my friends and clients to sell their properties; unfortunately, no one of them followed my advice, all of them were thinking to sell at the top market price to make huge profits (as today, still the same minding for many people). The results were that ALL OF THEM lost their houses. All of them! I remember some of them laugh of me and others get mad. At that time, the bubble crunch was not so hard as today. At this time (Feb 2008), if you decide to sell, my friend, you must do it as soon as possible, because house prices are dropping the value drastically every month! When you short sale your house, you must do it through a very good Realtor experienced in Short Sales. Depending on the negotiation developed by this person with your lender, it can be a successful outcome or not. Your lender can easily turn down the offer of your buyer if that Realtor misses just one thing. So, be aware. After entered your property in the Real Estate market by a really good and really experienced Realtor and you finally have found a QUALIFIED buyer (to find a buyer can take from one day to several months), the Short Sale transaction will just began, and this can last from one month to eight months! By the end of the transaction, the buyer may not qualify anymore or the house has dropped down more in value. You want to know that a foreclosure is stopped when a short payoff transaction is approved and your house will not start foreclose proceeds until the lender decided what to do. It is said by experienced investors that an additional 30% to 50% will drop down on house values here in the Valley of Phoenix by 2009. There is a similar average for the national scenario. (But, you know how is thisnobody knows. We just need to be prepared)

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Watching the following video, will graphically explain to you what has been happening all these years. This video will make you seriously think about where we are going right now: The Real Estate Roller Coaster http://www.speculativebubble.com/videos/real-estate-roller-coaster.php

SHORT REFINANCE For a SHORT REFINANCE, you must work closely with a seasoned loan officer or financial advisor who originates home loans; they will negotiate a SHORT REFINANCE for you in coordination with both you and your lender in order to refinance for less than you owe. Short sales and short refinances are not easy, and many of them are not accepted by lenders. These transactions must be handled by experienced negotiators in order to be successful on this. To show a hardship in your situation, you MUST be late in your mortgage payments. Very few lenders are willing to negotiate a short sale or short refinance if the homeowner is current.

SHORT PAYOFF For a Short Payoff, must be through a Real Estate Investor which can negotiate for you a lower balance in your mortgage debt for 65% or less of the fair market value, then transfer the note back to you through a hard money lender. This is not a Short Sale and for this reason it may exclude tax liabilities. It seems to be more effective a SHORT PAYOFF as this type of investors will work as a third party NOT as your representative. Your Promissory Note and Deed of Trust (or Mortgage) states that the homeowner will be responsible for 100% of the debt and a representative (like a Realtor or Loan Officer) will be requested for this as well. Under the FAIR HOUSING LENDING the banks cannot give you any special treatment or discounts because if they do, they must offer the same exact discount to ALL of their borrowers, of which they can turn around and file a law suit against the bank, causing them to lose millions of dollars. A Short Payoff is not illegal as many unknowledgeable people can say. More information for SHORT PAYOFF in page # 130

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HOW TO QUALIFY FOR A SHORT SALE

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You may be wondering how you can sell or refinance for less than the balance in your loan. Its not that easy again. In order to the lender accept your offer to SHORT SELL your house they will consider the following:

1. The property was purchased or refinanced at the top of a seller's market at an overinflated price, and has had a substantial drop in value. 2. The property's value has decreased to an amount that's below the loan balance due to local and national economic conditions that are beyond your control. 3. The proposed selling or refinancing price is more than the lender would be able to sell the property for after foreclosing on the loan. 4. The lender would have to pay MORE MONEY to sell the property if forecloses on the present loan. 5. You must proof you cant pay the same amount as before, and there's no realistic expectation that your financial condition will improve within the foreseeable future. 6. THE PROPERTY MUST NOT HAVE MORTGAGE INSURANCE. Why? There is no sense for a lender to receive a short payment when the mortgage insurance will pay them the full amount in a Foreclosure. If you have MI, you may not qualify for Short Sale. Please do no be confused with Mortgage Insurance and Hazard Insurance. Hazard Insurance is the insurance that protects the policy holder against property damages made by fire, storms, lightning, flooding, etc. Mortgage Insurance is a policy that insures the lender against the borrower defaulting on a loan. Sometimes it may be confusing, but this is as simple as that the borrower is paying a monthly premium for Mortgage Insurance included in the mortgage, and it is only covering the LENDER NOT the borrower; because if the borrower forecloses in the property, the lender is being paid by this insurance and the borrower lose the house anyway. Mortgage Insurance is not included in 80/20 loans due to this insurance is only designed for loans with more than 80% LTV (100% loan for example) I have seen many homeowners trying to short sell a property with MI and they have never being approved, even with cash buyers.

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YOU MUST KNOW ABOUT THE DEFICIENCY LIABILITY

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If you short sell a property, (for example, if you owed 250k and sold by 150k) the remaining debt (named DEFICIENCY LIABILITY or FORGIVEN DEBT) will be given back to you next year by the IRS in a form of 1099 INCOME. The same liability will apply if you foreclosed for less than the balance or given the property in deed in lieu (next page). This 1099 income is your TAX LIABILITY. But if that was your principal residence, you may avoid that Tax Liability, thanks to the Mortgage Forgiveness Debt Relief Act of 2007 (up $500,000 if you file your taxes jointly or $250,000 if file individual); although if the SHORT SALE was for an investment property YOU MAY HAVE TO PAY TAXES! The Deficiency Liability does not apply for all states (Oregon for example). If your state allows this, you should request to your lender -before selling the property- a WAIVER of the Deficiency Liability. If the borrower doesnt get that waiver, well borrowers may be paying huge taxes on that liability unless they file a report of insolvency with the IRS or file bankruptcy. A qualified CPA must be contacted for concerns in tax consequences. Remember that the DEFICIENCY LIABILITY is JUST for the first loan. If you have a second loan or more liens in your property, you may be still pending with that debt. Im talking more about it into the chapter of Bankruptcy. Also read page # 129 on SHORT PAYOFF.

Circular 230 Disclosure: Internal Revenue Service regulations provide that, for the purpose of avoiding certain penalties under the Internal Revenue Code, taxpayers may rely only on opinions of counsel that meet specific requirements set forth in the regulations, including a requirement that such opinions contain extensive factual and legal discussion and analysis. Any tax advice that may be contained herein does not constitute an opinion that meets the requirements of the regulations. Any such tax advice therefore cannot be used, and was not intended or written to be used, for the purpose of avoiding any federal tax penalties that the Internal Revenue Service may attempt to impose. Copyright 2008, Orbis Marketing, LLC. All Rights Reserved www.foreclosureinprocess.com

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DEED IN LIEU OF FORECLOSURE

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If you couldnt refinance the property, you couldnt qualify for any negotiation with your lender to stay in the property and you couldnt sell the property, then you may be able to voluntarily "give back" your property to the lender (deed in lieu) in order to avoid foreclosure. Deed-in-lieu is a process in which the borrower in default of the loan obligation gives back his property to the lender. The lender then sells the property. This won't save your house, but it will help your chances of getting another mortgage loan in the near future. You may qualify if: You are in default and don't qualify for any other option You couldnt sell the house before foreclosure You don't have another FHA mortgage in default. See the following page for ELIGIBILITY

You have to sign legal documents through an escrow company: An Agreement in Lieu of Foreclosure, a Warranty deed and a Quit Claim Deed Agreement in Lieu of Foreclosure Reveals the terms and conditions of the deed-in-lieu, and is signed by both the lender and borrower Warranty deed Quitclaim Deed Conveys legal ownership of the property to the lender A document which a person transfers ownership to other

After signing these documents, your lender will mark your mortgage note as "paid". The escrow then records the deed used for transferring legal ownership of the mortgaged property and sends a copy to you. You are now released from the liability of the mortgage payments Also, if you have an 80/20 loan in the house you dont qualify for a Deed-in-Lieu. Also, any other liens attached to your house will not make you qualify, such liens are tax liens, judgments, etc.

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The US Department of HUD has the following information on its web site (the mortgagee is your lender; you are the mortgagor): DEED-IN-LIEU OF FORECLOSURE OPTION The Deed-in-Lieu of Foreclosure allows a mortgagor in default, who does not qualify for any other HUD Loss Mitigation option, to sign the house back over to the mortgage company. FACTS Mortgagee can pay, not to exceed $2,000 compensation, to the mortgagor. The $2,000 compensation is not paid to mortgagor until they have vacated the property. Mortgagor(s) compensation must be applied to any junior lien(s) placed on the mortgage property. Mortgagor must agree to written agreement of property conditions. Mortgagees may determine that a current mortgagor is eligible for the Deed-in-Lieu of foreclosure option. Under no circumstance should the mortgagor be encouraged to default on their mortgage for the purpose of qualifying for this option. Deed-in-Lieu must be completed or foreclosure initiated within six (6) months of the date of default, unless the mortgagee qualified for an extension of time by first trying a different loss mitigation option or an extension of time was approved by HUD prior to the expiration of the time requirement. If the Deed-in-Lieu follows a failed special forbearance agreement or the preforeclosure sale program, then the Deed-in-Lieu must be completed or foreclosure initiated within 90 days of the failure.

ELIGIBILITY 1. The property must be owner-occupied, no walk-a ways or investment properties. 2. Exceptions: when it is verifiable that the need to vacate was related to the cause of default (job loss, transfer, divorce, death), and the subject property was not purchased as a rental investment, or used as a rental for more than 12 months. 3. The mortgagor must be 31 days delinquent or more at the time of the Deed-in-Lieu 4. Warranty Special Deed is executed. 5. The mortgagor must provide documentation of a reduction in income or an increase in living expense, and documentation, which verifies the borrowers need to vacate the property. 6. Mortgagee will develop a written Deed-in-Lieu of Foreclosure Agreement, which is to be signed by both the mortgagor and mortgagee, which contain all of the conditions under which the Deed will be accepted.

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DEED-IN-LIEU AGREEMENT

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Mortgagor(s) does not own any other FHA-insured mortgages and/or or mortgage held by HUD. Agreed upon transfer date of property to mortgagee within the Agreement. Notification to the mortgagor that there may be income tax consequences as a result of the Deed-in-Lieu of Foreclosure. Acknowledgment that mortgagor(s) who complies with all of the requirements of the Agreement shall not be pursued for deficiency judgments. Mortgagor is to provide a statement describing the general physical condition in which the property will be conveyed. Mortgagor will convey property vacant and free of personal property unless HUD has approved an occupied conveyance. Itemization of the keys, built-in fixtures and equipment to be delivered to the mortgagee on or before the transfer date. Mortgagor(s) agreement to provide evidence that certain utilities, assessments, and homeowners association dues are paid in full to the transfer date unless otherwise agreed to by the parties. The dollar amount of consideration payable to and/or on behalf of the mortgagor is not to exceed $2,000.

If you have any question, you may contact NSC at: National Servicing Center E-mail: hsg-lossmit@hud.gov 1-888-297-8685 www.hud.gov

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Chapter 3

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FORECLOSURE If you followed all the options described in this book and there was no way to stop foreclosure on your specific case, you have to know all your foreclosure rights under your state law.

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Maybe at this point you still dont understand what is happening. A clear example of this is when you go to a pawnshop and give a watch in exchange for $200. If you dont pay back the money, the pawnshop sells the watch. The same case is here, you gave your house as a security for the money borrowed. If you didnt pay, the lender uses his right to sell this security interest. THE FORECLOSURE PROCESS I will disclose now The Foreclosure Process step by step. Dont get discouraged. There are several stages where the homeowner still has an opportunity to find a solution. (You have to know that from a psychological point of view, if a borrower miss the first payment, it will be easier to miss the following months, or keep being late very often. Dont make a habit for this). The foreclosure process can vary by state, and the following is a standard of this process in a non-judicial system state, from the beginning to the end:

#1 DEFAULT Mortgage payments are established to be paid on the 1st day of every month, and there is a grace period of (generally) 15 days. That means the borrower can wait to pay until the 15th day and not have any late fees. A borrower is officially late in the mortgage payment, after the grace period or after the 15th day of the month. A late fee is imposed to the payment, but it is not reported to the credit bureaus as late payment. Only if the payment is sent after the 30th day, then it is reported to the credit bureaus as late. After the first 30 days late in the payment, the lender will send you by mail a notification about the missing payment and will include late fees in your bill. At 60 days late, you will receive a second notification for this. After 90 days of non-payment (three months), you may have started a pre-foreclosure action by your lender (most common practice). Other states may start Pre-foreclosure actions when the homeowner defaults his/her mortgage loan the third, fourth, fifth or sixth month after. You must check your state law. Here in Arizona is on the 90th day (the third month).

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#2 NOTICE OF DEFAULT

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After 90 days in default (in most cases), your lender will then order a Trustee to record a Notice of Default (NOD) at the County Recorders Office. You are in PRE-FORECLOSURE now. Your lender will publish a legal notice in a local newspaper of the pending foreclosure (subject to local laws). In addition, your lender may make a demand for payment in full. This is stipulated in your mortgage loan under the acceleration clause, which is included in most standard mortgage contracts. You will receive a copy of the Notice of Default as well. The Notice of Default officially opens the pre-foreclosure stage. TRUSTEE: A Trustee is a neutral person or entity authorized by a trust document to handle certain property matters on behalf of another. You can keep negotiating with the lender(s), though. Note: This Notice of Default (NOD) is just to let you know that you are BEING OFFICIALY AND LEGALY WARNED of a Mortgage default and need to do something about it. Many people getting this letter think it is an official foreclosure and leave the house that same night. Dont do this! Pre-foreclosure is like a grace period. At this point, with just a Notice of Default filed, your lender is unable to claim back the property and sell it. YOU CAN LEGALLY STAY AT THE PROPERTY without making any payments either to keep negotiating with the lender, to sell it or preparing to leave. I you have a second mortgage in default too, only the FIRST is allowed to start a Foreclosure process. A second mortgage can start a foreclosure action, ONLY if the first is current.

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Within this period, you have a Reinstatement Right (or full payment of the pending debt) which can be done anytime in this grace period. Remember not only will you owe the balance of the mortgage, but also any missed payments, legal fees and late fee penalties. Some states allow a reinstatement period until five days before the auction sale. Once you reinstated the loan and missed another payment again, the lender will start the foreclosure process from the beginning. The length of this grace period varies, as it is determined by state laws. Some states allow the Pre-foreclosure or grace period to last for as long as 6 months, although most states have shorter periods. The Pre-foreclosure period in Arizona is within two to three months. From the NOD to the sale of the property.

#3 NOTICE OF SALE If you cannot negotiate successfully with the Loan Mitigation Department any of the options described in this book, or if you can not payoff the full amount including all pending fees within your States Pre-foreclosure period (2 to 3 months in AZ), then: You will receive a NOTICE OF SALE indicating the time and location of the auction or foreclosure sale. This may be served by mail, a processor or by the local sheriff. The trustee also will mail a copy of this notice to all affected parties. Maybe one normal day you will stand out of your home and find this notice posted on the front door of the property. A Notice of Sale must be posted at your property at least 20 days before the Auction sale (in Arizona). This same notice will be recorded at the County Recorders Office in the county where the property is located. Finally, it is also published once a week in county local newspapers over a three or four-week period.

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#4 FORECLOSURE SALE

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The foreclosure sale typically occurs on the county courthouse in which the property is located, but it also can be conducted at the same property address or the trustees office. The time and location of the Auction Sale are designated in the Notice of Sale you received before. The lender sets the opening bid. It sometimes is equal to the outstanding loan balance, interest accrued, attorney fees and any additional fees associated with the sale. The property will be auctioned to the highest bidder. The winner of the auction will receive the trustees deed to the property when paid (usually next day). If there are no bids higher than the opening bid settled by the lender, the property will be purchased for the lender by the attorney or trustee conducting the sale. At the foreclosure sale (this can be called an auction, sheriff's, trustee or foreclosure sale), anyone can participate in the auction; however, bidders must have a deposit check for the stipulated minimum and financing lined up to take over the property. The winning bidder has until 5:00 p.m. the next day to pay the full bid price in cash, and within seven days the property ownership is legally transferred by the trustee. The proceeds of the sale are paid to the primary lender, then to any secondary lenders. If everything is paid and there is some money left, it will be sent to the homeowner (now exhomeowner). The time frame from the first month late in the mortgage payment to the auction sale is normally around six months in Arizona. When there is no buyer, the lender buys the house itself. If the house was bought by the same lender at the foreclosure sale, the property will be deemed as a Real Estate Owned or REO. Then, the lender can sell it later at a lesser price in a REO sale.

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#5 POST-FORECLOSURE Redemption Period after an Auction Sale

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If you still into the property after the closing have happened, the new owner can file an eviction. Eviction: The legal act of removing someone from a property Your state foreclosure laws will determine how soon the new owner can start an eviction. However, after the auction sale, you may stay rent-free at the property more days, weeks, months, and up a year if your State laws allow for a redemption period after auction sale. In this way, under your State law, you may postpone an eviction legally. Redemption period: The period during which a borrower may reclaim the title and possession of property by paying the debt Your right here is simply that you can buy the home back from the person who bought it at foreclosure; so now you may look for new ways to find a loan (or cash) to pay the redemption amount. If this is not possible in your State, expect an eviction process usually within 2 to 4 weeks from the auction. * Arizona does not allow the Redemption Right. It must be understood that an EVICTION PROCESS must be started first at COURT. Here, a Judge will send to the homeowner a letter of eviction with the date that the house must be vacated. The homeowner can stay rent-free at the house until that day. NOBODY CAN LEGALLY TAKE YOU OUT OF YOUR PROPERTY. NOT EVEN A POLICEMAN OR SHERIFF, UNTIL THERE IS A LEGAL EVICTION FROM COURT. ITS THE LAW.

