# Washington state invalidates common mortgage provision



## mtmtnman (May 1, 2012)

In a ruling this month, the Washington Supreme Court found that action illegal — a decision that clears the way for a federal class-action case that Jordan brought on behalf of at least 3,600 borrowers in the state, and one that could have broad ramifications on how some lenders respond when homeowners miss payment, 
"This is criminal trespass and theft, and it should be treated as such," said Sheila O'Sullivan, executive director of the Northwest Consumer Law Center. "There's no basis for them to walk in and change the locks on a person's home until they have foreclosed. It's an important ruling."
The mortgage industry is wrestling with the significance of the 6-3 ruling, which found that provisions standard in mortgage documents around the country conflict with state law. The provisions allow for lenders to change locks, winterize homes or take other steps to preserve the value of properties that are in default or abandoned."

http://www.msn.com/en-us/money/real...-common-mortgage-provision/ar-BBuqk9D?ocid=sf


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## Ohnojim (Mar 25, 2013)

Wow, that could spread pretty quickly.


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## safeguard dropout (Apr 21, 2015)

Oh yes, the floodgates are open. How many people that have been foreclosed on would LOVE to sue?!!

I am by no stretch a legal mind, but I do think the court is drunk on power.

That mortgage payment I make every month? Yep, the bank agrees to let me live there as long as I make that payment. At the time I pay the principal in full, then I own the house. Until then I only am a percentage owner. I laugh every time I get the question 'are you a homeowner'. Um no not really.

So a couple questions for legal people.

How are any laws being broken here? The borrower has signed for the banks rights to preserve property in the event of nonpayment. If I own land and give you written and signed permission to be there, are you trespassing? If the borrower signs a contract with the lender spelling out what happens in the event of non payment-how is anything unlawful??!

On a side note, is home repossession any different than a car repo/impoundment? Boat? Motorcycle? Collateral on ANY loan? How is it any different? If you don't make said payment, someone will be out to secure, or take an asset. Said asset will be held until payment is made. If no payment then asset is sold and remaining balance goes to borrower. 

With a home loan, the house is obviously the collateral to the loan. Why shouldn't the bank have rights to the asset they own?

Like I said, not a legal mind. Feel free to blow me up.:biggrin:


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## Ohnojim (Mar 25, 2013)

*The same crooked lawyers that rode the housing bubble up*

will pick its bones on the way down. That's all the "legal education" you need to figure this one out.


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## Doc (Sep 3, 2015)

safeguard dropout said:


> On a side note, is home repossession any different than a car repo/impoundment? Boat? Motorcycle? Collateral on ANY loan? How is it any different?:biggrin:


Major difference. The car repo laws for each state may differ but for the most part, state courts come down hard on car repo guys if they don't follow the rules...Mainly because they're repo guys.

Car repo guys know the laws very well. That's all they do, every day. In many states they have to be licensed. I've worked for one. Never again, to much stress.

I can't imagine walking up to home without a foreclosure notice and without a sheriff sheriffs deputy and changing the locks. The Sheriffs office won't put themselves in that position without the proper paperwork. 

Many vendors in the housing repo arena do it to make a few extra bucks here-and-there. And they don't make nearly what a car repo guy makes for the same BS.


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## Wannabe (Oct 1, 2012)

Safeguard Dropout,

The bank does have collateral rights but only after a foreclosure has been granted from the court. 
Personally i agree with this opinion. Keeps the P&P guys out if trouble AND makes you a lot more money with repairs from the years/months of neglect waiting for a court approved foreclosure.


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## safeguard dropout (Apr 21, 2015)

In my state when a car payment is ten days late, a right to cure 20 day notice is served. If no payment then repo can happen, without going through the courts. So 30-40 days. I'm not talking about the specific laws being the same as foreclosure, I was talking more about the similar concept of repoing any collateral, whether is be a house or an RV camper, and raising the question of why the lender isn't afforded the same rights to repo a house as they are a vehicle.


I'm not a lender and I do very little P&P so I have no dog in this hunt. Just sayin.

