THE LEGAL LIGHTS ARE BEGINNING TO SHINE IN GEORGIA

For the last 6 years during this terrible housing meltdown with Georgia becoming Number 1 in the nation in foreclosures the legal landscape has remained gloomy and depressing for homeowners. Borrowers have struggled to find anyone with the big banks, the servicers, and even the government to help them with their housing problems to work out something, anything, to save their homes. However, few have been able to get loan modifications despite government hype and banker promises, and millions have lost their homes or are facing foreclosure.

Georgia is a non-judicial foreclosure state. This means that the alleged secured creditor only has to give proper notice to the homeowner of default, whether true or not, whether in the middle of a loan modification or not, and after 4 consecutive weeks of advertising once a week, the alleged secured creditor can foreclose on the property, and sell the home on the county courthouse steps to the highest bidder. A non-judicial foreclosure means just that; no judge and no court is involved in reviewing the foreclosure. Home financing and foreclosures are viewed as contract disputes, and where the deed empowers the alleged secured creditor to foreclose upon default with notice, there has been little until recently that homeowners could do about it.

Old court decisions from decades ago when S&Ls handled mortgages have had an adverse impact on openness, transparency, and honesty that the General Assembly has tried to improve for consumers and homeowners. In 2002 the Georgia General Assembly passed the toughest consumer law in the nation on mortgage lenders and foreclosure. But after threats from Wall Street bankers and the rating agencies like Moody and Standard and Poor the Georgia Legislature backed down and in 2003 took the fangs out of the law leaving consumers worse off. In 2008 the Legislature again tried to add more transparency and openness to foreclosure notices and communications with homeowners prior to foreclosure. But banks, mortgage bankers and mortgage servicers have dodged the law, ignored it, or presented an interpretation that violated the very transparency the Legislature was trying to provide for consumers and homeowners.

Moreover, in addition to ignoring Georgia statutorily required transparency concerning foreclosures, mortgage financing has become far more complicated.  Real estate financing has changed dramatically since the Savings & Loan days with mortgage securitization, hidden investors, mortgage pooling, servicers, lenders, REMICs, tax-free mortgage pass-through trusts, and predatory lending, luring into default, Robosigning, absolute fraud being conducted against homeowners, and banker business models that knowingly violate the law.

Further with the advent of securitization bankers arranged the circumstances where all the bankers were paid off quickly, thus having no risk as they sold mortgages to others and turned them into securities traded on Wall Street. The result was that the personal relationship homeowners had with the S&L bankers who owned their note and were interested in their welfare was replaced by a total depersonalization of housing and mortgage lending so that when times went bad there was no one there for homeowners to call.

As the no risk huge profit potential of mortgage securitization exploded in the early 2000s greed and avarice seized bankers everywhere and the American home became viewed as a lucrative quick money scheme rather than the family home which many feel is the foundation of our success as a country; the right to own and enjoy real property.

But over the last decade or two amassing great wealth at the homeowner's expense and sacrifice became the norm on Wall Street and elsewhere until the bubble burst. The banks became hyper extended, the real estate market collapsed, and the banks turned to Washington to bail them out. They were bailed out to the tune of a trillion dollars or more from taxpayers through the TARP program, which the banks used to bail out their friends and get their gambled money back from credit default swaps at full price by bailing out AIG. If you were not their friends, like Lehman Brothers, you were forced to go bankrupt and lose everything.

Further, because the bailout did not require them to increase lending to consumers, instead of helping beleaguered homeowners banks used the federal bailout TARP money to buy other banks and build up their balance sheets for the next debacle. Even the medium sized banks followed this path, and despite all the banker illegal foreclosures, consent orders, consent judgments, federal HAMP and MHAP loan modification programs and other incentives, nothing has been done for the consumer and homeowner.

There are a few bright lights beginning to shine for homeowners however in the legal arena in Georgia and elsewhere. Recently, the federal district courts in decisions by Judge Totenberg in the Northern District of Georgia in the Morgan case and the Stubbs case have challenged bank dismissiveness of consumer complaints, forced them to follow the law, and corrected the banks’ misguided interpretations of Georgia foreclosure law and its transparency. And on July 12, 2012 the Georgia Court of Appeals issued a stunning decision, following up on Judge Totenberg’s decision in Stubbs, requiring that the secured creditor identify itself to the homeowner in foreclosure notices, or else the foreclosure will be set aside. The case is Reese v. Provident Funding . Finally someone is actually reading the law, the statutes, and the legislative intent, and issuing good court decisions to help struggling homeowners when certainly no one else is doing so.

How many times in a hundred years are we going to let the banks ruin our economy, wipe out our savings, erase 40% of our net worth in one month, only to listen to the banks scream for the feds to bail them out once again? Will Americans ever learn their lesson about greedy investment bankers and their national retail banker wannabees?