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EVICTION

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The day considered for the eviction, the county sheriff will be present at the property to conduct this humiliating process. The personal belongings are usually just put in the front lawn or everything may be seized into the property depending in the new owner decision. If they seized your belongings, there is no way they can give you back. Even suing the county or the new owner will not work. You can avoid this bad situation, just requesting more time to stay in the property or simply moving out before the eviction. Before the eviction date, call to the new owner or the sheriffs office and ask for more days to move out. They will usually agree to hold the eviction if you are in the process of moving, as long as you are not asking for a month or more to live rent-free. Tip: you can request to be a caretaker of the house while the buyers plans to remodel can be finalized. Sometimes the buyer will prefer to have the house occupied than vacant, so it cannot be vandalized or having other problems. You need to know that after an auction sale, most lenders use to give you compensation money if you leave the house clean and in good conditions within the first 15 days after the auction sale. It can be from $500 to $2,000 dollars. I understand many lenders dont worry about stoves, refrigerators, fans, or dishwashers staying in the house, they just want to see the property in good conditions, free of broken windows, missing doors, perforated ceilings, damaged roof, broken walls, blocked pipes, etc. If you decided to foreclose, you may want to stay at the property all this process (until they give you an eviction letter) and save, save and save all you can! Please, do not leave the property the first month you are late and start renting out next month! Federal and State laws protect you so you can legally stay rent-free into the property all this time. Your kids and family have to be feed every day and you must be the responsible to supply all their needs. Nobody knows what is going to happen tomorrow, my friend; let the government laws work in your side, find better options to produce more money, keep the most cash you can, and strive for a fresh start. Learn the foreclosure laws of your state: http://www.foreclosurelaw.org/

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BEWARE OF FORECLOSURE SCAMS UNESCROPOLOUS INVESTORS If you are trying to sell your property by yourself or without professional guidance, you may have some investor buyers knocking at your door while you are in Pre-foreclosure. Do you remember the Notice of Default? And the Notice of Sale?

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These documents were recorded at the countys office. That means it is public! Anybody can enter to revise these files and find who is in a foreclosure process. Some of these investors will try to rush you and sign a document. DO NOT SIGN ANYTHING you not clearly understand until those documents are first reviewed and approved by your Realtor, Loan Officer, Financial Advisor or your Attorney. A common scam is that they push you to sign a QUITCLAIM DEED (now you know what it is), so they can be the legal owners of the property with the right to sell and keep all the profit. Investors of this type say they may give you a sum of money when the property is sold. Remember everything must be disclosed in writing. Some of them also may request you to move out as soon as possible, and they ask you for this so they can rent the property to somebody else for a few months, keeping the proceeds just for them. If you signed a quitclaim deed, you cannot do anything about it. If that buyer does not make any payments to your mortgage, and couldnt resell it, the lender will foreclose the property. You will have a foreclosure recorded in your credit, and you will be responsible for the pending debt. The investor does not loose anything. You do. Unfortunately, there are many people doing this, so be aware. Check the history of the investors company at local District Attorney's Consumer Fraud, your States Attorney General or the Real Estate Commission. FORECLOSURE COUNSELING AGENCIES Some people that dont have anything else to do, call them selves Foreclosure Counseling Agencies. They may contact you offering certain services asking for an upfront fee. All the information they have is the same you can do over the phone. You have more information here, so you can achieve a better solution with more knowledge and power. If you still want to have a good representation, the best you can do is to contact an attorney that is doing this type of work. Look for an attorney who specializes in loan modifications, predatory lending and/or consumer rights. Look for references, though, and ask all the questions you can as many attorneys dont know what they are doing either.

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Chapter 4

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LEGAL DEFENSES OF A BORROWER Every homeowner needs to know that government reports are confirming widespread abuse by many lenders, realtors and title companies that have overcharged thousands if not millions- of unknowing homeowners. Also, many lenders (especially subprime banks) have been doing illegal procedures while handling the confidential paperwork behind borrowers knowledge.

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If a home owner has been trying to negotiate with his/her lender to no avail and all the options included in this book have been already considered, a legal defense may be necessary to enforce their consumer rights. Most homeowners dont know that there are so many laws protecting them as consumers. And to be sincere, I am also really impressed for this because, before to write this chapter, I have consulted several Predatory Lending, Real Estate and Foreclosure attorneys and many of them they dont either have any idea in what you are just going to read. Even many court judges dont have enough knowledge about it, or maybe they dont have enough interest to solve this kind of situations. Many judges will say: well, you owe that money and you have to pay, if not, you have to give up your house. That sentence is completely understandable and fair; unfortunately, I dont understand why judges may say that even if there is legal evidence of fraud on the borrowers loan or if the loan was originated in abusive circumstances, which is not completely understandable and fair to me. I have found some court litigations that have not enforced the Law effectively, due to the incompetence of some judges or attorneys. But the Law is the Law and it must be followed at what it is. I warn any homeowner that wants to proceed in this way: it will be tough; however, if the borrower finds illegal and abusive procedures of banks and third parties in his/her home loan, it may lead to delay a foreclosure process indefinitely or to keep the title free and clear. Even its possible to have a claim for refund or monetary damages. The best reason here is that when a lender or servicer has been found guilty of any violation of the law, it may be possible to force these debt collectors to accept any crazy negotiation the borrower may have in a loan modification, in order to avoid litigation.

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This is the information what mortgage, real estate brokers and title companies dont want you to know. The following defenses may be used by homeowners that want to enforce the Law on their side.

1. Predatory Lending Defense Abusive circumstances when originating the loan

2. Lender Defense FDCPA, RESPA and FCRA guidelines

3. Trustee Defense Only for non-judicial foreclosure states

4. Court Litigation For both judicial and non-judicial foreclosure states

5. Bankruptcy A complete separated chapter for this defense

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PREDATORY LENDING DEFENSE

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The definition of Predatory Lending has not been defined yet by Federal Law or by the states, but we can say that Predatory Lending is the action of intentionally placing consumers in loan products with significantly bad terms and/or higher costs than loans offered to similarly qualified consumers in the region, only for the purpose of enriching the originator and with little or no benefit to the consumer. While the definition of predatory lending varies by every advisor, the awareness that homeowners need to be protected by predatory lending laws is growing every day. In the last years, Ive seen a huge potential for greedy mortgage companies to abuse on a pool of low-income homeowners or a group of minorities, women or the elderly that are financially vulnerable. While the procedures of these lenders may not always be illegal, the consequences can be the same: the homeowners may lose their home and the professionals who apparently helped them end up making a huge profit. These helpers are predators seeking their prey from the minorities, the aged people, the sick, the foreign and the poor. Predatory lending practices can leave victims homeless and defeated, with a sense of not having self-respect and hope, and with their credit ruined for years as well. Very often, homeowners involved in predatory lending will not fight against this type of abuse. Many will think they cannot afford an attorney, or they dont speak English, or they will leave the house right away, or they may think its impossible, many will not have access to the internet, many will say let it go or I dont care, etc. etc. all of these situations and more, the banks know it very well. Unfortunately, many homeowners let their houses end in foreclose or bankruptcy without knowing they were abused on their consumer rights. In order to fight Predatory lending, it is mandatory to hire an attorney specialized in Predatory Lending or FORENSIC AUDITS or FORENSIC ACCOUNTING. I recommend also looking for a class action attorney as well (class action means court litigation of various persons complaining on the same case at the same time, which is extremely terrifying for any company). It is possible to find free or cheaper legal services in the states bar associations or asking to the clerks of any court. Also contacting the Attorneys General office or using http://www.google.com can be helpful as well. Some attorneys will charge for their services until they win. If they dont win, they will not charge anything. Also if win, all costs may be paid by the guilty lender. If a borrower can afford legal services, the National Association of Consumer Advocates website http://www.napa.net will help to find a qualified attorney in any state.

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SIGNS OF PREDATORY LENDING The items below are a good way for any homeowner who wants to know if a lender could be misleading them about their home loan. If a lender is found guilty of Predatory Lending, the penalties are enhanced damages and rescission (that means to cancel the loan), which can be a tremendous advantage for the borrower.

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(Note: Just having one or more of the following items does not mean anyone has been a victim of predatory lending. I recommend having a consultation with an attorney who specializes in predatory lending to discuss any suspicions and to possibly register a complaint).

1. The home loan is a Balloon. 2. The homeowner was required to buy credit insurance and pay the premium included in the monthly payment of the home loan (this is the insurance that will repay the debt at death or becoming disabled). 3. The homeowner have refinanced the loan several times, and in each instance increased either the monthly payment and/or the total amount owed on your home. 4. The homeowner refinanced to a significant higher interest rate than the past home loan (had a 5% interest rate and refinanced to a 10% interest rate, for example). 5. The monthly payments on the mortgage loan were higher after the closing than on the initial disclosures. 6. Unexpected costs at closing that were not explained prior to the signing. 7. Interest rates changed at the last time and the homeowner was not notified prior to the signing (even if it changed 0.125 %!). 8. Leaving signature lines or any other important line-item in blank in any form. 9. The lender or broker altered any information entered on the loan application. 10. Any of the following disclosures are missing in the existing loan file. Good Faith Estimate Special Information Booklet Truth in Lending HUD-1 Settlement Statement 11. The Promissory Note reveals that the interest rate calculation will change to require a payment with "daily interest" in instances when payments are late.

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12. The loan amount on the loan obtained was higher than the value of the home (for example the 125% loan-to-value loans) 13. The borrower was encouraged to include false information on the loan application. 14. Excessive closing fees. More than 8% of the loan amount in fees. 15. Abusive prepayment penalties (more of 3 years prepayment or costs of more than 6 months interest). 16. Unreasonable Yield Spread Premiums (the fee paid from the lender to the broker in the back).

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17. The appraisal was over-inflated to sell the house at a higher price or to be refinanced with a higher loan amount. This was done very often by dishonest realtors and bad loan officers in conjunction with corrupt appraisers. Some houses were full of termites or the roof almost falling, and these appraisers didnt write down those problems within the appraisal to make things happen. Obviously, there was a considerable amount of money paid in the back cash. 18. The loan contract includes a clause with Mandatory Arbitration, meaning that the borrower cannot seek legal remedies in court if a predatory lending situation is found. (Dont believe it). 19. The homeowner was given a subprime loan when he/she would be qualified for a prime loan. This is called Steering & Targeting. According to a study from the Center for Community Change, a non-profit consumer advocacy group, more mortgages in AfricanAmerican and Hispanic homes are subprime loans compared to the mortgages of whites in the same level of income. 20. Violations to the Truth in Lending Act (TILA) may be a legal right of rescission, which can be only enforced after the first three years of the origination of the loan. 21. Recording fees are aprox $10 dollars in AZ, but some lenders charged $1,500!! 22. There might be more items to identify Predatory Lending in every case, but just a qualified attorney can advise accordingly. EVEN IF YOU THINK YOU DONT HAVE ONE OF THESE POINTS, MAKING AN APPOINTMENT WITH A QUALIFIED ATTORNEY JUST TO REVIEW YOUR DOCUMENTS IN DETAIL, MAY ABSOLUTELY KNOCK YOUR SOCKS OFF! DAY BY DAY, MANY LENDERS WERE DOING VIOLATIONS OF TILA AND PREDATORY LENDING AS EASY AS DRINKING A GLASS OF WATER. AND BORROWERS DIDNT KNOW.
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LENDER DEFENSE In 1974 the Congress of the United States passed The Real Estate Settlement Procedures Act (RESPA) to solve the problems created in the process of real estate agreements. This Federal Act regulates the costs and procedures of obtaining a mortgage and was imposed because the companies related with the selling and buying of real estate, such realtors, lenders, appraisers, insurance and title companies, were doing unfair practices in those transactions; for example, different companies paying commissions each other for the referral of a home buyer, like lenders to realtors, and title companies to lenders.

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The Act prohibits rewards between lenders and third-party settlement service agents in the real estate settlement process. RESPA requires lenders to provide a good faith for all the approximate costs of a particular loan and a HUD-1 (for purchase real estate loans) or a HUD-1A (for refinances of real estate loans) at the closing of the real estate loan. The final HUD-1 or HUD-1A allows the borrower to know specifically the costs of the loan and to whom the fees are being allotted. A borrower must be informed in writing for every transaction in the loan. The problem is that many lenders have failed to comply with this Federal Law in the greedy rush to originate more and more loans in the Real Estate Bubble made from 2001 to 2006. And this is a serious issue for them now. Lenders were closing loans everywhere everyday; then selling those loans in huge bunches to other investors. Some lenders did this activity every month, others every 3 months and others sold it when they had a predefined quantity of loans. Im exposing here how was that very profitable business in the advantage of people following the American Dream (which is now The American NightMare): The original lender qualified and funded home loans at 100% loan-to-value (that means NO DOWN PAYMENT) to incredibly no-qualifying borrowers, borrowers having the following scenario: Recent bankruptcy Really bad credit with collections, repossessions, foreclosures, late payments, etc Unemployed Employment unsteady or unverifiable Residence unsteady or unverifiable Fake documents from illegal aliens or double identity persons No savings at all, even with no checking accounts or retirement funds

Would anybody lend $350,000 dollars or more to anyone showing this financial scenario without any reason?

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These lenders did it nationwide, everyday, for years! They perfectly knew what they were doing. After the original lender obtained for example, 400 loans in that month, they put it for sell in the secondary market. Here, other investors bought these loans (for the benefit of the high interest rates proceeds or for reselling), leaving the original creditor with huge profits from the deal. I have the knowledge of lending companies -that they are not in the market anymore- making $5 BILLION dollars PER MONTH for this kind of transactions. When the Real Estate Bubble stopped its crazy growth, all of these lenders also stopped their extraordinary money making machine; consequently causing the borrowers with those financial scenarios (or even with good credit now) couldnt refinance or sell any more, being trapped overnight in the now de-inflated Real Estate Bubble, causing homeowners to lose their houses and ruin drastically their dreams and credit. Additionally, millions of people involved in related businesses (as construction workers, architects, loan officers, realtors, title agencies, hazard insurance agencies, furniture stores, appraisers, real estate investors, etc) starting loosing their jobs, offices and homes as well. I repeat: many lenders have failed to comply with RESPA and other laws in the greedy rush to originate more and more loans in the Real Estate Bubble. Those lenders knew the Bubble will expire some day. They knew the recession monster was coming already. They perfectly knew what they were doing (their employees maybe not). They knew it would be temporary. These lenders knew those loans will be foreclosed some day. Why cheat millions of borrowers to make a colossal profit if one day it would be stopped? What is the reason that lenders took that kind of risk? This is because two nasty reasons: 1. Lenders/servicers will do anything possible to charge everything they want to the subprime borrower, then force to refinance or sell to charge a huge prepayment penalty. An amazing record of lender servicing abuses has been appeared all over the country. Many subprime loans have been sued for the same reason of illegal fees and abuses on the loan. The charge for high interest rates and illegal hidden fees was not enough to these greedy lenders; their biggest target was to profit from the huge prepayment penalty involved in this kind of loans. Lots of borrowers found their payments were missing after 2 or 3 months late, and obviously being extra-charged with outrageous late fees, being forced to refinance or sell the property. The lender/servicer then got their abusive high prepayment penalty quick and easy, including all the hidden fees since the origination of the loan.
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2. Lenders/servicers would not have any loss at the end.

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My understanding is that if a lender short-sells or pays to sell a foreclosed property they will not lose anything at the end. Why? Because every loss is completely tax deductible for them or even passed to the borrower as a 1099 income. I have heard about people suicide for loosing their houses or employments. I have heard about people on deep depression for the same reason of loosing properties. I have seen hard working humans loosing everything they had. I strongly believe the people of this country have been involved in a false illusion originated for the incontrollable greed of lenders behind a government fallacy. Is my personal perception that the only reason of making those huge profits was injecting capital to the weaken country economy after the terrorist attacks of 2001, with the approval and stimulation of the top guys without considering peoples hearts and dreams. Must be remembered also those 0% interest rate to buy cars all over the country and those 0% credit cards so people could buy anything anywhere anytime, leaving them into the worst debt in history. Mortgage lenders must be forced to make new arrangements with their borrowers or definitively to be severely punished and/or having their unfair contracts cancelled. For this cause, I am writing these lines to let people know how to defend themselves against these lenders. If any lender or servicer is facing a lawsuit based on legal violations on a mortgage, or they can simply avoid litigation by modifying a loan, guess what they will do? 99% of the time they will cave to the borrower demands and approve a sweet and affordable loan modification much better than anyone could have ever imagined or obtained on a simple negotiation or modification.