I'm just having trouble wrapping my brain around the fact that the lender can own up to 100% (based on amount of principal paid)of an asset and have no rights to it without going through the courts. We all know that process can take a year or longer, and as Wannabe pointed out, a LOT of damage and dollars can add up in short time. I just think the lender is getting screwed and I wonder if this ruling will change lending practices, and more so, lending costs. 

More than anything I think the term 'homeowner' needs to be looked at and redefined.

Just my opinion....


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## Doc (Sep 3, 2015)

safeguard dropout said:


> In my state when a car payment is ten days late, a right to cure 20 day notice is served. If no payment then repo can happen, without going through the courts. So 30-40 days. I'm not talking about the specific laws being the same as foreclosure, I was talking more about the similar concept of repoing any collateral, whether is be a house or an RV camper, and raising the question of why the lender isn't afforded the same rights to repo a house as they are a vehicle.
> 
> 
> I'm not a lender and I do very little P&P so I have no dog in this hunt. Just sayin.
> ...



Trespassing on a "borrowers" premises and changing the locks while the property is in pre-foreclosure is an unacceptable practice. It can also get a someone seriously injured or killed.

You mentioned the time frame in which a car repo guy can proceed. If he follows the rules, has his ducks-in-a-row (paperwork) and the cops get called, the cops will allow the repo.

Ethical car repo guys will, if possible, contact the local police to tell them when, where and how there going to perform the repo. Just in case there's any conflict.

What does a P&P guy have? A work order for a lock-change from some two-bit servicing company that no one has ever heard of outside of the P&P industry.

Ha!

To a cop, or anyone else, that work order is worthless. They themselves could be, or know someone that is in arrears.

The bottom line is, due-process has to take place. Pre-Foreclosure is not Foreclosure.


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## oteroproperties (Aug 10, 2012)

When you buy a house you sign in your mortgage contract an agreement that allows the servicer to "protect and preserve the collateral" I think you'd be surprised what an average mortgage has in it.

Sent from my SM-N920P using Tapatalk


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## Doc (Sep 3, 2015)

oteroproperties said:


> When you buy a house you sign in your mortgage contract an agreement that allows the servicer to "protect and preserve the collateral" I think you'd be surprised what an average mortgage has in it.
> 
> Sent from my SM-N920P using Tapatalk


How about the servicing company comes and mows my grass, pressure washes, and paints my house for the P&P prices? Oh, I have some stuff that need to be taken to the dump too.

After all, it's protecting and preserving the collateral.

Sign me up. Oh wait, I guess I already did.


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## oteroproperties (Aug 10, 2012)

Doc said:


> How about the servicing company comes and mows my grass, pressure washes, and paints my house for the P&P prices? Oh, I have some stuff that need to be taken to the dump too.
> 
> After all, it's protecting and preserving the collateral.
> 
> Sign me up. Oh wait, I guess I already did.


While you're at it, stop paying your homeowners insurance. They'll give you a great "forced coverage" policy. 

I'm sure you're just being sarcastic but incase you're not, belive that all those expenses get tacked onto what you'll ultimately owe them. 

Sent from my SM-N920P using Tapatalk


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## safeguard dropout (Apr 21, 2015)

Doc said:


> > Trespassing on a "borrowers" premises and changing the locks while the property is in pre-foreclosure is an unacceptable practice.
> 
> 
> I simply don't agree that it is trespassing when they have borrowers signature approval to be there. (I know, now illegal in WA. If I understand the ruling, ALL P&P activity is what the court has ruled illegal, including mortgage document wording.) So what about a grass cut? Should that be illegal? If servicers don't do it, the municipals will. Are they also trespassing? You could make a lot stronger case for municipals trespassing than you could for mortgage lenders.
> ...


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## Doc (Sep 3, 2015)

oteroproperties said:


> While you're at it, stop paying your homeowners insurance. They'll give you a great "forced coverage" policy.
> 
> I'm sure you're just being sarcastic but incase you're not, belive that all those expenses get tacked onto what you'll ultimately owe them.
> 
> Sent from my SM-N920P using Tapatalk


Your right, I'm being sarcastic. Getting all that work done at P&P prices does sound intriguing tho.

Perhaps go into pre-foreclosure. Get brand new locks / knobs (there old) and a new paint job (old too), take a break from mowing the lawn. Spend some quality time with the bike and boat. Maybe take a real vacation.

