Earlier articles which overlap San Francisco Chronicle's 10/27 article, but which contain some additional information.

abc7news article - 10/24/07

abc7news article - 10/25/07

Example from the 10/25 article:

"State law does say, if a loan was negotiated in one of five foreign languages -- Chinese being one -- all loan documents must be sent to the homeowner in that language. Unfortunately, it's not clear if that law applies when a family member negotiates that loan for you in English, as was the case here."

Added links to Quick Summary.

GermanExpat said:This story smells a little fishy to me. The guy was able to buy a house and get a first mortgage, he was able to sign up for a HELOC. He must have used friends or relatives to fill out all the paperwork.

The article says the guys wife left him in 2005. Perhaps she was fluent in english.

LordKronos said:GermanExpat said:This story smells a little fishy to me. The guy was able to buy a house and get a first mortgage, he was able to sign up for a HELOC. He must have used friends or relatives to fill out all the paperwork.

The article says the guys wife left him in 2005. Perhaps she was fluent in english.

There are two good points. If his wife was doing the reading for him before, I can understand how he did not realize what the notices were telling him. I can also go out far enough to believe his condition could have affected his mental ability to keep track of the mortgage payments. However, it seems a far stretch to me that since she left him in 2005 that he has no one helping him out and reading stuff for him. How does he handle his other bills like power, water, gas, property taxes, income taxes, bank statements? This is where I think we are definitely missing something here. How can someone keep up with all these other things, but not this one mortgage.

On the other hand, Countrywide (if they looked) could see the guy was current on his biggie mortgage and either a) they were sending him the bill each month, or b) he kept track of that mortgage. It is not a far stretch for them to take an additional step of maybe accelerating his first mortgage or tack on some old payments to his escrow acct. One would hope he would notice the first mortgage's pmts suddenly change (or a full bill).

I have only sighlty more than zero sympathy for this guy, and that's based only on my humanity, not the facts. I've spent a lot of time in Asia, including some in China. By the way, I don't speak more than a few words of Chinese. I wouldn't think of entering into such complex financial transactions as buying a house, taking out a HELOC, etc. in another country without making sure to my satisfaction that I had all of the documents translated properly and I understood them fully. Even then, I would be very careful. You can't come to another country, not learn the language in which all financial transactions take place, then complain that you got burned by the process. Foreclosure isn't a trivial process, and you can bet that the lender followed the procedures to the letter of the law. This is about the only country that I know where people will actually feel sorry for this guy. Maybe I'm just cold hearted, but he should have a) learned English b) found someone trustworthy to translate his mail and handle his affairs or c) moved back to a country where they speak his language.

SUCKISSTAPLES said: I saw this guy on TV, they showed his stack of junk mail and UNCLAIMED CERTIFIED MAIL NOTICES from the post office.

Could he argue that he was not properly served?

My POS ex-landlord never claimed the certified mail notice that I sent her regarding her unlawful withholding of part of my security deposit. She lives in the Bay area, and the property I rented is in the Chicago area, so it's going to be a pain to serve her and her husband.

I think we all agree that a bit more personal outreach than the phone calls and letters might have prevented the foreclosure in this situation, but what about the 1000 other homes Countrywide has in default in Oakland? Are they going to hire teams of "home visitors" to see whats wrong with all these people too? Like I said in my earlier quote below, its generally not practical.

SUCKISSTAPLES said:It probably would have been a better business decision (and MUCH better PR decision) for Countrywide to try some "personal outreach" instead of just sending unclaimed certified letters. But with the # of homes in default, its not only impractical, such persons might face the wrong end of a gun if making a personal visit (espec in Oakland)

BTW I dont think Countrywide intentionally "chose to do the minimum" and concentrate only on foreclosure in order to pocket foreclosure fees.

SUCKISSTAPLES said:I think we all agree that a bit more personal outreach than the phone calls and letters might have prevented the foreclosure in this situation, but what about the 1000 other homes Countrywide has in default in Oakland? Are they going to hire teams of "home visitors" to see whats wrong with all these people too? Like I said in my earlier quote below, its generally not practical.