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The Scariest Thing Lenders They Dont Want You to Know

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I know many lenders are praying to anyone not read these lines. I dont care. Their hidden secret is the following: In order to any bank or lending institution to be entitled to make a claim on a debt (they are debt collectors), they must have to proof the following: 1. A debt collector must proof the existence of the ORIGINAL PROMISSORY NOTE. It means the physical paper signed at the settlement. This must be a document showing the borrowers signature in INK, and not a simple copy (signatures can be fraudulently copy and pasted to any document using the present technology). The debt collector must provide a certified copy dated after the borrowers request not before, and with the condition to have permission to inspect the physical note. 2. A debt collector must be in possession of the ORIGINAL PROMISSORY NOTE. If they cannot proof the existence of the note, then there is no note. That means there is no debt, and evidently, there is no owner of the debt. The lender must be the NOTE HOLDER in order to be entitled to make a claim. 3. A debt collector must have a LEGAL PROOF OF ASSIGNMENT if they are not the original lender. This proof of assignment must show that the original promissory note was sold, transferred or assigned FROM THE PAST NOTE HOLDER to the present lender/servicer trying to collect the debt. (If they dont have this, how anyone can know if they are the legal collector of borrowers money?) This proof they are the OWNER of the Promissory Note. This document must show by law, the signature of the past note holder, the present collecting lender/servicer and the BORROWERS signature (borrowers signature may be not necessary if that was waived in the Deed of Trust or Mortgage under Transfers Clause). 4. A debt collector must proof that a CERTAIN BALANCE IS REALLY DUE AND OWING IN THE NOTE. If a lender is claiming a certain balance is due, a borrower can legally request evidence such a general ledger and accounting records of the alleged pending debt, so it can be analyzed and verified from malicious extra charges. This evidence must be provided by the person responsible for preparing and maintaining the account general ledger, which must be sworn to and dated.

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My record at the time of this writing is that since 2001, 85% of subprime lenders have been not able to verify the holding and the ownership of the note. Some have been destroyed, missed or simply unavailable, which is unfair and illegal. If the Note is missing right now, where is our SSN information right now? Handled by whom? They even have been not able to provide evidence of the general ledger and accounting records. How they calculate their numbers to collect? Can they charge anything they want? If they claim that the records of prior servicers are missing, then there is no rightful way for anyone to PROVE UP THE BALANCES AND AMOUNTS THEY CLAIM ARE OWED. They may have improperly inflated the principal balance or the escrow account by not applying the payments correctly; adding fees not legally owed to the principal balance; miscalculating the interest and not properly amortizing the loan; fraudulent selling of the loan or misreporting the credit report. I dont have enough information for how many notes are also missing into the Prime lending, but I think that can be interesting to find out. Many Prime lenders do not transfer the loan to other investors and stay as original creditors since the origination of the loan. However, if they either have all the requirements cited above, they cant make a claim on the debt by law. Prime or Sub-prime, Federal Circuit Courts have ruled that the only way to prove the perfection of any security [including promissory note] is by actual possession of the security. Some lenders will say the note was destroyed or lost intentionally [the industry maintains this practice, specially the company named MERS, of whom we are going to talk later]; then they may be trying to hide the beneficial owners and shield them from any assignee liability arising from the actions of the servicer who they hire, supervise and most importantly AUTHORIZE to foreclose upon the borrower. Without the note, since subsequent endorsements are not recorded to avoid payment of taxes and hide true and real beneficial interests, there is NO POSSIBLE WAY to determine who ever held a rightful interest in the note and who the borrower may have claims or counter claims against and who should be presently before the court as a real party in interest. Furthermore, if there are missing assignments of the original note and the assignment went from Lender A to Lender B to Lender D without an intervening assignment from Lender B to Lender C and From Lender C to Lender D, then the note may be void and a legal nullity in the state.

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Being Practical In my Financial Seminars, I like to give an example of this situation:

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John Doe is in need of money and goes with Paul, his best friend to borrow him $10,000 dollars. John started paying back every month on time and everything was looking good. One day, there is a person knocking on the door of John: John opens the door of his house. -Good morning, how can I help you? -Im looking for John Doe. -I am. -My name is Daniel and Im coming for the monthly payment that you owe to Paul -Well I have the commitment with Paul not with you, Daniel. Said John. -I understand, but Paul and me we made a deal. He sold the debt to me and now I am the person you have to pay every month. -Are you the owner of the original note and you have a document where you can proof that there were a legal assignment of the note? -ahhrr I have everything of that in my files (debt collectors dont know anything about it), but if you dont pay me, you have to give me something of your property. -Yeah, right Unfortunately this is the same action that is happening in real life on hundred of thousands of foreclosures right now. A borrower made a commercial contract with New Century Mortgage, and now Countrywipe is collecting all the payments. How is that? Thats why many lenders are doing illegal actions taking away homes without having a legal ownership of the debt. And these debt collectors know the borrowers dont know their rights.

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What about if Paul already died? That situation would be the same as when the original creditor filed bankruptcy and now no longer exists anymore. A party trying to collect a debt that is not of its own. Do you know what is this called? FRAUD = the use of deception for unlawful gain. EXTORTION = the gaining of property or money by any kind of force. HARASSMENT = unsolicited words or conduct which tend to annoy, alarm or abuse another person. One of the biggest subprime lenders was NEW CENTURY, closing home loans as crazy everyday. Many borrowers signed with this bank. Now, NEW CENTURY is bankrupted. However, why is Countrywipe Bank trying to take away those homes now? A Borrower has a legal right to ask them for a proof of their ownership. If they dont have it well that means THERE IS NO OWNER. Then, by default, a Borrower may be the legal owner of the property until a lending company can proof they are the owner of the promissory note which may not exist anymore. In the following page any homeowner in this situation will know how to defend against any debt collector.

Remember, I am not an attorney, accountant, tax advisor or real estate guru giving legal, tax or financial advice. This book is not a substitute for the advice of a competent attorney. I do not claim to give you legal advice in this book to your specific circumstances. This book is intended just to educate homeowners in default of their mortgage. The information provided in this eBook is provided just for personal information. Under no circumstances does the information in this content represent a legal recommendation to sell, buy or hold any property.

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VALIDATION OF DEBT

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A borrower can send to the lender/servicer a request named NOTICE OF VALIDATION (or NOV) pursuant the FDCPA (Fair Debt Collection Practices Act) to legally ask for the documents that lenders dont want anybody to know. Any borrower needs to know that starting a defense before being late on the mortgage monthly payments, qualify to be in Federal Court for statutory claims (Consumer Fraud Act), although anytime after being late it is possible to dispute any debt as well. The FDCPA Section 15 809 gives loan borrowers certain consumer rights, whether or not a loan servicing is transferred, because this is designed for any DEBT COLLECTOR. If a borrower sends a VALIDATION OF DEBT to the present DEBT COLLECTOR (which may be a loan servicer or lender), the debt collector must provide the borrower all documentation within 30 days of receipt of the request (so, it must be sent by certified mail). The request should be in writing and must include the words VALIDATION OF DEBT. It cannot be written on the payment coupon or other payment medium supplied by the lender or servicer and it must be in a separated piece of paper, which includes borrowers name and account number, and the reason for the request. Not later than 30 days after receiving the request, the DEBT COLLECTOR (lender/servicer) must validate the debt by Federal Law. During this 30 days period, the DEBT COLLECTOR must suspend any and all collection activity (including the foreclose of the property) UNTIL the debt has been legally validated. If the debt collector fails to comply with the VALIDATION OF DEBT NOTICE", the borrower is entitled to an award of actual damages, statutory damages up to $1,000, costs and attorney's fees. 15 U.S.C. 1692k(a). Class action relief is also available. 15 U.S.C. 1692k(a)(2)(B). A debt collector who has violated any provision of the FDCPA is liable for actual damages. 15 U.S.C. 1692k(a)(1). A single violation is sufficient to support judgment for the consumer. Cacace v. Lucas, 775 F. Supp. 502, 505 (D.Conn. 1990); Supan v. Medical Bureau of Economics, Inc., 785 F. Supp. 304, 305 (D.Conn. 1991). Actual damages include emotional distress. The debt collector may be held "liable for any mental and emotional stress, embarrassment, and humiliation caused" by improper debt collection activities. The FDCPA contains special damage provisions for class actions. 15 U.S.C. 1692k. Recovery of statutory damages for the class is limited to 1% of the debt collector's net worth or $500,000, whichever is less.

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Sending the Request If a Borrower has concerns about who is the original lender or who is the company that is collecting the monthly payments, the Promissory Note and Mortgage/Deed of Trust must have the original lender information. The strategy used here is for validation of the note basically.

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The VALIDATION OF DEBT must be sent to the present lender/servicer (the one who is collecting the debt), and if the borrower has already received a Notice of Sale from the Trustee or a Judge, that letter must be sent to them as well. When a borrower receives the Notice of Sale from the Trustee or a Judge, the property is now being handled by other party than the lender. Note: any one trying to enforce a foreclosure is a DEBT COLLECTOR. To facilitate this, Im providing letters (which have been reviewed and approved by different attorneys) for every case in specific: validation letters for THE LENDER, validation letters for THE TRUSTEE in a non-judicial foreclosure and other set of letters for THE COURT in a judicial foreclosure. Borrowers may want to copy and paste the letters for every step of the foreclosure in process and fill them with the borrowers personal information; so it will be possible to defend in writing against any fraudulent and abusive lender. Note: In the monthly mortgage billing notice are printed the name of the present lender/servicer and the loan number. The borrower may want to verify his/her documents to find out who really is the original lender (validation letter must be sent JUST to the present debt collector). (The < >s in letters must be deleted and filled with the information of every case) The VALIDATION OF DEBT letter SHOULD NOT be included with the mortgage payment, but should be sent separately to the customer service address by Certified Mail. A borrower SHOULD continue to make the required mortgage and escrow payments until the validation is resolved, so, if the debt collector cannot validate the debt, the borrower may file a lawsuit for fraud, OR FORCE THE LENDER TO MAKE THE BEST OF THE MODIFICATIONS ON THE LOAN. A borrower may bring a private right of action under FDCPA, FCRA and RESPA, if he/she suffers damages due to the lender's servicing of the loan. See the FDCPA LAW at: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf

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DISCLAIMER: The reader will find formal letters in the following pages that can be used to legally request documentation to lenders and trustees (the debt collectors), which are not into any court; although these letters can work as official evidence in court. Some other template letters are Court Motion format letters that are just to be used in a court complaint. A MOTION is a request asking a court to do something. Motion to Dismiss = Request to Dismiss

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The Motion examples can be used as a guide to answer and try to dismiss a mortgage foreclosure complaint in court. Every state has Rules of Civil Procedures that govern how motions are formatted along with other rules of the court. I recommend a Borrower use these template letters included in this book as a stimulation to create their own with the help of a consumer rights protection, real estate, foreclosure, debt collection, mortgage servicing fraud or class action attorney (class action means court litigation of various persons complaining on the same case at the same time, which is extremely terrifying for any company). It is possible to find free or cheaper legal services in the states bar associations or asking to the clerks of any court. Also contacting the Attorneys General office or using http://www.google.com can be helpful. Searching Lawyer Referral Services at the web will find attorneys charging $35 dollars for 30 minutes counseling (in Arizona). If a borrower can afford legal services, the National Association of Consumer Advocates website http://www.napa.net will help to find a qualified attorney in any state. In my personal research, I have found that so many attorneys dont know about this strategy. Even consumer right attorneys or foreclosure attorneys or real estate attorneys do not have any idea what Im talking about. Anybody wanting to start a legal defense with the promissory note strategy may want to consult several attorneys before find someone with knowledge on this. Many attorneys told me they think it will not work, also many of them asked me to keep in touch with them to let them know about my investigations. The few I met with real knowledge on this were the most expensive ones (I have spent too much money and time on this investigation). A borrower must know that some attorneys will charge for their services until they win. If there is no winning, the attorney will not charge anything, and some will charge the lender if win. Again, the proceedings that are shown in this book should be taken only if a Borrower understands the rules of the court. If a Borrower do not understand the rules, or a Borrower dont have the time to learn the basics or do his/her homework (as studying the site jurisdictionary) then a Borrower may want to hire an experienced attorney to file the paperwork for him/her, or to show a Borrower how it should be filed.

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Also, Attorneys can be hired as coaches, in some cases, just giving advice on how to file motions and argue cases. That might be appropriate for some borrowers who wish to defend themselves in court, but cannot afford the higher fees of having the lawyer take over the case completely. Those persons who represent themselves in legal matters, are referred as Pro Se or Pro Per litigants. On court litigation, the Judge considers the written motion and any other response or objections, and then enters an order either granting or denying the motion. Both parties are notified of the decision on the motion. CRITICAL UPDATE (on September 2008): I have found that many borrowers being pro se (or representing themselves) are having hard time at court. An attorney told me that many judges will not give the reason to a pro se even if he/she is coming with all the law at his/her side. This is because it will not be nice to have somebody with no license, no experience and no court relationship, winning a case against a licensed attorney from a major lender, with years of experience and a strong court relationship (some attorneys are very good friends of judges). If a borrower wants to have a good fight in court, must be with a GOOD attorney (remember many dont know anything about it), unless the borrower studied and got prepared well enough to convince a judge. If an attorney was hired for representation at court, this fight will cheaper if a borrower made all the initial validation with the debt collectors. THE NOTE STRATEGY IS TO FINALIZE AT COURT. If you start this, start with that in mind. To fill the following template letters, it is recommendable to use different words to create letters a little different from the template included and written with the specific borrower needs. (The following form is to delete the < >s and fill them with borrowers information)

ATTENTION MODIFICATION COMPANIES: if you are buying this eBook to use these strategies for your clients and make a profit, let me tell you that many modification companies all over the country has been trying to sue me because lenders and trustees are sueing them. It is not possible. You cannot sue me, but lenders they can sue you if you use these letters. You cannot use these letters as a third party. Thats illegal. THIS EBOOK IS DESIGNED ONLY FOR BORROWERS AS A PERSONAL EDUCATION IN THIS MATTER AND THEY CAN LEGALLY USE SIMILAR LETTERS FOR THEMSELVES. You Modification Companies are herein warned. Im not liable for any lawsuits you may have when using these letters in behalf of your clients.

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Foreclosure Secrets Guide VALIDATION OF DEBT


CERTIFIED MAIL # <BORROWER 1> <BORROWER 2> <ADDRESS> <CITY, STATE, ZIP> <PHONE NUMBER>

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<LENDER> <ADDRESS> <CITY, STATE, ZIP> <DATE> Re: Loan Number #

To Whom It May Concern:

You are in receipt of a NOTICE OF VALIDATION under the authority of The Fair Debt Collections Practices Act (15 USC 809) regarding the loan number cited above. I am in receipt of your companys letter informing me you are handling the account mentioned above. However, after reviewing my records, I am unable to find documentation of any contractual relationship between you, <LENDER> and me, <BORROWER> which makes you a person entitled to enforce a claim against me. As I dont have any document that can substantiate your legal standing to collect this alleged debt or a portion thereof in the past, I may have paid you in error. It is not now, nor has it ever been my intention to avoid paying any obligation that I officially owe. In order that I can make arrangements to pay an obligation which I may owe, please document and verify the debt by complying in good faith with this request for validation and notice that I dispute part of, or all of the alleged debt. 1. I am not in receipt of any notification of assignment, sale or transfer for this promissory note. You were required to send me written notice of the assignment, sale or transfer of the servicing not less than 15 days before the effective date of the transfer and another notice 15 days after the date of the transfer as well. This notification is required under RESPA 12 USC section 2605. However, according to my records you did not comply with this requirement. Providing proof of notification and delivery will be evidence that you have not violated the requirements of that Section.

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2. Please provide a certified copy of the original promissory note and state under penalty of perjury that you are the holder in due course of the promissory note and will produce the original for my own and a judges inspection if we go to a trial to contest these matters. 3. State that the original note is available for physical inspection and copying, providing the address of the company holding the document and their phone number for contact. 4. Produce a copy of the account and general ledger statement showing the loan history including all payments made, all fees incurred, what has been paid out of the escrow account, and how all payments were applied. This information should cover the entire life of the loan and the full accounting of the alleged obligation that you are now attempting to collect. 5. Identify by name and address all persons, corporations, associations, or any other parties having an interest in legal proceedings regarding the alleged debt, including mortgage insurance company if applicable. 6. Verify under penalty of perjury that you know and understand that certain clauses in a contract of adhesion, such as a so-called forum selection clause, are unenforceable unless the party to whom the contract is extended could have rejected the clause without impunity. 7. Verify that you know and understand that contacting me again after receipt of this notice without providing procedurally proper validation of the debt constitutes the use of interstate communications in a scheme of fraud by advancing a writing, which you know is false with the intention that others rely on the written communication to their detriment. 8. If you cannot provide legal evidence that you have a legal standing to collect this debt, shall be not any data furnished to the credit report agencies. Further derogatory reporting to one or more of the credit bureaus may constitute violations of the FDCPA, FCRA, RESPA, and other laws. 9. I understand that under the FDCPA you are required to verify this debt within 30 days and must suspend any collection activity including the foreclose of the deed of trust on this property- until you legally validate this debt. Disputing the debt

_________________________ <NAME>

Cc:

Federal Trade Commission, Consumer Response Center 600 Pennsylvania Avenue, NW, Washington, DC 20580
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LENDER RESPONSE After a lender receives this type of written request, they will be shocked if they cant proof the possession of the original promissory note. A borrower will know when his/her debt collector doesnt have the note when a response is sent back. Most lending companies will send anything but the items requested. Most of the time, debt collectors will send the following: Validation papers printed from a computer Nothing certified (notarized) and not dated recently Nothing showing the name and signature of the original lender or past note holder Nothing proving the notification of a transfer Simple copies, etc.