Then get current on the payments (lump sum saved-up). Might save a few hundred bucks on the maintenance. I'll be dead before the house gets paid-off so they can tack it on to the back-end :angel:. Doh!

Were off-track from the original post anyways.


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## Wannabe (Oct 1, 2012)

There's an old member from Baltimore that could explain this ruling. He had years as a mortgage broker and always said when the first person sues about mortgage companies extending their collateral rights its all over for the banks pre-foreclosure lock changes. 

I'll send him an email for his take.


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## NorthwestWA (Jun 25, 2016)

I don't get it... Are you guys in the dark? This is all bull****. We are not repossessing a house. in preforclosure.. Notice those work orders clearly state. DO NOT REOVE PERSONAL BELONGINGS..etc..etc... These initial secure orders are issued because the house has been found to be vacant by an inspector. No doubt continued attempts to communicate from the mortgage bank have gone un answered. inspector goes to the property. inspector finds property to be vacant. Notice is posted on the door. Still no reply from the borrower. Initial secure gets ordered. this is not a LOCKOUT or an EVICTION. If I find someone living in the home I have to back away and report it as occupied. Even if nobody is home and it looks like it is currently lived in, you can confirm with a neighbor and report it as occupied. Occupied properties are (usually) clear as day. Neglected abandoned properties are definitely obvious. So why should the lean holder of this property not be allowed to preserve the asset? We are dos secure a secondary door. Assess the condition. bid on everything that is needed and walk way. That is NOT an eviction. That is NOT repossession.


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## mtmtnman (May 1, 2012)

Posted on a FB group today.....

"
Effective Immediately 
A2Z Field Services can no longer 
enter or secure Pre-Foreclosure properties 
in the state of Washington.
A recent development in Washington state will greatly affect when preservation contractors may legally "enter, maintain and secure" a property that is deemed "vacant" prior to foreclosure. On July 7th, the Washington State Supreme Court upheld a decision pertaining to when a lender can "take possession" of a property by changing locks (securing). 
A2Z will still be completing all exterior work on these properties so if you find a property unsecured or have reason to believe there may be significant interior damage, you are to call from site. A2Z"


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## Doc (Sep 3, 2015)

NorthwestWA said:


> So why should the lean holder of this property not be allowed to preserve the asset?


Because the property has not gone through receivership when it's in a pre-foreclosure position.

In a previous post, I stated that if the mortgage company wants to preserve their property (asset), they can mow their (my?) lawn and paint their (my?) house. They can replace their (my?) water heater when it fails too!

I would have no complaints with them performing those tasks.

After all, it is their property.

Changing locks without a court ordered foreclosure? No.

They shouldn't have it both ways.


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## Wannabe (Oct 1, 2012)

My take;

Many court rulings have defined abandonment and as long as the homeowner looks after the property (i.e. Drives by once a month or has a friend drive by) then the property is not vacant or abandoned. 

We were involved in such a lawsuit (luckily we were released from suit since we only mowed the yard and checked the lockbox code to see if it worked). FYI cost us $5000 in legal fees and the homeowner won the suit. 

It's a screwy world. Do what you think is right, follow the law and you will have a defenseable position if sued 

JMO


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## mtmtnman (May 1, 2012)

Wannabe said:


> My take;
> 
> Many court rulings have defined abandonment and as long as the homeowner looks after the property (i.e. Drives by once a month or has a friend drive by) then the property is not vacant or abandoned.
> 
> ...


Many of the initial secures i have done over the years where for sale and maintained by the owner but vacant. I always thought it was wrong that the bank would bill the owner for cutting the grass when it was clearly already cut and winterizing the property when the heat was clearly being maintained......


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## BamaPPC (May 7, 2012)

The homeowner signed a binding agreement that expressly gives the lender permission to assume the maintenance of the property ONCE IT IS ABANDONED. The rub comes when hacks in this industry don't take the time to establish true abandonment. 

I have argued my way out of work many times because I didn't feel comfortable entering a property. Whether because of a hand written sign on the door saying keep out, or because there were a lot of personals visible, or the utilities were still on, or even because I could not see inside the dwelling to make a determination. I've had work re-assigned, but that's better than a $5k deductible and cancellation of my insurance.


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