SUCKISSTAPLES said:It probably would have been a better business decision (and MUCH better PR decision) for Countrywide to try some "personal outreach" instead of just sending unclaimed certified letters. But with the # of homes in default, its not only impractical, such persons might face the wrong end of a gun if making a personal visit (espec in Oakland)

BTW I dont think Countrywide intentionally "chose to do the minimum" and concentrate only on foreclosure in order to pocket foreclosure fees.
Not arguing about their intent; I agree with your opinion on that. "Generally not practical" depends on the situation, doesn't it? In this person's case, as was pointed out in one of the articles and by a poster here, a credit report would have revealed that the person was current on the larger mortgage loan. If in fact he appears not to be a deadbeat, but something else is going on, don't you think this is precisely the type of loan where a relatively small amount of additional effort would have been more than repaid? Much more preferable to the bank than the typical subprime situation, I'd think. And they could have publicized the extra effort they took as well! They wouldn't have even had to pay for advertising.

geo123 said:There is absolutely nothing unusual about borrowers having the mistaken impression that as long as they continue to pay their 1st mortgage, the 2nd mortgage holder cannot foreclose on them. This is an urban myth that has been around for generations and I have heard this from plenty of people out there, including some loan officers. As such, the lenders are almost never surprised to discover that their second mortgage is in default while the first mortgage is current and such a discovery does not and should not give them any pause over initiating enforcement action against the defaulting borrower.

The same is also true for "sudden death" scenarios, where borrowers with otherwise stellar payment history suddenly default on all or some of their obligations. A certain percentage of borrowers have been doing this for years and, after several months of telephone calls and letters to the borrower, the lenders have no choice but to take enforcement actions.

By the way, I don't mean to attack posters here who are clamoring for a "more humane" approach by lenders. I can tell you, however, that people are always quick to admonition the "big, bad lenders" over their "draconian enforcement policies." Those same people later complain when the cost of credit goes up as a result of lenders adopting some of their suggestions and passing on the costs thereof to the borrowers. As I and many others before me have already explained above, there was absolutely nothing atypical or unusual about the borrower's behavior in this case, so there was absolutely no reason for the lender to suspect that it was dealing with a situation different from a standard "sudden death" default situation. Defaults are INCREDIBLY costly for the lenders and the costs thereof are always passed on to the otherwise solvent borrowers. If the lenders out there were to start investigating these "sudden death" types of defaults, not only would there efforts be absolutely futile in almost every single situation, but the lenders' shareholders and the borrowers alike would be complaining about "wasteful enforcement actions" that are costing them money in the form of increased credit costs.
Could you please tell me what you mean by the term "enforcement action", specifcally "initiating enforcement action" in the first paragraph, "take enforcement actions" in the second paragraph, and "wasteful enforcement actions" in the third paragraph? Thanks!

i bet every foreclosure has a sob story behind it--divorce, illness, layoff, tricked by teaser loan, and the list goes on. he's just another statistic. plus the article is supposed to evoke sympathy and doesn't contain all the details.

on a side topic, my dad actually knows the investor who bought the property pretty well. he runs an REIT with millions of investment dollars. i tried to get my dad to get a statement from him, but he didn't say anything about it. i don't think he'll sell the house back at a discount. it's all business to him.

geo123, thanks very much for your follow-up. It made things in your initial post and some of the other posts clearer to me. This probably goes beyond the scope of this thread, and I certainly don't have any expertise in this matter as you seem to, but I wonder if lenders have any different sort of template for handling the situations you mention where it appears that the person might be able to repay their loan, as opposed to situations where it appears that the person has little chance of doing so. Of course, I'm sure there are legal requirements for consistent procedures, but is there any way that a low cost consistent set of procedures could be developed that would identify situations where the lender would have a greater chance of getting borrowers to repay their loans? For example, if it's not already being done, would getting a credit report and trying to verify income drive up costs a lot? If the information doesn't reveal any clear reason why the person isn't repaying their loan, could and should the lender try to investigate the situation more deeply?

If, as you stated earlier, there are misconceptions about not paying the seond loan and not losing one's house as long as one doesn't default on the main loan, and that this misonception is fairly common, would it be possible to come up with different methods in order to try to avoid the misconception in the first place, or do you think most of the people with the misconception and not paying their second loan simply can't afford to do so?

I suppose at least some of the above falls under the sudden death situations regarding people with "stellar credit." Again, for others with excellent credit who aren't paying their loan, is it worthwhile to further investigate those situations and try to come up with something better and less costly than foreclosure?

As I indicated before, it's a very tricky area, at least to me, but I think the real question is: Is the way enforcement actions are currently done the best way? Like I said, I wish I knew! Thanks again for your replies. And thanks to everyone who has contributed to this topic. I'm always looking to learn more about these kind of situations; as geo123 says, ultimately the costs get passed on to us.