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They perfectly know what the legal requirements are. Any borrower after reading this book will know that as well. So, why they dont send it? It must be because they dont have it. Isnt? Most lenders will send a copy of a GENERAL Assignment of Deed of Trust/Mortgage. The requesting borrower has to be not confused. That letter will say the Deed of Trust/Mortgage is being assigned to another party, but will not contain their name or the name of the past note holder. Even most attorneys get confused with this. NOT A BORROWER WHO HAS READ THE FORECLOSURE SECRETS GUIDE! Pursuant the Uniform Commercial Code Section 3-204, the name and the signature of both the beneficiary and the original creditor must be disclosed in the same document 3-204 (d). The signature of the borrower must be included as well into the assignment or transfer, unless a clause in the deed of trust/mortgage waives that (most deeds of trust disclose this at clause #20). If the lender didnt send anything as requested, which may be 85% possible, the following letter example called NOTICE OF INSUFFICIENT VALIDATION (or NOIV) must be used to write a response letter and send it back to the desperate lender. This response must be sent certified mail as well. I recommend having printed evidence of the delivery for free at http://www.usps.com under track and confirmation which is a free certified mail confirmation service that can be accepted in any court.

(The following form is to delete the < >s and fill them with borrowers information)

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NOTICE OF INSUFFICIENT VALIDATION CERTIFIED MAIL # <BORROWER 1> <ADDRESS> <CITY, STATE, ZIP> <PHONE NUMBER> <LENDER> <ADDRESS> <CITY, STATE, ZIP> <DATE> RE: ACCT # _____________________________

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To whom it may concern: On <DATE> I sent a letter regarding a NOTICE OF VALIDATION (see attachment). The basis for my letter is that you were required to validate a debt. However, you sent me back a response dated on <00/00/00> which failed or refused to comply with my request. Please provide a certified copy of the original note dated after my first request, a legal proof of assignment and ALL other items included in my initial letter of validation. If the note is missing or destroyed, I request the facts in how the original was unavailable and an explanation in how this can be justifiable under Rule 1002 of the Federal Rules of Evidence. If you are not the holder of the note, I request an explanation in how you are entitled to make a claim on a promissory note being not the note holder. Please keep in mind that the purchaser of a claim is not entitled to enforce anything. I will wait for a significant reply within 15 days (as I already gave you 30 days). In the event you cannot comply accordingly with my VALIDATION OF DEBT, you must suspend all collection activity to this account (including a foreclose in the deed of trust of this property) sending me written evidence that a deletion request has been submitted to the credit bureaus. As you may understand, I cant keep sending my payments until you provide me legal information in who is the holder of my original promissory note. Sincerely, _________________________ <NAME> Cc: FTC, RESPA, Attorney General and State Banking
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FTC AND HUD COMPLAINT If a borrower believes his/her mortgage servicer has not responded appropriately to a written inquiry, the states Attorney General Consumer Protection Office must be contacted.

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The borrower also should contact the Department of Housing and Urban Development (HUD) to file a complaint under the RESPA regulations. Write: Office of RESPA and Interstate Land Sales, Department of Housing and Urban Development, 451 Seventh Street, S.W., Room 9154, Washington, DC 20410, and provide copies of all records. In addition, the borrower may want to contact an attorney to advice of legal rights. Under certain sections of the RESPA, consumers can initiate lawsuits and obtain actual damages, plus additional damages, for a pattern or practice of noncompliance. In successful actions, consumers also may obtain court costs and attorney's fees. Borrower may want to contact the Federal Trade Commission (FTC). The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint with the FTC or to get free information on consumer issues, visit http://www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad. An aggressive attorney may advice to a complaining borrower to dont wait for any response from the FTC and start a lawsuit immediately against the lender after the first 30 days of the Validation Letter. If this is the case, a Trustee defense (living in a non-judicial foreclosure state) or a Workout Proposal may not be necessary anymore. A borrower may want to apply a Trustee Defense or a Workout Proposal if dont want to go to court immediately or keep negotiating with the lender. If a debt collector didnt respond accordingly after 15 days of receiving the insufficient validation notice, then the following letter may be used as an idea in how to negotiate. Good luck, and dont forget to keep praying all the time. Nehemiah 4:14 be not ye afraid of them; remember the Lord, which is great and terrible, and fight for your brethren, your sons, and your daughters, your wives, and your houses.

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HOW TO SUBMIT A RESPA VIOLATION COMPLAINT

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The Real Estate Settlement Procedures Act (RESPA) under the United States Department of Housing and Urban Development (HUD) has a mechanism for consumers and others to file a complaint with RESPA if RESPA violations are being committed or you believe that RESPA violation is being committed. If a complaint is going to be filed with the RESPA division, please make sure you follow the following steps so your complaint gets the most attention from the investigators: 1. List the names, addresses, and phone numbers of the alleged violators of RESPA; 2. Write a detailed summary of what happened or what's happening that leads you to believe that a violation is taking or has taken place; 3. Make sure you list the specific section of the RESPA statute that was violated. Often times regulators or investigators will miss even the most generic of violations so listing the appropriate violations will help them do their job better; 4. Check your spelling and make sure the complaint is coherent and easily understood to the reader; and 5. Include your name, phone number, and address in the complaint so that an investigator can contact you for more information, if they need to contact you. RESPA Complaints can be submitted confidentially to HUD as well. If you believe you have a potential litigation matter with RESPA to HUD, I would recommend that you submit your complaint to your attorneys prior to submission to the HUD office or let your attorneys file the complaint for you. Once you are ready to send your RESPA violations complaint, you will send it to this address: Office of RESPA and Interstate Land Sales United States Department of Housing and Urban Development 451 7th Street, SW, Room 9154 Washington, D.C. 20410 The RESPA Division does have a limited number of staff, fewer than 30, and the number of violations is in the thousands so the more detailed and professional the complaint is the more weight it will carry.

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Update: All communications for the NOTE STRATEGY must be in writing, nothing over the phone. Also, W2, paystubs, bank statements, proof of income may not be necessary.

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My experience is that I have been contacting by phone many lenders to investigate where the original promissory note is located physically, and no one knows about it. Many lenders are not willing to talk about it over the phone. Some lenders gave me the name of the title company who is holding the original note, but when I called to the title company, there was no company anymore. Many companies related to real estate (such as mortgage brokers, real estate brokers, title companies, etc) are closed after these years. Where is the note? Nobody could give me information over the phone. Additionally, at this time, ALL LENDERS ARE NOT LOWERING THE BALANCE ANYMORE with this strategy. Some lenders are just lowering the interest rate and extending the amortization, others are totally ignoring this process.

THE REASON: Lenders are expecting the borrower now go to Court FIRST so they can approve a modification that lowers the balance and/or cancel a second loan, as they know now that many borrowers will not proceed to file a complaint in court BECAUSE OF FEAR.

IF ANY HOMEOWNER WANTS TO PURSUE THE NOTE STRATEGY, MUST BE WILLING TO GO TO THE END: THE COURT.

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WORKOUT PROPOSAL
<BORROWER 1> <ADDRESS> <CITY, STATE, ZIP> <PHONE NUMBER> <LENDER> <ADDRESS> <CITY, STATE, ZIP> <DATE> RE: ACCT # _____________________________

To whom it may concern:

This is an attempt to avoid litigation. Any information obtained will be used for that purpose. At this time, you have not provided evidence that your company is the legal note holder, therefore, by law, you cannot call to my house, you cannot send me any more collection letters, you cannot report any derogatory information to the credit bureaus and of course, you cannot foreclose my home under the authority of The FDCPA 15 USC 809 (b). In order to avoid long legal procedures and a possible record of fraud in your history, is my desire to propose a workout for a new agreement, specifically between YOU and ME, which can be beneficial for both parties. My Workout proposal is the following: Interest Rate: Amortization: Payments: New Loan Amount (market price): New Monthly Payment: Fees paid in advance: First Monthly Payment: 2% 40 Yrs. FIXED Principal and Interest $xxx,xxx $xxx.xx $0.00 <Two months later>

Please send me a Workout Package to sign according this proposal in no less than 15 days. You can mail it to <ADDRESS>. Sincerely,

_________________________ NAME

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TRUSTEE DEFENSE After the dispute letters were sent to the lender and there was not any legal verification of the items requested, by law it must be stopped any collection activity until the debt is validated. Unfortunately, most lenders will not accept this situation and will try to find a remedy sending the debt to a trustee to sell the property in foreclosure.

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(A borrower may want to keep saving the monthly payments apart while the note is found -in a money market account so it can earn better interests than a savings account-, remembering it may take years to find the note). At this time, if they couldnt validate this debt, by law they cannot contact in writing or by phone- a consumer, borrower or debtor anymore until the debt is confirmed by legal proof. There might be a penalty of $1,000 for every mailing or recorded call from the invalidated lender. It is imperative to keep a record of every letter sent and received. If the harassing calls are recorded that will be perfect. Invalidated lenders not even can report any derogatory information to the credit bureaus. There are more monetary penalties for these violations. Also, at this time the borrower may have decided already to file a complaint in court against the lender/servicer, so he/she can avoid a fight with the Trustee, or maybe the lender/servicer is now accepting a loan modification. If a borrower has already received the Notice of Sale while reading this book, have already tried to negotiate with the lender to no avail in the past and is living in a non-judicial foreclosure state, the validation of debt strategy may be considered by the borrower in order to find out if the note is really owned by any debt collector involved. This borrower may want to start sending notice validation letters to lender/servicer and the trustee at the same time, and keep all copies. Any borrower who wants to enforce everything what I am writing here, must do his/her homework to feel more confident doing these disputes. I know these defenses may sound impressive or hard to believe at first hand, thats why I suggest anyone in doubt to ask a qualified attorney about this, or look at the local law library or look in the local library or make an extensive research on any web searcher, so any homeowner can understand how consumer rights works and feel more secure to defend this cause. Knowledge is Power.

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A borrower that already disputed a debt with his/her lender, must understand that the lender will not be stay silent, and may want to start giving $1,000 dollars everyday to the borrower (what I want to say, is that the lender may start harassing with calls and letters). It will be imperative to record everything. It may be possible that a lender/servicer will send the Notice of Default after 3 months without receiving a payment. The lender knows at this time, that they are in serious problem if they dont provide proof of the possession of the promissory note. They may loose the property, not the borrower. For the same reason, it may be now the best time to negotiate with the lender and force them to accept any conditions from the borrower. If there was not any negotiation settled between both parts, after the 4th month, the borrower may receive the Notice of Sale from a Trustee. As we have seen in past chapters, a Trustees Sale will be done ONLY in states implementing a NON-JUDICIAL FORECLOSURE process, which means a process not involving any court. The reader must be reminded that a Trustee is like an intermediary or a third party looking to fairly intercede between the lender and the borrower. A Trustee may be a title agency or an attorney, for example. But remember, a Trustee is ruled as a DEBT COLLECTOR, and they must also be following the FDCPA. I have also the understanding that very often, a Trustee may be inclined more to the side of the lender than the borrowers. A Trustee is liable for this action, though. If the borrower has a VALIDATION OF DEBT done and recorded by certified mail BEFORE BEING IN DEFAULT, it will be stronger to win a lawsuit. If a borrower is already in default, it also may be possible to make a legal fight based in the same allegations, and win. MOST LENDERS do not provide a legal proof of assignment (or assessment) when asked in a validation of debt or at the time of filing the Notice of Default. I dont know why. It might be because THEY DONT HAVE IT. With this, a borrower can legally request in writing the Trustee or Judge (depending in the borrowers state) to force the foreclosing lender to provide proof of the note ownership. Again, the proof can be a certified copy of the assignment of the original note; negotiated, transferred or sold to the new lender claiming for the payment.

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When a Borrower in default receives the Notice of Sale, that document must show by Federal Law the following statement (named as MINI-MIRANDA):

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THIS FIRM IS ATTEMPTING TO COLLECT A DEBT. THE DEBT SET FORTH ON THIS NOTICE WILL BE ASSUMED TO BE VALID UNLESS A BORROWER DISPUTE THE DEBT BY PROVIDING THIS OFFICE WITH A WRITTEN NOTICE OF YOUR DISPUTE WITHIN 30 DAYS OF YOUR RECEIPT OF THIS NOTICE, SETTING FORTH THE BASIS OF YOUR DISPUTE. IF A BORROWER DISPUTE THE DEBT IN WRITING WITHIN 30 DAYS, WE WILL OBTAIN AND MAIL VERIFICATION OF THE DEBT TO YOU. IF THE CREDITOR IDENTIFIED IN THIS NOTICE IS DIFFERENT THAN YOUR ORIGINAL CREDITOR, WE WILL PROVIDE A BORROWER WITH THE NAME AND ADDRESS OF THE ORIGINAL CREDITOR IF A BORROWER REQUESTS THIS INFORMATION IN WRITING WITHIN 30 DAYS. The Federal Law clearly says that a borrower or debtor can dispute THE VERIFICATION OF THE DEBT. If the borrower has failed to dispute the debt in writing before the 30 days of receiving the notice, can cite the Fair Debt Collection Practices Act 809 Validation of debts [15 USC 1692g], which says on (c) The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer. With this citation included in a written dispute after the 30 days, it may be not a problem. Almost all subprime loans have been bought and sold many times to other investors. Every borrower must check this legal standing of their lenders, even if they are not transferred. Any Debt Collector is regulated by the FDCPA. Period. And a Trustee IS a debt collector. The following template letter is to be filled and sent to the Trustee in charge of the sale of the property after the Notice of Sale is received. The Notice of Sale from the Trustee is used just in the states of non-judicial foreclosures. Every homeowner must make their homework to learn all these details. After these Trustees template letters, I am providing letter examples for a court Judge used in a judicial foreclosure state. These court letter examples may be used also if the trustees letters were ignored or not satisfied. (The following form is to delete the < >s and fill them with borrowers information) Is recommended to use own words and make the letter a little different from this.

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NOTICE OF VALIDATION CERTIFIED MAIL # BORROWER 1 BORROWER 2 ADDRESS CITY, STATE, ZIP PHONE NUMBER TRUSTEE NAME ADDRESS CITY, STATE, ZIP <DATE> RE: TS NO: ____________________________ Loan # _____________________________ Order # _____________________________ APN # _____________________________

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To whom it may concern: I am in receipt of a Notice of Sale of my property located at < ADDRESS >. This letter is stating that the property will be sold, pursuant to the power of sale under a certain Deed of Trust. I am sending this response by certified mail in order to make an opposition to this NOTICE OF SALE; my reason is that there is a LACK OF STANDING on this notice. I am unable to find any documentation that I owe this debt or that <LENDER> as a debt collector have any legal standing to collect anything (if any liability even exists) OR <LENDER> had any legal standing to collect this alleged debt or a portion thereof in the past; therefore I may have paid them in error. I respectfully request YOUR COMPANY to provide a DEBT VALIDATION under the authority of The FDCPA (15 USC 809).

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Please provide me the following: 1. Legal proof of ownership of the original note which entitles any lender or person to be THE NOTE HOLDER of the debt in claim 2. Legal proof of existence of the original note in question and contact information for physical inspection. 3. Legal proof of assignment to substantiate their claim, specifically the past note holder naming the present company as a person entitled to collect a debt against me

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4. Complete records of the general ledger and accounting of the alleged unpaid promissory note, proving that a certain balance is really due and owing in the note. Unless these items are provided, I will not recognize the claim of <LENDER> for the property located at <ADDRESS>. Therefore, pursuant FDCPA (15 USC 809) this property cannot be sold by YOUR COMPANY at the scheduled date until this request has been legally validated. Please suspend your efforts to foreclose the deed of trust on my property until this debt has been validated. If this validation notice is after the (30) days of the date received by me, the FDCPA 15 USC 5 (c) says that the failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer. Please also follow the FDCPA (15 USC 1692f808)(6) which states that: A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section: (6) Taking any non-judicial action to effect dispossession or disablement of property if (A) there is no present right to possession of the property claimed as collateral through an enforceable security interest; Thank you in advance for your cooperation. I look forward to resolving this matter as quickly and efficiently as possible. Respectfully, ________________________ BORROWER 1 Cc: <Foreclosing lender> Cc: FTC ________________________ BORROWER 2

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TRUSTEE RESPONSE

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The duties of a Trustee are to effectively manage every concern of the security instrument which is the Mortgage or Deed of Trust depending in the state. Unfortunately, Trustee clerks dont know ANYTHING about it and they dont understand the Promissory Note and legal transfer guidelines that we are talking about. They even will tell you that they are NOT DEBT COLLECTORS! Even managers, supervisors or even the president of the company will tell you this. If they are recorded stating that over the phone, it will be an additional powerful tool to fight against them. I know that trustees are not responding to the validation of debt request and let the lenders/servicers to take charge of that. For this reason, if a borrower did not receive a satisfactory resolution for the Notice of Validation from the Trustee, it must be necessary to send a second letter.

(The following form is to delete the < >s and fill them with borrowers information)

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NOTICE OF INSUFFICIENT VALIDATION CERTIFIED MAIL # BORROWER 1 BORROWER 2 ADDRESS CITY, STATE, ZIP PHONE NUMBER TRUSTEE NAME ADDRESS CITY, STATE, ZIP <DATE> RE: TS NO: ____________________________ Loan # _____________________________ Order # _____________________________ APN # _____________________________

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To whom it may concern: On <DATE> I sent a letter regarding a NOTICE OF VALIDATION (see attachment). The basis for my letter is that YOUR COMPANY, as a debt collector, was required to provide proof of legal standing to substantiate the claim of <LENDER>, as a person entitled to collect a debt on me. However, YOUR COMPANY failed or refused to supply these legal requirements: 1. 2. 3. 4. I am not in receipt of legal proof of ownership of the note I am not in receipt of legal proof of existence of the note nor contact information I am not in receipt of legal proof of assignment of the note I am not in receipt of legal proof of a certain balance due on the note

As <LENDER> and your company have failed to proof the existence of the note, then there is no note. A promissory note is the instrument or the security interest in which must be perfected by possession ONLY. Therefore, <LENDER> and your company have no legal standing to collect this debt unless due course status has been established. If the note is missing or destroyed, I request the facts in how the original was destroyed and an explanation in how this can be justifiable under Rule 1002 of the Federal Rules of Evidence.

