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Worcester Anti-Foreclosure Team Wins Landmark Legal Case

Friday, August 02, 2013

 

A foreclosure crisis runs rampant in Central MA, and it's all residents can do to hold on to their homes.

Mildred and Gregg Collins will not be evicted from the three-decker they inhabit at 82 Ingelside Avenue on Worcester’s East Side neighborhood–at least, not for now. That’s the good news. The bad news: nobody knows for sure who legally owns the property in which they are being allowed to continue residing.

Much of the credit for the financially struggling couple being able to stay put, goes to the private, non-profit Worcester Anti-Foreclosure Team. Co-founded by Grace Ross, who’s also a regular GoLocalWorcester columnist, WAFT supported their legal efforts against German financial giant Deutsche Bank National Trust Co. Deutsche is trustee of the pool that contains that mortgages–including, purportedly, that of Mildred and Gregg–that had been held by now-bankrupt New Century Mortgage Financial Corp.

With the start of 2007, New Century was the second-biggest subprime-mortgage lender in the U.S. Its now-defunct Home123 Mortgage division signed Bob Vila of “This Old House” fame as its spokesman for several years. Home123 also became “The Official Mortgage Company of NASCAR.”

As for subprime loans, these are highly risky loans because they are made to borrowers–such as Mildred and Gregg–who are unable to qualify under traditional, more stringent criteria. Subprime borrowers are generally defined as individuals with limited income or having FICO credit scores between 500 and 620 on a scale that ranges from 300 to 850. Subprimes have a much higher rate of default than prime mortgage loans and are priced based on the risk assumed by the lender.

On July 22, Mildred and Gregg were both surprised and elated to learn that a Worcester Housing Court judge had ruled in their favor–and against Deutsche Bank, which had purportedly but not, as the judge decided, legally foreclosed on the property in 2011. At the time, the property had an outstanding refinancing loan of around $250,000–money that Mildred and Gregg had borrowed a few years earlier to pay for renovation work.

While Mildred and Gregg had renovated the inside of the three-decker, they had yet to renovate the run-down exterior when the foreclosure action took place. And that happened around the time Gregg became quite ill, and their two tenants had trouble making rent payments because of the weak economy. To make matters worse, Mildred lost her social-service job last October after 27 years in that position.

Based on the judge’s ruling, Mildred and Gregg can continue to live on the first floor of 82 Ingleside–rent-free, although not limbo-free. And Deutsche must continue to maintain the property. This includes paying property taxes and water and sewer bills, mowing the lawn, shoveling snow, and addressing what Mildred calls “a whole list” of outstanding code violations.

Could 82 Ingleside–which Mildred and Gregg bought in 1996–remain in legal limbo forever? “In theory,” WAFT’s Ross responds. What Mildred and Gregg decide to do now, she adds, “will take some thought because we haven’t been at this [legal] crossroads much, before.”

Ocwen under the spotlight

Mildred Collins is in a tight spot, having saved her home from foreclosure but now stuck in a state of legal limbo.

As the first-floor tenants of 82 Ingleside consider how to proceed, the bankers they’ve been fighting with seem to be closing ranks and zipping lips.

When GoLocalWorcester asked a Deutsche Bank spokesman for comment on the Housing Court ruling in favor of Mildred and Gregg Collins, he referred us to Ocwen Financial Corp., whose slogan is “Helping Homeowners is What We Do!” On its website, Ocwen, in addressing residential-mortgage lenders, states, “The way to get the highest value from your loans–and to help families keep their homes–is to keep your loans performing. Because of our passion for protecting our investors' assets, Ocwen has become the industry leader in loss mitigation with a pre-foreclosure resolution rate over 70 percent…”

Ocwen, in turn, referred GoLocalWorcester to its PR firm, Sommerfeld Communications, with offices in Boston and New York City. A Sommerfeld staffer, maintaining that she “is not an official spokesperson” for Ocwen and “should not be quoted,” declined to comment because of "pending litigation." When GoLocalWorcester informed her that the judge has ruled in favor of Mildred and Gregg Collins and that no appeals have been filed, she agreed to do a double-check.

The Sommerfeld staffer returned with another no-comment. This time, she accompanied it with this prepared statement: "Ocwen’s robust and scalable servicing technology has enabled it to expand its servicing portfolio and assist more families experiencing financial hardship. We are an industry leader in foreclosure prevention and committed to helping as many borrowers as possible stay in their homes. Through loan modifications and workouts, we have saved over a quarter of a million struggling families from foreclosure during the mortgage downturn."

