Mortgage Foreclosure

 

Getting Homeowners a Ladder for Climbing Out of the Hole

 

The Challenge.  As did many others after 2008, Husband and Wife Homeowners fell behind on their mortgage and the bank that held their mortgage filed a foreclosure action.  After a period of years, during which the bank changed hands and the law evolved, the original bank’s successor (New Bank) voluntarily dismissed the foreclosure action.  Homeowners then brought suit under various federal statutes and state torts, seeking emotional distress damages arising out of the now withdrawn foreclosure action as well as attorneys’ fees and costs.  

 

Overcoming the Challenge.  I am often struck by how people in disputes define themselves and their opponents solely in terms of the dispute, one often demonizing or marginalizing the other.  Sometimes, a few minutes chatting helps to remind everyone that the people in the room have lives beyond this dispute.  In this case, we chatted briefly about how Homeowners met, which led to opposing counsel and I sharing a common experience.  The temperature in the room seemed to warm up a little, and we got to work.

 

The negotiations almost derailed after New Bank’s first offer.  Homeowners’ counsel expressed frustration that it was too low, and refused to counter.  We talked through options, and Homeowners decided to make a small move.  This development allowed me to avoid putting New Bank in the position of bidding against itself, and to explain how Homeowners’ counsel saw things playing out if the case did not resolve (that is, he could keep Homeowners in their house for a number of years at substantial cost to New Bank).  Negotiations took off from there.

 

The Result.  New Bank accomplished its business objective of taking possession of the house while the homeowners got to walk away with enough cash to get a new start.