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As a result of the harassment and attempt of extortion Ive been exposed, I have been damaged financially, socially, and emotionally.

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Your company has 10 business days to respond to this letter accurately. If more time is in need it may be requested so in writing. If your company cannot substantiate that I am obligated to contract with <LENDER>, by law it must be suspended any and all collection efforts (including the foreclose of the deed of trust on this property). This is the last chance to cease and desist all Foreclosure efforts. If this matter is not corrected within 10 business days I will have no other choice but to initiate complaints against your company for violations of the law with the applicable administrative agencies. In addition, I will also submit the basis for my argument and all correspondence to a legal firm specializing in Class Action Lawsuits. This request is being sent CERTIFIED MAIL to insure it is processed in a timely manner. Your help and cooperation is greatly appreciated. Thank you in advance for your cooperation. I look forward to resolving this matter as quickly and efficiently as possible. Respectfully,

________________________ BORROWER 1

________________________ BORROWER 2

Cc: <Foreclosing lender> Cc: FTC Cc: RESPA Cc: Attorney General Cc: State Banking

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COURT LITIGATION If a process of validation has been ignored by the lender and/or trustee and they keep trying to foreclose the property and dont want to make any negotiation, the next step is to file a Court Litigation.

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Some aggressive attorneys will file litigation in Court for Fraud after the first 30 days of sending the validation of debt if that is not sufficiently validated. Taking this fight to the court may be intimidating for some and exciting for others; the difference between each other is just the confidence in what they are doing. Thats it. Going to court is like 3 persons getting together to talk about a concern: the complainer, the defendant and a judge. Everybody has their time to talk and its supposed nobody will interrupt each other and everybody will remain calm, respectful and courteous with no screams at all. I insist, if a borrower is not doing a research in other sources, all of this may look like a crazy stuff. I strongly suggest to keep looking for information on this, especially information about the states procedures. Working with an attorney will be the best, even if the attorney is operating just as a coach in the preparation of these letter examples or the borrowers litigation. It is better to not file anything at court if an attorney has not criticized a motion or complaint. A borrower can search Lawyer Referral Services at the web where attorneys charge $35 dollars for 30 minutes counseling (in Arizona). I suggest consulting at least 3 attorneys at this price to get a better advice. I have to say that IN SOME STATES (Virginia for example) borrowers are winning these cases when filing against the lender for FRAUD. Other states have many judges granting these cases to the lenders and complaining borrowers are not winning. Many borrowers get discouraged after a decision like that. Any borrower need to know that there is another resource: the borrower still can appeal in Superior Court filing a WRONGFUL FORECLOSURE ACTION, which is one of the worst things that can happen to a lender. We are going to talk about that later. First, lets start with the first step in Court: a Complaint.

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In Non-Judicial Foreclosures

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For borrowers living into the non-judicial foreclosure system states, the lender will send the case directly to the trustee after the 4th month (average); going to court will be only if the lender files a claim or complaint against the borrower or if the borrower files a complaint against the lender. If the borrower already sent validation letters to lender and/or trustee, and the requested validation has not been satisfied, the following step is to litigate in court. Along that, sending complaining letters to every regulative agency available may be beneficial, and if the borrower has the guts, will be awesome to contact local and national media as well. Validation letters may not have stopped the Trustees foreclosure at this time, but the borrower has now a powerful tool to fight against the lender. If a borrower has not been successful in stopping a foreclosure, the borrower must file a complaint at the district court (at trial or court of first instance) at least five days before the scheduled sales date (depending in the state) to stop the sale legally. To file a complaint in Arizona is around $350 dollars (whoever files it, has to pay that fee). A borrower can waive this charge if requests to the clerk of the court and qualifies to proceed in forma pauperis. A plaintiff (person making the complaint) must file at the district court a complaint, a summons to the defendant party and a certificate of service. All of this has to be mailed by certified mail to every party involved and keep a copy. Every court has free information in how to file a complaint or a motion as pro se (without an attorney). The District Courts are the general trial courts (where parties present their first arguments) of the United Federal Court System. In some states this court is named also as circuit court; others states name it different. The objective of this litigation is to enforce Federal Laws against the lender.

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COURT COMPLAINT A complaint can be filed by a borrower when all the written requests have been sent to the lender/servicer and/or Trustee with no satisfactory responses.

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If the lender has not been able to provide legal proof of ownership, the borrower can file a COMPLAINT in the District Court where the property is located (not in the district court where the borrower lives). If there is a foreclosure sale, it must be stopped by law once the complaint was filed, and the lender/servicer must send a response back (or MOTION) with the evidence to rebut the facts of the complaint. If the lender/servicer does not send back a response in time, they will lose the case by default. The following format letter is to have an idea in how to file a complaint. A qualified attorney must be consulted to verify everything is in compliance with the borrower state statutes. A good saving idea is to prepare all the defense letters (NOV and NOIV for lender, trustee, and complaint to court) at once and let the attorney direct the borrower in the whole process at the same consult. It will depend in the affordability of every borrower. Remember that many attorneys are not familiar with this type of fights and every state is different. So, if a borrower is pursuing the Note Strategy, must be advised by a local attorney on this fight. If the lender/servicer already filed a complaint against the borrower in court, the complaint letter will not be necessary. In that case, the required letter is a MOTION, which is the response to a lenders complaint (shown after the complaint letter example). (The following COMPLAINT form is to delete the < >s and fill them with borrowers information)

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<NAME> <ADDRESS> <CITY, STATE, ZIP> <PHONE NUMBER> (Plaintiff) UNITED STATES DISTRICT COURT DISTRICT OF _____(state)_________ CASE # ____________________ <NAME> Plaintiff, vs. <LENDER> Defendant ___________________________________________/

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COMPLAINT 1. Plaintiff is a citizen of the State of _________________ 2. Defendant is a corporation with its principal offices at ________________________________ 3. On <DATE>, Plaintiff bought a home at <ADDRESS>. 4. Plaintiff bought that home with the approval of a <$250,000> home loan, promising Plaintiff to repay that amount to the lender within 30 years. 5. Defendant wants to foreclose the home through <TRUSTEE>. 6. Plaintiff requested Defendant to produce to Plaintiff the documents described in the

Validation of Debt which is attached as an exhibit to this action.


7. Plaintiff denies the legal standing of Defendant to foreclose. Defendant is not the lender. 8. Plaintiff, therefore, asks the Court to impose punitive damages to Defendant for Harassment, Fraud and Attempt of Extortion.

__________________________ <NAME> (Plaintiff) <ADDRESS> <TELEPHONE>


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<NAME> <ADDRESS> <CITY, STATE, ZIP> <PHONE NUMBER> (Plaintiff) UNITED STATES DISTRICT COURT DISTRICT OF _____(state)_________ CASE # ____________________ <NAME> Plaintiff, vs. <LENDER> Defendant ___________________________________________/

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SUMMONS

YOU ARE HEREBY SUMMONED and required to serve on _______(PLAINTIFFS name and address)________ an answer to the complaint which is served on you with this summons, ______________days after service of this summons on you, exclusive of the day of service. If you fail to do so, judgment by default will be taken against you for the relief demanded in the complaint. Any answer that you serve on the parties to this action must be filed with the Clerk of this Court within a reasonable period of time after service.

____________________________ CLERK

_________________________________ DATE

____________________________ (By) DEPUTY CLERK

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CERTIFICATE OF SERVICE

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I, < NAME > hereby certify that on _________________, 20____, I mailed a true and correct copy of the above and foregoing complaint via certified mail to the persons listed below: <LENDER> <ADDRESS> <CITY, STATE, ZIP CODE> CERTIFIED MAIL #

____________________________________ < NAME 1>

________________________________ < NAME 2>

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Judicial Foreclosures For borrowers living in the judicial foreclosure system, they dont have to contact a trustee. (A list of states into this system is at the end of this eBook). When a house is in default, usually after the 4th month (or more, depending in the state) the lender will send the case immediately to the court and will open a file. Then, a judge can officially make the borrower pay through the court or will foreclose the property. The court will send a summons (or notice) to the borrower address notifying the complaint FROM THE LENDER. When a person responds to that notification requesting anything, it is called a MOTION. A Motion is simply a Request. Motion to Dismiss = Request to Dismiss. The following letter template is a Motion to Dismiss a Foreclosure Sale with supportive attachments. It can also be used as response if the lender or trustee filed a complaint against the borrower after the requests. Every attorney has different ideas in how to file a Motion, and many of that ideas work better depending in the state. So consult an attorney before to file it. It may be possible to pay a fee to file a motion.

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REMEMBER: THE FOLLOWING MOTIONS ARE JUST FOR JUDICIAL FORECLOSURE STATES. Note: if a borrower is not filling the Motion or the Complaint by himself, the motion must be signed in front of a Notary Public.

(The following form is to delete the < >s and fill them with borrowers information)

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<NAME 1> <NAME 2> <ADDRESS> <CITY, STATE, ZIP> <PHONE NUMBER> (DEBTORS)

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UNITED STATES DISTRICT COURT DISTRICT OF _____(state)_________ CASE # XX-XXXXX

<LENDER> Plaintiff, vs.

<NAME 1> <NAME 2>

Defendants ___________________________________________/

DEFENDANTS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED <NAME>, Defendant, respectfully moves this Honorable Court to grant this motion to dismiss case number XX-XXXX-XX with prejudice. <LENDER> (hereinafter referred as lender) and its counsel has failed to state a claim upon which relief can be granted. I, <NAME>, of age and competent to testify, state as follows based on my own personal knowledge:
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1. I deny the following allegations: Paragraphs #___, #___ and #___. 2. I affirm the following allegations: Paragraphs #___, #___ and #___.

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3. I am unable to find any documentation considered Evidence Admissible in Court that verifies I owe this debt or that lender has any legal standing to collect anything (if any liability even exists). I also dont have any documentation that lender had any legal standing to collect this alleged debt or a portion thereof in the past; therefore, I may have paid them in error. 4. I am not in receipt of any document which verifies that lender has standing to sue in any Court by virtue of being duly registered as lender or by lender meeting the minimum contacts requirements for in personam jurisdiction. 5. I am not in receipt of legal proof of ownership on the original note, which entitles lender to be THE NOTE HOLDER of the debt in claim. 6. I am not in receipt of legal proof of existence of the original note in question. 7. I am not in receipt of legal proof of assignment to substantiate their claim, specifically the past note holder naming lender as a person entitled to collect a debt against me. 8. I am not in receipt of any notification of assignment, sale or transfer for this promissory note.

9. I am not in receipt of the complete records of the general ledger and accounting of the alleged unpaid promissory note, proving that $_________________ is really due and owing in the note. 10. My credit report has derogatory information from this matter. As lender does not have legal standing to collect this debt, shall be not any data furnished to the credit report agencies. Sincerely,

____________________________________ <NAME 1>

________________________________ < NAME 2>

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Memorandums of Law
Memorandum of law in support of the point of law that party alleging to be creditor must prove standing

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<LENDER> has failed or refused to produce the actual note or other debt obligation that <LENDER> alleges < NAME > owes. Where the complaining party cannot prove the existence of the note, then there is no note. To recover on a promissory note, the plaintiff must prove: (1) the existence of the note in question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note; and (4) that a certain balance is due and owing on the note. See In Re: SMS Financial LLc. v. Abco Homes, Inc. No.98-50117 February 18, 1999 (5th Circuit Court of Appeals.) Volume 29 of the New Jersey Practice Series, Chapter 10 Section 123, page 566, emphatically states, ...; and no part payments should be made on the bond or note unless the person to whom payment is made is able to produce the bond or note and the part payments are endorsed thereon. It would seem that the mortgagor would normally have a Common law right to demand production or surrender of the bond or note and mortgage, as the case may be. See Restatement, Contracts S 170(3), (4) (1932); C.J.S. Mortgages S 469 in Carnegie Bank v Shalleck 256 N.J. Super 23 (App. Div 1992), the Appellate Division held, When the underlying mortgage is evidenced by an instrument meeting the criteria for negotiability set forth in N.J.S. 12A:3104, the holder of the instrument shall be afforded all the rights and protections provided a holder in due course pursuant to N.J.S. 12A: 3- 302" Since no one is able to produce the instrument there is no competent evidence before the Court that any party is the holder of the alleged note or the true holder in due course. New Jersey common law dictates that the plaintiff prove the existence of the alleged note in question, prove that the party sued signed the alleged note, prove that the plaintiff is the owner and holder of the alleged note, and prove that certain balance is due and owing on any alleged note. Federal Circuit Courts have ruled that the only way to prove the perfection of any security is by actual possession of the security. See Matter of Staff Mortg. & Inv. Corp., 550 F.2d 1228 (9th Cir 1977), Under the Uniform Commercial Code, the only notice sufficient to inform all interested parties that a security interest in instruments has been perfected is actual possession by the secured party, his agent or bailee. Bankruptcy Courts have followed the Uniform Commercial Code. In Re Investors & lenders, Ltd. 165 B.R. 389 (Bkrtcy.D.N.J.1994), Under the New Jersey Uniform Commercial Code (NJUCC), promissory note is instrument, security interest in which must be perfected by possession... Memorandum of law in support of the point of law that to prove damages for default of a debt, party must enter the account and general ledger statement into the record through a competent fact witness

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To prove up claim of damages, creditor must enter evidence incorporating records such as a general ledger and accounting of an alleged unpaid promissory note, the person responsible for preparing and

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maintaining the account general ledger must provide a complete accounting which must be sworn to and dated by the person who maintained the ledger. See Pacific Concrete F.C.U. V. Kauanoe, 62 Haw. 334, 614 P.2d 936 (1980), GE Capital Hawaii, Inc. v. Yonenaka 25 P.3d 807, 96 Hawaii 32, (Hawaii App 2001), Fooks v. Norwich Housing Authority 28 Conn. L. Rptr. 371, (Conn. Super.2000), and Town of Brookfield v. Candlewood Shores Estates, Inc. 513 A.2d 1218, 201 Conn. 1 (1986). See also Solon v. Godbole, 163 Ill. App. 3d 845, 114 Il. Memorandum in support of the point of law that when jurisdiction is challenged, the party claiming that the court has jurisdiction has the legal burden to prove that jurisdiction was conferred upon the court through the proper procedure. Otherwise, the court is without jurisdiction. Whenever a party denies that the court has subject-matter jurisdiction, it becomes the duty and the burden of the party claiming that the court has subject matter jurisdiction to provide evidence from the record of the case that the court holds subject-matter jurisdiction. Bindell v City of Harvey, 212 Ill.App.3d 1042, 571 N.E.2d 1017 (1st Dist. 1991) ("the burden of proving jurisdiction rests upon the party asserting it."). Until the plaintiff submits uncontroversial evidence of subject-matter jurisdiction to the court that the court has subject-matter jurisdiction, the court is proceeding without subject-matter jurisdiction. Loos v American Energy Savers, Inc., 168 Ill.App.3d 558, 522 N.E.2d 841(1988) ("Where jurisdiction is contested, the burden of establishing it rests upon the plaintiff."). The law places the duty and burden of subject-matter jurisdiction upon the plaintiff. Should the court attempt to place the burden upon the defendant, the court has acted against the law, violates the defendant's due process rights, and the judge has immediately lost subject-matter jurisdiction. Prepared and submitted by:

____________________________________ < NAME 1>

________________________________ < NAME 2>

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DECLARATION

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Fifteen days from the verifiable receipt of this motion to dismiss, an order shall be prepared and submitted to the court for ratification, unless prior to that time, lender presents a competent fact witness to rebut all articles of < NAME >s affidavit, making their statements under penalty of perjury, supporting all the rebutted articles with evidence which would be admissible at trial, and sets the matter for hearing. Prepared and submitted by:

____________________________________ < NAME 1>

________________________________ < NAME 2>

CERTIFICATE OF SERVICE I, < NAME > hereby certify that on _________________, 20____, I mailed a true and correct copy of the above and foregoing motion to dismiss via certified mail to the persons listed below: <LENDER ATTORNEY> <ATTORNEY LAW FIRM>, <ADDRESS> <CITY, STATE, ZIP CODE> CERTIFIED MAIL # <LENDER> <ADDRESS> <CITY, STATE, ZIP CODE> CERTIFIED MAIL #

____________________________________ < NAME 1>

________________________________ < NAME 2>

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COURT HEARING After a complaint has been filed (from the lender or the borrower), the next step is the counterpart to file a motion (or objection, opposition, etc.). After a response has been filed, the third step may be the Notice for HEARING.

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That means the plaintiff and the defendant must be face to face both at court in front of a judge. Generally, each party has an opportunity in court hearing to present their side of the case. It can include witness and exhibits (exhibits are like an attachment to the case paperwork, providing documents or other items introduced as evidence during a trial or hearing NOVs for example). The court will determine a limited period of time to file these exhibits before appearing in court hearing. This will be the time to file copies of all letters sent and received along with copies of the certified mails, including the harassing letters and recorded calls as well. THIS IS A GOOD TIME TO CONTACT THE LENDER AND MAKE A MODIFICATION BEFORE THE HEARING When they see a summons from a borrower and they have not complied accordingly with the dispute letters, they are more willing now to accept a reduction on interest rates, fix the term, wave all fees and REDUCE THE BALANCE TO THE PRESENT MARKET PRICE. Anyway, in order to be well prepared for a hearing, each party presenting exhibits should mark them as exhibits and make copies for the judge and for the counterpart. Every different matter is filed in different exhibit marked as A, B, C, etc. For example, the Notice of Validation can have a top cover named Exhibit A. The letters sent and received from the trustee can have a top cover as Exhibit B, etc. This way, everybody at the hearing can easily find the exhibit in reference. I have the understanding that if a document is not filed as Exhibit before the time limit, it will not be considered as valid evidence at the hearing (ask your legal coach or attorney). A format for the exhibit cover is included in the following page. Also, a borrower must be well informed and trained in what to do and what to say at the court hearing (dont forget to make copies!) I am providing some examples at court hearings that can be helpful for any litigant borrower.