Ocwen and its PR professionals may believe that. But, according December 2012 article in the Wall Street Journal titled Ocwen’s Rapid Growth Puts Spotlight On Its Practices, Ocwen has some explaining to do. “Like other mortgage servicers, Ocwen has faced regulatory and legal scrutiny,” the article reports. “[In 2011], it paid $5.1 million to settle a class-action lawsuit alleging it overcharged delinquent borrowers, though the company denied wrongdoing or liability as part of the settlement. [In December 2012], the company agreed to install an outside observer to monitor its servicing practices at the request of the New York Department of Financial Services.”

The Wall Street Journal article also noted that Ocwen “has been scrutinized by regulators and plaintiff lawyers over its practices, even as it has won praise from consumer advocates for its willingness to rework mortgages and help struggling borrowers stay in their homes.” But the article then observed that Ocwen, in securities filings, “has disclosed information requests and subpoenas from agencies including the Federal Trade Commission and Massachusetts attorney general over servicing activities and foreclosures. Ocwen warned that the regulatory actions could result in fines, penalties and higher servicing costs. An FTC spokeswoman declined comment on the status of the inquiry. A spokeswoman for the Massachusetts attorney general declined to comment.”

Against this backdrop coupled with the landmark nature of the Housing Court judge’s ruling in favor of Mildred and Gregg Collins, it’s easy to see why no seems to know who legally owns 82 Ingleside.

Ways to clarify ownership

A key reason for the continuing uncertainty is that Housing Court does not have the power to undo a foreclosure–purported or otherwise. In addition, the judge in this case did not explain–either verbally or in writing–why he ruled in favor of Mildred and Gregg Collins. Nor was he legally required to do so.

As a result, the rest of us can only make an educated guess of the judge’s reasons, based on a court filing by Craig Ornell, the attorney for the Collins couple in the Housing Court case. Among other things, Ornell wrote that Deutsche “has failed to obtain a valid assignment” of the mortgage on 82 Ingleside “both because lender New Century Mortgage filed for bankruptcy and did not provide for assignment of mortgages as part of its bankruptcy because the purported assignment of the mortgage was void as a matter of [New York] law because it was in violation of the Trust’s own documents… Therefore, the subsequent purported foreclosure sale is null and void.”

WAFT’s Grace Ross says her group has yet to decide whether to ask the judge for a written ruling. In the meantime, she identifies three likely ways to clarify ownership of 81 Ingleside:

  • Mildred and Gregg could haul Deutsche Bank into Superior Court to force a legal ruling on the ownership issue.
  • Mildred and Gregg could offer to purchase 82 Ingleside at its real value, which would take into account the significant amount of repair work that’s needed.
  • Deutsche Bank could withdraw the purported foreclosure on the mortgage on 82 Ingleside, which would once again make Mildred and Gregg the legal owners.

 

It’s now up to Mildred and Gregg to decide what they want to do next, Ross notes. WAFT has lawyers who will be available help them, she adds, once they make that decision.

Not a piece of heart in their bodies

Mildred and Gregg have certainly benefitted from WAFT’s efforts to deliver on its mission. While they now have a big decision to make, for Mildred, it’s pay-forward time.

When they bought 82 Ingleside 17 years ago, their goal was to fix it up so that one day their three children could each have one floor of it. Mildred says she and Gregg still want leave the three-decker to their kids–presuming they get back ownership of it–but Mildred now wants to help more than just their offspring.

Because of the support she and her husband have received from WAFT, she is doing regular volunteer work for the organization. She knocks on doors of people whose property is about to go to foreclosure auction, letting them know that WAFT is there to help them.

“This has been a very long fight,” Mildred says, adding that she originally thought “it was all my fault.” She’s since learned that it wasn’t all her–or her husband’s–fault, and that many more financially hurting people have faced–and will continue to confront–a similar fight.

Mildred thinks the bankers could have at least shown some humanity while attempting to foreclose on 82 Ingleside. When your next car payment is due and you can’t make that payment, she says, most banks will at least put that payment at the end of the loan schedule.

In the case of 82 Ingleside, Mildred says with a deep sigh, the bankers were not willing to help. “They were not willing to do anything,” she says, adding, “I don’t think the banks have a piece of heart in their bodies.”

 

Steven Jones-D'Agostino is chief pilot of Best Rate of Climb: Marketing, Public Relations, Social Media and Radio Production.

 

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