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EXHIBIT ______

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COURT HEARING QUESTIONS AND RESPONSES EXAMPLE To remember: Borrower cannot recognize any signature until he/she can see it in INK.

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A Defendant was asked: -is this your signature? Defendant said: I dont know. -He was asked again: is this your signature, yes or not? Defendant said: NO. -Are you sure? Im sure, that is a copy, not my signature. -So, is this a copy of your signature? I dont know, that question is for the person who made that copy.

Judge: -What do you want to do with the property? Defendant: -I dont know, I just want to know who the note holder of the property is.

Judge: -Why did you get late on the mortgage monthly payments? X Defendant: -because a representative of lender/servicer told me to be late 3 months in order to negotiate with the loss mitigation department Y Defendant: -because lender/servicer couldnt verify me they were the legal owner of the note. I thought that was a SCAM

Defendant: -lender, how do you know that I owe exactly $xxx,xxx.xx ? Lender: -because that are the accounting records Defendant: -Did you provide it at this hearing as requested? Lender: -nnnoo

Defendant: -lender, are you the holder and owner of the promissory note, yes or not? Lender: -NO Defendant: - can you explain to me how a person can be entitled to enforce a debt without being the note holder? Lender: -MERS is the note holder. Defendant: -Who is MERS? Lender: -MERS is an associate of lender
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Defendant: - is MERS a financial institution? Lender: -NO Defendant: -if Mortgage ELECTRONIC Registration Services (MERS) is doing everything electronic, how can you explain that MERS is in possession of the physical note, the paper document? Lender: -eerrr I dont know. Defendant: -who is foreclosing the property MERS or lender? Lender: -MERS Defendant: -but MERS is not the servicer, correct? Lender: -It is not the servicer, correct. Defendant: -A servicer is a separate independent legal entity, correct? Lender: - separate from MERS, correct.

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Defendant: -So, why you are foreclosing the property if you are a separate party from MERS? Lender: -

Judge: -if you had an adjustable loan and it changed after 2 years, that is what you accepted in the loan Defendant: - yes, your Honor, that is true, but I understand that every lender has modification plans available and lender didnt want to accept any modification at all. I understand now I had to talk with MERS not with lender, and lender didnt tell me anything about that company. Judge: -I thought you didnt recognize lender as your lender. How you said now you were trying to negotiate with them? Defendant: -In that time, I didnt know how all this business was working before.

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MERS

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Every homeowner should look at their promissory note and find out if one of the clauses is defining MERS as the beneficiary of the loan. Millions of loans have been originated by MERS and borrowers around the country have never been aware of this. Borrowers thought they were doing a loan with Wells Fargo, New Century, First Magnus, etc., but never with someone called MERS. I dont want to say this was with the intention to deceive or abuse a borrower, but sounds like. Almost every funded home loan included an almost hidden clause designating MERS as the beneficiary of the loan, MERS is not a lender or a financial institution, and as long as I know, there was nobody from the original lender or from the escrow agency, letting know or understand this important point to the borrower. After a huge research in this company, I can say that if homeowners couldnt negotiate with their lender or servicer for a modification in the loan that can save their home from foreclosure, may happened because MERS didnt allowed it or maybe MERS was not able to modify the loan due to the inexistence of the note. This situation has caused a huge disadvantage for every borrower due to the lack of disclosure concerning the true identity of the mortgagee. Their website states this: MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans. In few words, MERS is practically a huge electronic warehouse holding digital documents and tracking numbers. MERS is not a system of legal record or a replacement for the public land records (Mortgages or Deed of Trusts must be recorded in the county land records), MERS is simply a company that was created in the early 1990s by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper. MERS stands for Mortgage Electronic Registration System. Regularly, there is no physical paper documented in the files of this company.

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In their website, MERS also states the following:

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Mortgage Electronic Registration Systems, Inc. (MERS) serves as the mortgagee of record on mortgage loans in a nominee (form of agency) capacity for the lender, its successors and assigns. Any request regarding obtaining a certified or verified copy of the promissory note will need to be made through the loan servicer of the mortgage loan in question. Information regarding the current servicer can be obtained by calling a toll free Servicer Information System at 1(888) 6796377 or by calling the MERS Help Desk at 1(888)680-6377. It is the current servicer that holds loan specific information and all questions regarding the specifics of a loan should be directed to the servicer. My personal records are that lenders/servicers are saying that MERS is the owner of the promissory note and MERS says they are not, but the servicer. Who is right? We have to remember that a creditor or a debt collector, in order to be entitled to claim a debt, must be in physical possession of the original note signed with INK. Period. MERS is only a nominee of the original lender, but the law does not recognize any legal consequences, entitlement, rights, or liabilities to one ostensibly designated as Nominee. By Law, a creditor suing a debtor or making a claim in court, must have a beneficial interest in the note and must be evidenced. MERS has no legal authority to foreclose upon any borrower and according to their own written documents NEVER HOLD THE NOTE OR OWN "ANY" BENEFICIAL INTEREST IN THE NOTE. If a borrower found MERS in his deed of trust or mortgage, is very possible that the original note may be lost or missing. And remember, if a note is lost or missing, then, there is no debt.

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WRONGFUL FORECLOSURE ACTION

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If the lender failed to provide legal proof of ownership as requested by the borrower, but a judge at court granted the case in the favor of the lender, dont worry, not everything is lost. Now is time to go to the State Superior Court and file a Wrongful Foreclosure Action against the lender. (This last process could seriously delay a Foreclosure) While filing bankruptcy to avoid or delay Foreclosure is a big headache for Lenders, the wrongful foreclosure action filed in superior court is potentially the most powerful weapon in the arsenal of a borrower. The Wrongful Foreclosure Action must be also filed along with a LIS PENDENS against the property and look for an order from the court to prevent foreclosure. Lis Pendens: Latin for Pending Litigation A property cannot be sold, or trespassed if there is a Lis Pendens recorded on title. For this matter to be in effect, a Borrower must hire an Attorney whose main emphasis is on Real Estate, Consumer Rights litigation, Mortgage Servicing Fraud or Foreclosure to finalize this last process (it will be cheaper as the borrower almost did all the work). The borrower can still litigate a Wrongful Foreclosure Action as Pro Se, but it will be very complicated and not recommended at all. We are talking Major Leagues. The primary allegation is that the lender trying to foreclose the property has no legal standing to do so. Because of this, the Foreclosure Process will be on hold until the lender provides the legal documents required. Some times, it could take years Sometimes it may never even happen as well There are cases that are pending since 10 years ago! This happens because the lender cant find the original promissory note and the extra paperwork that now the Superior Court is requesting; they will not find it especially if the original creditor filed bankruptcy! However, if the lender finds and provides the documentation requested the foreclosure will take place normally; although the borrower can stay at the property all this time rent-free protected by the state laws. UPDATE: some courts in some states request that the borrower keeps making the monthly payments to the clerk of the court until the lender finds the original note. It is a secret for me that if they didnt do it at first instance why should they do it after the years??? We just want to make a fair modification to the loan!

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So, What Happens If The Lender Didnt Transfer the Loan?

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If the mortgage company is the same since the beginning, a Borrower can still fight for the legal possession of the original note. Any lender as a debt collector - must be in possession of the original promissory note to be entitled to collect a debt. If the note was not found and the court granted the case, still room to file a Wrongful Foreclosure Action claim to enforce this right as well. But, if the note was already found or was in possession of the lender, the only thing remaining to fight against any lender is: Find ANY mistake or abusive act made by the lender: Predatory lending, abusive charges, violations of RESPA, violations to the Truth in Lending Act, etc. The complaint may be now on the allegation that there is an illegal, fraudulent or willfully oppressive sale of property under a "power of sale" contained in a mortgage or deed of trust. And, with this allegation, file a Wrongful Foreclosure Action against the lender. To find a mistake in the paperwork will be very complicated to anybody who is not related to these guidelines. Thats why I recommend looking for a good attorney. Just bring to the attorney all the documents from the mortgage and ask him to find any violations, abuses or predatory lending on it. A Borrower can find more information about any possible legal defenses in the following link: http://www.edcombs.com/cm/news/news178.asp For other sources of inexpensive or Free Legal Services contact: http://www.probono.net/ http://www.abanet.org/legalservices/probono/directory.html Pro bono: Provision of services free of charge A Borrower may want to know that even if the property was already sold at the auction sale, it may be possible to file this Wrongful Foreclosure Action as well, so a Borrower may get the home back free and clear. Update: I have found now that many Prime Lenders (those who didnt transfer the note) have MORE PROBABILITIES TO NOT HAVE THE ORIGINAL NOTE. An attorney in California, who has fight thousands of these cases, told me that out of 1,000 cases, JUST 4 LENDERS HAD THE ORIGINAL NOTE IN POSSESSION.

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Some other interesting allegations that may fit to file a Wrongful Foreclosure Action: Breach of contract A missing agreement between borrower and lender Superfluous and obligatory Insurance on the property Payments not applied correctly Deliberate infliction of emotional suffering Incorrect interest rate (maybe it was already adjusted) Violation of Business and Professions Codes Violation of Civil Codes Foreclosure process not stopped after partial payments Wrong impound accounts Wrong description of Bankruptcy Chapter 13 plan Quiet title

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If part or all of above can be proved as fraud or malicious, punitive damages against the lender can be obtained. The borrower may have damages compensation for emotional distress as well. However, if the borrower doesnt have comprehensible evidence of his claim, may be penalized to pay the lenders attorney fees. My recommendation is that in order to have a successful outcome of this last step (the Wrongful Foreclosure Action and Lis Pendens Filing) to hire an Attorney whose main emphasis is on Real Estate, Foreclosures, Mortgage Servicing Fraud or Consumer Rights litigation will be the best. If a Borrower is into the Foreclosure Process now, may want to start looking what defense or negotiation will work best for him/her and stop the process as soon as possible. Homeowners must remember that starting a legal defense for any of the abuses we have discussed in this book before being late in the mortgage, qualify to be in Federal Court for statutory claims (Consumer Fraud Act).

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Chapter 5

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BANKRUPTCY

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LIMITATIONS OF USE OF THIS INFORMATION: YOU MAY NOT RELY ON THIS INFORMATION OR LINKS AS A LEGAL, TAX OR FINANCIAL ADVICE. YOU MUST HIRE A GOOD BANKRUPTCY ATTORNEY AND A TAX ADVISOR TO DIRECT YOU AS TO YOUR UNIQUE CIRCUMSTANCES. Another alternative to stop or delay foreclosure, filing bankruptcy may be the best option for some homeowners mortgage-stressed who has been trying to solve this matter to no avail. To be bankrupted is one of the worst of the credit scenarios and is a crazy chaos to be plunged into this. I recommend to the person thinking about it fully understand what bankruptcy is, how difficult the entire process is and what the benefits are. Filing bankruptcy is a long and time-consuming process where the filer must provide a big bunch of papers showing financial and personal information. The bankruptcy process demands filling out long schedules and boring forms about existing debts, assets and income. Debt listings must include mortgages, car loans, credit cards, medical debts, collections, etc. etc. just to give an idea. However, at the end, it provides a huge emotional relief and a fresh start. Imagine a life with no debts! Filing Bankruptcy is not a bad thing really. It gives the opportunity to start all over again, and it is supposed that a bankrupted person will be more cautious in his financial decisions in the future. Many wealthy people as Donald Trump or Robert Kiyosaki have had to file bankruptcy before, building a massive empire of real estate afterwards (not just buying their own homes). This is not supposed to depress anybody or to think nothing is worthy anymore. Depending in how a person rebuilds his finances and credit history, he may have fair credit in two years after being discharged from a bankruptcy chapter 7. For the most part the bankruptcy process is actually well structured and simple, although overstressing and dishonorable for some. To walk through the bankruptcy process, most people hire an attorney and their cost will vary in every case. It is possible to file bankruptcy individually. The Countys Bankruptcy Court will give all the information, forms and directions anybody may need to file a case, however, they do not give legal advice. They have a Self Help Center for filers without an attorney, where persons can learn everything about it. They also provide information in how to get free or cheap legal advice. The most difficult part is to decide which bankruptcy chapter is best for every situation.

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Let me warn the reader:

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If you dont feel right even filling out a job application, you must hire a qualified person to do it for yourself. It is too much paperwork and information to learn, fill and supply. If you feel comfortable reading, writing, filing documents, studying, researching, filling forms, creating letters, and you have the time for all of this, you may decide to do it yourself. It will be a lot cheaper as well. You must make a list of all of your creditors; if you fail to disclose some of them, the bankruptcy court will not know about it, so you will still owing that missed debt after the discharge. Be sure to list every account you owe, even if you dont think you owe them any money Youll never know. After a bankruptcy is discharged, you dont have any debts any more by law until you start getting debts again by your own decision.

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TYPES OF BANKRUPTCY

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Bankruptcy laws has several ways of filing depending in your specific case; but at this time, for the purpose of this book, I will talk just about the types that will work better in the foreclosure process. These types are Chapter 13 and Chapter 7 BANKRUPTCY CHAPTER 13 If the borrower is behind in his mortgage payments with no realistic way to get current, almost facing foreclosure but anyway wanting to keep the home, filing Bankruptcy Chapter 13 can stop the foreclosure forever legally. This how it works: The legal protection of Bankruptcy Chapter 13 lets a debtor pay off the unpaid and late payments on a repayment plan. This plan must be approved by the Court. The debtor must have a solid job and enough income to cover the new payment arrangements of his debts over time, usually from 3 to 5 years. A court appointed trustee will supervise the debtor through the length of the repayment plan. If he/she fully paid all the promised payments to the end, the debtor may keep the house and avoid foreclosure. The credit cards included under Chapter 13 are of last priority and may be discharged at the end of the repayment plan without having them to be paid back at all. So the debtor may stay just with his mortgage payments at the end of the 5 years plan. Note: This rule may help a borrower in default to eliminate the payments of the second mortgage at the time of discharge. If there is no more equity in the house (it is very possible due to the market conditions), this fact will convert a second mortgage (which is a secured mortgage) to an unsecured debt, which is the same category of credit cards. Filing properly a Chapter 13 will stop a foreclosure right away. If the debtor make all the payments under the plan, will see that foreclosure open up never again. However, failing to make the payments will restart the foreclosure as how it was left before filing Chapter 13. THINGS NEEDED TO QUALIFY FOR CHAPTER 13: Basically, the debtor must be a wage earner and have a steady source of income to proof the ability to satisfy the repayment plan. If the debtor earns cash or is self employed, he/she will not qualify. A bankruptcy attorney must be consulted to revise new changes to the law. Note: The existing record is that most of the Chapter 13 petitioners file Chapter 7 before the ending of the 5 years repayment plan. Some debt consolidation companies are just doing Chapter 13 to their clients.
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BANKRUPTCY CHAPTER 7

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Filing Chapter 7 will freeze the foreclosure at least two to four more months (and maybe several more after it is discharged), allowing a borrower to live in his home all this time, legally. In the mean while, it is recommendable to keep saving as much money as possible, looking to provide new shelter to the family after this storm is over. Chapter 7 will cancel all debts as well. Although Child Support, Taxes and some Students Loans will not apply. All secured loans (means if the debtor doesnt pay, they will take back the product) are optional to be included. For example, if a car loan is included in the bankruptcy, the debtor must give up the car. If a mortgage loan is also included, the debtor must give up his house etc. On unsecured loans, debtors dont have anything to give up. These loans are unsecured; like most credit cards. If a debtor thinks to leave open a credit card to keep building credit after the discharge, it may be closed by the creditor without asking anything, after they see the bankruptcy in his credit. If the debtor keeps a car loan outside of the bankruptcy, the lender may not report the payments as before (this is illegal, but very common on some banks). TAX LIABILITY EXCLUSION LAW If a borrower foreclosed, deed in lieu or short payoff, depending in the state, may stand a pending balance called Deficiency Liability, and if this is the case, this will be waiting for this borrower next year to pay income taxes on it. If the borrower owed $250k and the property got sold by $150k, there is a difference of $100k!! That difference the lender will submit to the IRS as Capital Loss. Then, the IRS will submit back to the borrower as TAXABLE INCOME in a 1099 form. This rule was used before, but as today, a new passed law says a borrower may not have to pay this tax liability if that was his primary residence for at least two of the last five years. With the new legislation, that tax liability has been eliminated until December 31st, 2009. Update: it is now until 2012. So at the very least, if a borrower was forced to sell a home he couldnt longer afford, and the lender sent the loss to the IRS, he no longer has to worry about a hefty tax bill, thanks to the Mortgage Forgiveness Debt Relief Act of 2007. (This tax break is retroactive to Jan. 1, 2007). Unfortunately, this new tax law does not protect anybody from paying taxes if a homeowner foreclosed his principal residence and had a home equity loan that was used to pay luxury stuff like vacations or a car (House improvements are OK).
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Also, if the borrower incurred in foreclosure or short payoff for investment or vacation properties and there is a pending debt, he will not be able to get rid of this. He must pay huge taxes for that Deficiency Liability to the IRS (this is worst than being sued by the lender for the same debt). He must pay, unless he claims for proven insolvency to the IRS or qualify for Bankruptcy Chapter 7 before the debt gets to the IRS files. (Chapter 7 means not have to pay anything else anymore). A Qualified CPA must be consulted for this matter. Bankruptcy Chapter 7 will exempt a debtor from a tax liability before it is on the IRS. Bankruptcy Chapter 7 doesnt discharge tax liabilities. THINGS NEEDED TO QUALIFY FOR CHAPTER 7: To qualify for bankruptcy chapter 7, a debtor must dont have any assets to sell and pay to his creditors. No equity in his house, no money in the bank, etc.; and also, he may lose also other properties he wants to keep if the bankruptcy trustee orders to turn over some items, for example a wedding ring, collectibles, extra cars, boats, etc. A debtor may not be eligible for Chapter 7 if his average gross income from the last 6 months at filing exceeds the state median income or if he present income is more suitable for Chapter 13. The main point here is that if the average income over the six calendar months before filing for bankruptcy is less than the median income for a household of the size in his state, he passes. Period. Hes done. He can file Chapter 7. If a debtor is doing more money than the median, he must figure out whether he would has enough left over, after subtracting certain expenses, to file Chapter 13. If a debtor had discharged a bankruptcy Chapter 7 within the last eight years, he doesnt qualify for Chapter 7. If a debtor had discharged a bankruptcy Chapter 13 within the last six years, he doesnt qualify for Chapter 13. If a debtor had dismissed a bankruptcy Chapter 7 or Chapter 13 within the past 180 days, he doesnt qualify for either one. A bankruptcy is discharged when is approved by the bankruptcy court, and dismissed when it is denied.

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A bankruptcy file can be dismissed by the following reasons: Lying to the Court The debtor filing was fraudulent The debtor pulled huge quantities of cash money from credit cards within the last 3 months The debtor clearly have tried to cheat his creditors The debtor abused of the bankruptcy system The debtor concealed assets so he can keep them for himself Giving assets to his friends or relatives to hide them from creditors or from the bankruptcy court Running up debts for luxury items when he was clearly broke and had no way to pay them off Hidden property or money from his spouse during a divorce proceeding Lying about income or debts on a credit application The debtor violated a court order

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The debtor must sign all the paperwork under "penalty of perjury" swearing that everything is true. If he deliberately lies or fails to disclose important financial information and the court discovers this action, the case will be dismissed and the debtor may be prosecuted for fraud. If the debtor wins the lottery after filing bankruptcy and before the discharge, that doesnt matter. All the income and assets are counted BEFORE the date of filing.

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THE AUTOMATIC STAY

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When a signed and dated paperwork is submitted to the bankruptcy court and is received a File Case Number, that day will be the day the debtor officially filed bankruptcy. Then, the bankruptcy court will issue to all his creditors, an order called Order for Relief, which is including a clause named AUTOMATIC STAY. The Automatic Stay order to all creditors to immediately cease and desist their collection activities, without excuses! Because of the AUTOMATIC STAY, if a borrower had his house waiting on foreclosure, the sale will be legally suspended until the bankruptcy is discharged; so typically, the borrower will have to wait 3 to 4 more months on AUTOMATIC STAY if filing Chapter 7. For borrowers filing Chapter 13 the Automatic Stay will be enforced until a monthly payment is missed again, so the lender can start the foreclosure process again.

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MOTION TO LIFT STAY After filing bankruptcy and having granted the AUTOMATIC STAY, the homeowner may receive a copy of a letter from his lender, called MOTION TO LIFT STAY. The lender will immediately pursue this motion to lift the automatic stay order, asking the bankruptcy court to proceed with the foreclosure sale.

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If this is approved by the court, the sale will still postponed at least two more months, and even more if the lender is slow. Note: Although Bankruptcy is ruled by Federal laws, some states will not allow an Automatic Stay if a Foreclosure Sale Notice is already filed. For example, in California, if a homeowner files for bankruptcy after the Notice of Sale was received, the lender will file a motion to lift the stay and the court could easily give permission to schedule the foreclosure sale before a discharge. (As long as I know, the state of California sends the Notice of Sale 3 months before the auction sale). Must be checked the State Laws OBJECTION TO RELIEF We have already discussed how the Foreclosure Process is. At this time, a borrower may have been rent-free in his house almost a year since the first missed payment. Because of the problem of lenders not being able to provide a legal proof of ownership in the note, there is a trend now in most Bankruptcy Courts, requiring more documentation from lenders in this Process. These Courts are requesting more documentation from lenders, to prove that they really OWN THE NOTE. In Bankruptcy Court, after the lender files a Motion to Lift Stay, the following step is the Objection to Relief from Stay, filed by the borrower for lack of STANDING, based on the same reason of lender to proof the ownership of the note. Therefore, when a lender is requesting a Motion to Lift Stay, the Bankruptcy Court is now dealing with another company completely different to the one is in the original documents! When a file is opened, lenders must provide documentation showing they own the note. But, MOST LENDERS do not provide this requirement at the time of filing. I dont know why.

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With this, you can request the Bankruptcy Court to ask this lender to provide proof of the note ownership. The proof can be the assignment of the original note negotiated, transferred or sold to the new lender/servicer asking for the lift of the automatic stay. The following letter is another idea in how anybody can personally file this Objection to Relief from Stay in the Bankruptcy Court. My recommendation is that it is necessary to consult first a Bankruptcy Attorney to comment in the borrowers Motion, before to file it at the court. (The following form is to delete the < >s and fill them with borrowers information)

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<NAME 1> <NAME 2> <ADDRESS> <CITY, STATE, ZIP> <PHONE NUMBER> (DEBTORS)

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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF _____(state)_________ Chapter __ <CASE No.: 2:08-BK-00000-XXX> <Adversary No.: 2:08-ap-00000-XXX> <LENDER > Movant, vs.

<NAME 1> <NAME 2>

Defendants ___________________________________________/

DEFENDANTS OBJECTION TO RELIEF FROM STAY FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED <NAME>, Defendant, respectfully moves this Honorable Court to grant this objection to relief from stay case number XX-XXXX-XX with prejudice. <LENDER> (hereinafter referred as lender) and its counsel has failed to state a claim upon which relief can be granted. I, <NAME>, of age and competent to testify, state as follows based on my own personal knowledge:
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1. I deny the following allegations: Paragraphs #___, #___ and #___. 2. I affirm the following allegations: Paragraphs #___, #___ and #___.

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3. I am unable to find any documentation considered Evidence Admissible in Court that verifies I owe this debt or that lender has any legal standing to collect anything (if any liability even exists). I also dont have any documentation that lender, had any legal standing to collect this alleged debt or a portion thereof in the past; therefore, I may have paid them in error. 4. I am not in receipt of any notification of assignment, sale or transfer for this promissory note. 5. I am not in receipt of legal proof of ownership on the original note, which entitles lender to be THE NOTE HOLDER of the debt in claim.

6. I am not in receipt of legal proof of existence of the original note in question. 7. I am not in receipt of the complete records of the general ledger and accounting of the alleged unpaid promissory note, proving that $_______________ is really due and owing in the note. 8. My credit report has derogatory information from this matter. As the company of lender does not have a legal standing to collect this debt, shall be not any data furnished to the credit report agencies.

Sincerely,

____________________________________ <NAME 1>

________________________________ <NAME 2>

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Fifteen days from the verifiable receipt of this objection to relief, an order shall be prepared and submitted to the court for ratification, unless prior to that time, lender presents a competent fact witness to rebut all articles of <NAME>s affidavit, making their statements under penalty of perjury, supporting all the rebutted articles with evidence which would be admissible at court, and sets the matter for hearing.

Prepared and submitted by:

____________________________________ <NAME 1>

________________________________ <NAME 2>

CERTIFICATE OF SERVICE
I, <NAME> hereby certify that on _________________, 20____, I mailed a true and correct copy of the above and foregoing motion to dismiss via certified mail to the persons listed below: <LENDER ATTORNEY> <ATTORNEY LAW FIRM>, <ADDRESS> <CITY, STATE, ZIP CODE> CERTIFIED MAIL # <LENDER> <ADDRESS> <CITY, STATE, ZIP CODE> CERTIFIED MAIL #

____________________________________ <NAME 1>

________________________________ <NAME 2>

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An immediate response from the lender may be a request for court hearing. If the lender, after the Objection to Relief from Stay comes forward with the declaration containing an attachment of the assignment, the borrowers motion will be dismissed.

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Most of the times, the lender will come to the hearing without the requested documents. The concept of filing Bankruptcy Chapter 7 is to be debt free and to have a fresh start, so by default, the petitioner is required to surrender every secured property, as a car or his home. Is strongly recommended to consult a bankruptcy attorney about this; if the motion is not properly filed or defended, the judge may grant the case to the lender asking the borrower to leave the property immediately (it must be in writing to truly leave the property). A discharge may be done about the same time as if the lender files a response. For this reason, some lenders are most likely to wait until the discharge and not respond a request. What they are asking is just to lift the Automatic Stay; this is only a matter of time. When a Bankruptcy Chapter 7 is discharged, the lender will have the opportunity to start the Foreclosure Process for a second time. If the lender never brought the required legal documentation, this case will fit for a lawsuit on Superior Court: The Wrongful Foreclosure Action. The borrower needs to convince the Bankruptcy Judge to stay in the property after the discharge; if not, will not have sense to file a lawsuit in Superior Court. The house will be lost. Please return to the chapter of Wrongful Foreclosure Action. After The Wrongful Foreclosure Action, depending in the outcome, the borrower may stay in his house for years or may stay forever, until the promissory note is found by the lender. Only in this way, proving the ownership of the original note, a lender can legally take the home away from a borrower. Remember: The Bankruptcy Process is the very last resource. ONLY recommendable if the borrower doesnt have any other option. Recommended link: http://www.bankruptcylawnetwork.com

Nothing enclosed in this book should be construed to constitute advice for your personal circumstances. This is intended as a peripheral exposure to the available options, but by no means this is a complete or exhaustive analysis of the bankruptcy laws or their alternatives. Whether or not you should file a Chapter 7 bankruptcy, Chapter 13 bankruptcy, or any bankruptcy, will differ depending on your personal situation and should only be undertaken after careful reflection, examination and after consultation with an attorney experienced with such matters. Copyright 2008, Orbis Marketing, LLC. All Rights Reserved www.foreclosureinprocess.com

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Chapter 6

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SHORT PAYOFF There are some investors that are using the SHORT PAYOFF strategy to negotiate with the lender. A Short Payoff Investor will negotiate the promissory note with the lender to reduce the loan amount at 65% or less, then, this note will be transferred to a Hard Money Lender to loan the money back to the homeowner. With a SHORT PAYOFF negotiation the HOMEOWNER will KEEP THE PROPERTY UNDER HIS NAME, thats the difference between SHORT PAYOFF and SHORT SALE. In a SHORT SALE the homeowner will lose his property. NOT in a SHORT PAYOFF. Additionally, in a Short Sale, in most cases, a homeowner may be LIABLE for TAXES in an investment home, which is NOT the case in a SHORT PAYOFF (consult your Tax Adviser). In a Short Payoff, a Second Mortgage is waived. Visualize this process as a "Short Refinance" through a Real Estate investor. How This Works:

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With the homeowner written authorization, the SHORT PAYOFF INVESTOR will negotiate the non-performing note of the home with the bank at a discount of a maximum of sixty five percent (65%) of the FAIR MARKET VALUE (F.M.V.). This is an example: Mortgage Balance: Present Fair Market Value: 65% Negotiation: New Mortgage Balance: Instant Equity In The Property: $300,000 $200,000 $130,000 $130,000 $ 70,000

Even if there are one, two, three and up to six months late, with this system they could reduce a mortgage debt almost by half and the new payments could be lower. Now the homeowner could gain equity in his home again, something that he did not have before with this strategy, NOT even with a Loan Modification, Loan Forbearance or FHA Partial Claim. A homeowner doesnt have to leave his home during negotiations.

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Remember that the lender and these negotiators DON'T want your home! (Just be careful who you are dealing with). With this process you DON'T sell your property (thats why you are not tax liable) The SHORT PAYOFF is a system that lenders don't want you to know. The objective with this strategy is that you keep the title of your property, through a SHORT PAYOFF negotiation with your lender so: Your monthly payments can be lowered, Your mortgage balance is lowered to 65% or less of your Fair Market Value Your property can have Equity again.

A SHORT PAYOFF seems to be more effective as this type of investors will work as a third party NOT as your representative. Your Promissory Note and Deed of Trust (or Mortgage) states that the homeowner will be responsible for 100% of the debt and a representative (aka Realtor or Loan Officer) will be requested for this responsibility as well. Under the FAIR HOUSING LENDING the banks cannot give any homeowner a special treatment or discounts because if they do, they must offer the same exact discount to ALL of their borrowers, of which they can turn around and file a law suit against the bank, causing them to lose millions of dollars. A Short Payoff is not illegal as many unknowledgeable people can say.

The best information you can find about it is in the following link: http://www.equitytarget.com

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IMPROVE THE INCOME Another good option to KEEP THE HOUSE and/or to have a relief on this situation is to improve the income. Very often, challenging times bring excellent opportunities that we were blinded before.

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A mortgage-stressed homeowner may find in very few months that to pay $1,500 dollars or $2,000 a month is nothing. For this, he/she may start doing something as self employed, and not working part time for a company! The best to do is buying something cheap and selling for a profit. Many people doing this in stressed situations became millionaires after the years. I know a person who started picking up on the streets aluminum cans and metal pieces to sell it later. She is now an owner of a recycling company in New York. I have sold houses to families that they make a living just selling tamales! (And let me tell you that some of them are doing very bad tasting tamales!) I know many people that they become wealthy just buying and selling cars. Other many people are buying and selling clothes, jewelry, food, nutritional products, eBay items, franchises, etc and doing great! They say that is better than working a full time job. There are so many opportunities out there that I would not have enough space in this article to talk about it. In summary, anybody just need to go out there and sell something although it has to be legal, ok? Also, let me say that if any homeowner wants to keep his house with a higher monthly payment, must understand due to current economic conditions (2008)- that it will be the same way the next 8 YEARS AT LEAST (and the variable rate will be adjusting every 6 months or every year, depending in the original deal). This borrower will not normally refinance or sell it to make a profit in all that time. If the property is hold for profit, it will be hard to rent it over if the payments are so high. First, the borrower needs to find out how much the rent prices in his area are. Whatever it happens in the economy, my recommendation is that everyone looking to improve the income must have a part time business, and have saved at least 6 months of expenses in a Credit Union Money Market Account that gives a good interest rate. Remember: no one has to humiliate himself for this or to involve in illegal activities. No money has to be invested in things that are too complicated or not well understood.

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Always the mentoring of a good financial coach will be helpful to understand how to manage the personal finances. There are so many business opportunities out there that so much people are amazed why they didnt do that before! Asking trusted people what to do is a right way to go. If someone doesnt know anybody, dont know what to do or where to start, what this person needs is just pray with all his heart, look for it, and it will find him! Just Believe.

Take a look on my website or send me an email if I can help you to direct your first steps in How To Improve Your Income.

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RENT TO OWN

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It is very common that some people buy a house with the idea to keep that home forever. I have had clients telling me: someday I will se all my grandchildren running in my backyard and I will die here as well, and that couple is just married in their 20s If a borrower is that type of person, or at least is in love with his home and dont want to move to any other house, he may be interested in the Rent to Own option. At this time, many cities are surrounded by signs saying: FORECLOSURE? I CAN BUY YOUR HOUSE IN 5 DAYS, CASH! These signs are from real estate investors that are looking for houses in pre-foreclosure. Most of the time, they will buy a house cash in five days ONLY if the property has substantial equity, so they can resell it and make a profit. The other day I was talking with a friend of mine that he knows an investor who invested 7 million dollars in this kind of properties all over the country; unfortunately, these properties are not being sold now and he is loosing all the properties in foreclosure Still so many investors they dont know what they are doing in this market. Most of them are still trying to flip the property so they can get rich overnight with the equity proceeds. If a good investor is NOT doing this (flipping), he might rent it back to the borrower in a Rent to Own deal, only for the benefits of the interest rate on this kind of agreements. The option presented here works in this way: the investor buys the borrowers house and then he rents back to the borrower for 2, 3 or 5 years (or more); after that period of time, the borrower will buy back the property to that investor so the house can be in his name again. I recommend signing and notarizing a RENT TO OWN contract, specifying all the future buying conditions; the purchase price, the monthly payments, the length of the contract, and specifically what is going to happen if the borrower doesnt qualify when the contract finalizes. I have seen families being evicted from their houses, for the simple reason that they didnt qualify for the purchase of the property when the rent to own contract concluded. The contract must specify that if the borrower doesnt qualify, he will be entered in a new rent to own contract for another length of years. A real estate agent, attorney, financial advisor or title company must verify the document before printing signing, so every point can be understood. In a Rent to Own option, the renter will be able to paint, modify, add rooms, anything he may want without asking to the investor. This will not happen if renting. If the house is sold to an investor in the SHORT SELL option, the payment may be lower in the new Rent to Own contract, because the new balance may be lower due to the short sell. Borrower must understand that some lenders will not agree with this and will deny a short sell transaction for this reason. Additionally, the house value may be at the same price as 2008 after 10 years (at least). Lets see.
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TRANSFER OF THE PROPERTY

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If the property is with some equity, the mortgage loan is fixed and the payments are not so high, it may be possible to find someone (that doesnt qualify for a home loan) interested to pay the months behind and the late fees so he can continue making the monthly payments and keep the home for him. (If the property does not have equity, the rate will change in the next months and the payments are so high, it will be very difficult to find somebody interested on a transfer, but not impossible). It is possible to make a transfer of ownership from the foreclosing borrower to the interested person, just signing and notarizing a QUIT CLAIM DEED; the new person will be the owner of the property right away (any title company can help with this). In this action, only the property is transferred BUT not the loan; the loan will stay in the borrowers name. Unfortunately, a transfer could trigger a clause that prevents something like this. Some lenders included in the Deed of Trust a clause prohibiting this action without lenders prior written consent. If the property is transferred without lenders written authorization, and the lender knows this, they can request an immediate payment in full of the loan in the next 30 days. Many people that has transferred a property in this way, says: as long as the payments are made on time and you don't call them informing them of the change in ownership, you might do ok, such action will depend in every borrower. There are two major issues here, one is the risk of the lender finding the deed was transferred and exercising immediately an acceleration of the note (the new owner can sell or refinance, though); the second is the risk of the new homeowner defaulting on the loan that is in the name of the original borrower. The benefit would be getting out of the foreclosure problem immediately. Some Conventional loans do have a provision for assumption of the debt by a subsequent borrower, only by qualifying the new person. FHA loans can be assumed (with qualifying) by an owner occupant at a charge of about $500 + title fees. VA loans can be assumed (with qualifying) by an owner occupant or by a non occupant borrower at a charge of 1/2% VA Funding Fee + title charges. The documents on the loan must be checked to see what is permitted or not. If the rate on that loan is lower than prevailing rates or if the payment is lower than the average in the area that might be the way to go. Some borrowers transferring the deed also ask for $1,000 or 3,000 dollars for moving expenses.
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RAFFLE

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In this market, to sell a property is really tough. There is too much competition. The inventory for houses is overflowing and growing everyday. Thats why many desperate borrowers have found additional ways to get out of the foreclosure monster. They started raffles with their properties as the wining price, selling tickets according to the numbers of the Power Ball for a price of $100, $200 or$250 dollars each one. 1,000 tickets at $250 each one makes $250,000. Some of those borrowers paid a $200,000 dollars mortgage and kept $50,000 for them, and the winner of the raffle won a house for $250 dollars. It looks like a win/win situation for everybody. Unfortunately, home raffles are hardly an easy proposition. Gambling regulations in many states make holding a private raffle for a house or land illegal unless the homeowner has a nonprofit organization as a partner, and the homeowner cannot make more than the appraised value of the house. In few words, the nonprofit organization is keeping the proceeds of the raffle in order to do it legal. (Some states, including New York, forbid even nonprofits from raffling off a home.) A nonprofit organization can be a church for example, and local business may donate additional prices to make a raffle more interesting (second price wins a used car, third price a washer machine, for example) I understand the ticket sold for X amount is for a raffle to participate in the purchase of the house for $1 dollar. A raffle of 5,000 tickets for $100 dollars each one can be a good solution for a mortgage-stressed homeowner, but it requires a lot of organization, work and knowledge in what to do exactly, understanding that there is no guarantee for success. Consult an attorney and a CPA for gambling rules on your state before start something like this. Update: In February 2008 when I launched this eBook, there was no information on the web about this strategy. On July 2008, Maryland entrepreneurs built a site focused on raffles around the country, www.usahomeraffle.com where homeowners can list their properties in their system. Another site is http://howtowinmyhouse.com/ Also you can find more information about how to conduct a home raffle in Google. Question: can a borrower buy again the house to the raffle winner on a special price?
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ALLODIAL LAND TITLE OR LAND PATENTS

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Recently, I received an email asking for Land Patents or Allodial Land Title as another way to fight against the lender in order to avoid or stop foreclosure. This same email directed me to an expiring website with dead links, which was claiming they were doing this kind of deals and stating the following: ----------------Many Americans have not come to the realization that their homes, businesses, and properties are collateral on the federal debt, even if you have the deed and its paid for, in FULL! If the federal government defaults on its interest obligation, the private World Bankers automatically become the new "Land Lords" of every home, business, and property in the United States. Fortunately, our Founding Fathers realized the importance of property ownership. And there are laws structured to protect citizens against taxes and seizures. Today over 75% of Americans DO NOT have the highest form of TITLE on their homes, businesses, or properties. Instead, they have "Deeds" which are merely a "color of title." To understand how the creditors or bankers qualify your property, it is essential to understand one legal term, "color of". "Color" is defined in Blacks Law Dictionary 6th Edition as "an appearance or semblance, as distinguished from that which is real; a prima facie, a deceptive appearance. "Color of Title" is defined as "that which in appearance is title but is not title in fact or in law." Write v. Matron, 18 How. (U.S.) 50 ".color of title is an appearance of title. coupled with possession, it purports to convey ownership. This is not to say, however, that it actually conveys ownership." Rawson v. Fox, 65 Ill. 200 David v. Hall, 92 Ill. 85. DID YOU KNOW THAT: A Deed is only a "color of title" Deeds constitute "colors of title". Dryden v. Newman 116 Ill. 186 "A warranty deed of conveyance is a "color of title." Dempsy v. Burns, 281 Ill.644, 65 (1917) "A quit claim deed is "color of title." Safford v. Stubbs 117 Ill.389 Thus, any tax deed which purports, on its face to convey title is a "color of title". Walker v. Converse, 148 Ill. 622,629 THE ONLY TRUE TITLE TO LAND IS A "LAND PATENT" "Patents are issued between sovereigns and deeds are executed by persons and Private Corporation" Leading Fighter v. Country of Gregory. 230 N.W. 2d 114, 116 (1975)
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"A patent is the highest evident of title, and is conclusive, against the government and all claiming under junior titles, until it set aside or annulled by some judicial tribunal." Stone v U.S. 67 U.S. 765 "The patent (land patent) is the only evidence of the legal fee simple title (or Allodial)". McConnell v. Wilcox, 1 scam. Ill. 381, 396 "Issuance of a government patent granting title to land is the most accredited type of conveyance known to out law". U.S v. Creek Nation, 295 U.S. 103, 111. See also U.S. v. Cherokee Nation, 474 F.2d 628, 634. From Blacks Law Dictionary 6th edition: ALLODIAL - "Free; not beholden of any lord or superior; owned without obligation; the opposite of feudal." Barker v. Dayton 28 Wis. 384; Wallace v. Harmstad, 44 Pa. 499. ALLODIUM - "Land held absolutely in ones own right, and not of any lord or superior; land not subject to feudal duties or burdens (property taxes and municipal codes). An estate held by absolute ownership without recognizing any superior to whom any duty is due on account thereof." 1 Wash, Real Property 16., 9 Cow. (N.Y.) 511, 18 Am. Dec. 516 IF YOU DONT HAVE AN ALLODIAL TITLE ON YOUR PROPERTY, SOMEONE ELSE OWNS IT Even if its PAID IN FULL! You still owe the taxes, not the King! Thats why you dont own your property. (End of the Webpage) ------It sounded very good to me and I started an investigation on this matter. Practically, Allodial Title Land is a property which has no tax obligations to the government. Is like owning all the properties you want and not having to pay any property tax on it, because of this concept. The land is owned by the government, thats why we pay taxes. With an Allodial Title Land, is supposed that the government is no longer the owner. Sounds great, isnt? The truth is that in the United States, "To say that land is owned 'allodially' is pure fiction, as all land under United States government jurisdiction is subject to expropriation by Eminent Domain. I was also not convinced of this strategy because it looks more as an avoidance of taxes, which I understand it is completely illegal.

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In my investigation, no attorney could tell me more about it, so you must consult your own attorney if you want to pursue something like this. If you have useful information about it, please contact me as soon as you can. Wikipedia (at this time) is the best information available on the net about this concept, with the following information posted in their website: -----------Some groups say references to allodial title in state constitutions and (allegedly) the Treaty of Paris give property owners absolute, inalienable title to their property. These groups include: 1. Tax protesters. (A Tax protester is someone who refuses to pay a tax based on constitutional, legal, or ethical grounds). This group denies the legal power of municipal and state governments to tax property on the basis that allodial title cannot be alienated by failure to pay those taxes. However, most private property (to include all property in the United States) is not held in true allodial title, which would be the only title exempting the title holder from any tax. 2. Mortgagors. Persons who have overextended themselves and face foreclosure often try to create an allodial title. As allodial title cannot be alienated by seizure by a creditor, they claim the foreclosure by the mortgagee is illegal. However, by its nature, allodial title cannot be mortgaged in the first place, and an attempt to create allodial title on land that is subject to encumbrance by debt is impossible. Actually a contract can be created by an owner of allodial property with a mortgagee resulting in the transfer of title under certain circumstances such as default on a loan, thus that land falls out of the allodial title domain as it is essentially jointly owned and governed by contract by both the mortgagee and mortgagor. Once the mortgagee releases the contract as satisfied in full, the ownership reverts entirely back to the owner. There was time when one was considered a fool to mortgage allodial land and thus give up allodial ownership as among other penalties the owner often lost the right of a freeholder to vote. 3. Anti-Zoning groups. Persons who own agricultural land that faces re-zoning due to encroaching urbanization often claim that zoning laws that control agricultural use of property are illegal as they constitute an encumbrance on allodial title. They claim that only the law of nuisance applies to persons holding allodial title. However, the U.S. Supreme Court has upheld the constitutionality of zoning laws on a very broad basis, even though such laws all post-date the 1787 Constitution. Schemes to obtain allodial title usually advise property owners to file a deed of allodial title with the local registry office, or to publish a notice of allodial title in a local newspaper. However, neither these or any other method is recognized by U.S. courts, and attempts to improperly assert an allodial title in U.S. courts may be classified as a "frivolous claim".

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Chapter 7

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WHAT HAPPENS TO THE CREDIT

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Nobody wants to be Foreclosed or Bankrupted. These are the worst things that can happen to a credit record; must be avoided as much as possible and filed only as the very last resort. A Foreclosure stays in the credit report for 7 years. A Bankruptcy Chapter 7 stays for 10 years (after the discharge date) A Bankruptcy Chapter 13 stays for 7 years (after the discharge date, not the filing date) A Short Payoff will damage the credit but not that much. This will appear in the credit report as settled for less Bad credit will affect anybody to qualify for any kind of new loans; and if the person dont know what to do, it will be very difficult to rebuild credit. Anyone knowing how to rebuild credit may have good credit again in the next year or two, depending in how handles the new open accounts. A borrower starting new credit may also want to start a Corporation or LLC and learn how to develop it (need to know how start building from zero without using his SSN), while rebuilding his as well. Business credit must have at least 2 years of established credit with 5 accounts in good standing at least, in order to the SSN of the corporation owner dont be requested anymore. Donald Trump, after a bankruptcy, started over his Real Estate Empire through corporative credit. I have now 6 years in front of hundreds of credit reports. Many of them were revised by me every single year. Ive seen how their FICO score have gone up and gone down again, and again. A Foreclosure in the credit affects the most to buy a property. Actually, for a home purchase qualification, most prime lenders usually do not qualify somebody with less of 5 years of Foreclosure, and no less than 2 years for a discharged Bankruptcy! (Will depend also how well managed are the other accounts in his credit) I have noticed also that when a person had a Foreclosure, leaves the other accounts unpaid, damaging his credit for years! Most of the unpaid accounts became collections, then judgments. All of those negative issues damaged more the credit than a bankruptcy through the years. A discharged bankruptcy will damage a credit record seriously, but this credit can be reestablished sooner than with a Foreclosure record with unpaid judgments and collections. I think this is because when a person files bankruptcy Chapter 7, he becomes really debt free, being able to start all over again and it is understood that- he/she learned by experience to become more financially intelligent.

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CONCLUSION Hope all this invaluable information can help you to find the best solution for your present mortgage situation so you can take the final decision with knowledge and power. We are now at the end of this book, and I dont want just to leave you there thinking about numbers, papers and potential deals.

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I dont know who you are maybe you are a friend, a client, a part of my family-, but we have shared together some minutes (or hours) through the magic of the internet and modern communications. Perhaps you are in another state, another country, another city; maybe you are years ahead reading this now! I dont know. However, through the limits of the space and time, I just want to tell you that anything that can happen to your material things are simply matters of this crazy world. The most important things are the good things you have in your heart, your mind and your Spirit; and always remember my friend, that your family is the most important thing in this world. If you lose your house, you can have a bigger and better later, but if you lose your lovely family, it will be forever irreparable. If you are experiencing damage in your credit, or if you are having problems with your house and/or your job, etc. you have to handle all of this issues as a huge lesson in your life; so next time, it will not happen to you again or to your kids when they grow up. Dont complain. Listen to the lesson. Educate yourself in what to do in any situation, in all areas of your life, so you can have a better balanced life, all the time. Que as sea, Alfonso Inclan Financial Educator and Credit Counselor Gilbert, Arizona February, 2008 For more information, you can contact me at alfonso@foreclosureinprocess.com

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Foreclosure Secrets Guide


RESOURCES US DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) 451 7th Street SW, Washington DC 20410 Telephone: (202) 708-1112 TTY: (202) 708-1455 http://www.hud.gov FEDERAL TRADE COMMISSION Consumer Response Center 600 Pennsylvania Avenue, NW Washington, DC 20580 1-877-382-4357 http://www.ftc.gov RESPA COMPLAINTS Office of RESPA and Interstate Land Sales, Department of Housing and Urban Development, 451 Seventh Street, S.W., Room 9154, Washington, DC 20410 US DEPARTMENT OF VETERAN AFFAIRS (VA) VA benefits: 1-800-827-1000 http://www.va.gov

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ADDITIONAL WEB RESOURCES Bankruptcy Attorneys Network Better Business Bureau Fannie Mae Federal Housing Administration Freddie Mac Federal Trade Commission Foreclosure Laws by State House Values Housing and Urban Development (HUD) Mortgages and Rates Information National Association of Consumer Advocates State Laws and General Info Veterans Affair (VA) http://www.bankruptcylawnetwork.com http://www.bbb.org http://www.fanniemae.com http://www.fha.gov http://www.freddiemac.com http://www.ftc.gov http://www.foreclosurelaw.org/ http://www.zillow.com http://www.hud.gov http://www.bankrate.com http://www.naca.net http://www.realtytrac.com http://www.va.gov

Youtube Video: http://www.youtube.com/watch?v=LqAWCgKuvZ0&feature=related

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Foreclosure Secrets Guide


States using Mortgages

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Alabama, Arkansas, Connecticut, Delaware, Florida, Hawaii, Indiana, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Vermont, Wisconsin States using Deed of Trusts Alaska, Arizona, California, Mississippi, Missouri, Nevada, North Carolina, Virginia, Washington DC States using both Deeds of Trust and Mortgages* Colorado, Idaho, Illinois, Iowa, Maryland, Montana, Nebraska, Oklahoma, Oregon, Tennessee, Texas, Utah, Wyoming, Washington, West Virginia * Custom dictates which document is used > Georgia uses a security deed

ATTENTION MODIFICATION COMPANIES: if you are buying this eBook to use these strategies for your clients and make a profit, let me tell you that many modification companies all over the country has been trying to sue me because lenders and trustees are sueing them. It is not possible. You cannot sue me, but lenders they can sue you if you use the letter examples provided in this eBook. The letters published in this eBook cannot be used from a third party. Thats illegal. THIS EBOOK IS DESIGNED ONLY FOR BORROWERS AS A PERSONAL EDUCATION IN THIS MATTER AND THEY CAN LEGALLY USE SIMILAR LETTERS FOR THEMSELVES. You Modification Companies are herein warned. Im not liable for any lawsuits you may have when using these letters in behalf of your clients.

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Foreclosure Secrets Guide

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The Foreclosure Secrets Guide


WHAT TO DO WHEN YOU ARE LOOSING YOUR HOUSE

Remember, I am not an attorney, accountant, tax advisor or real estate guru giving legal, tax or financial advice. This book is not a substitute for the advice of a competent attorney. Although I am a Financial Educator in the State of Arizona doing Foreclosure Consulting, Residential and Commercial Loans, Mortgage Training and Consulting, Real Estate investments, Business Coaching, Marketing and Credit Counseling since 2002, I do not claim to give you legal advice in this book to your specific circumstances. This book is intended to educate homeowners in default of their mortgage. Nothing enclosed in this book should be construed to constitute advice for your personal circumstances. This is intended as a peripheral exposure to the available options, but by no means this is a complete or exhaustive analysis of the bankruptcy laws or their alternatives. Whether or not you should file a Chapter 7 bankruptcy, Chapter 13 bankruptcy, or any bankruptcy, will differ depending on your personal situation and should only be undertaken after careful reflection, examination and after consultation with an attorney experienced with such matters. The information provided in this book is provided just for personal information. Under no circumstances does the information in this content represent a legal recommendation to sell, buy or hold any property. Circular 230 Disclosure: Internal Revenue Service regulations provide that, for the purpose of avoiding certain penalties under the Internal Revenue Code, taxpayers may rely only on opinions of counsel that meet specific requirements set forth in the regulations, including a requirement that such opinions contain extensive factual and legal discussion and analysis. Any tax advice that may be contained herein does not constitute an opinion that meets the requirements of the regulations. Any such tax advice therefore cannot be used, and was not intended or written to be used, for the purpose of avoiding any federal tax penalties that the Internal Revenue Service may attempt to impose. Copyright 2008, Orbis Marketing, LLC. All Rights Reserved www.foreclosureinprocess.com

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