Forced from home: Legislation would rewrite state’s foreclosure laws

Jeff Bradley got the call at work. A neighbor had tracked him down – the message was urgent. Return home.

Men were in Bradley’s yard, prowling through his house, the neighbor reported. A dumpster sat out front, a padlock clinging to the door. Bradley dropped everything and raced back.

The scene he returned to was chaotic by design: a landscaper, acting on behalf of a bank, clearing out rooms and tossing belongings into a heap. To Bradley, it was the heart-stopping culmination of a fight that stretched years.

After exhaustive efforts to resolve long-standing complications with his mortgage, Bradley was finally facing foreclosure. The house had been sold by power of sale at auction days prior. The bank was moving in.

Bradley said he had no warning – no notice of an auction date, no writ of eviction.

“I was in a rage,” he said. “I was pissed.”

After a heated argument with his evictors, Bradley convinced them to allow him access to the house, by then a wreckage of strewn items. Much of his family’s possessions had already been thrown into the dumpster. Bradley took some essentials – clothes, records for his DJ business – and loaded his van. He grabbed his daughter’s prom dress, weeks ahead of her big day.

He drove back to his parents’ home, called a lawyer, and prepared to go to court.

Ten years after the peak of the housing crisis, foreclosures in New Hampshire – and every state – are receding. But advocates say the trend masks another problem: Banks in New Hampshire are rushing residents through the legal process, sometimes failing to give proper notice of an auction in time for the homeowner to stop it. Under New Hampshire law, banks are only required to give notice of auctions through the mail and in a newspaper ad, which can lead to missed warnings and lost opportunities.

A new bill would change that process, flipping the onus onto the banks and turning New Hampshire into a “judicial foreclosure state.” House Bill 1682 would require that banks initiate a civil action in superior court before foreclosing on a home, creating a legal forum to work out misunderstandings before the clock runs out.

For banks and housing organizations, the bill is an unwarranted source of strain and delay. For foreclosure attorneys and housing advocates, it’s a chance to right an imbalance in power.

“There was nothing I could do with these guys,” Bradley said. “They just did what they felt like doing, period.”

Like many homeowners, Bradley’s troubles began with a change in circumstances. He and his wife had lived at the Epping house since 1993, raising three daughters and chipping away at the mortgage year by year. Then, in 1998, Theresa Bradley was injured in an auto crash – a T-bone collision at an intersection near the house. Jeff Bradley, working at Home Depot and as a disc jockey for weddings and parties, kept up with the mortgage payments, but the medical bills complicated their finances for years.

So when a mortgage company, Ameriquest, offered a refinancing deal in late 2004, Bradley jumped at the opportunity. The new offer would require them to pay a higher interest for three months, after which they would be rewarded with a lower monthly rate.

Bradley says he was quick with the payments, turning in the first two months’ up front. But soon, he was informed by a new lender, Home Q, that the money had not been received and was still due. Despite keeping evidence of the payments he had made, Bradley acquiesced, giving the new lender additional payments to make up the alleged difference. But by then it was too late; the lenders had moved into the next phase, foreclosure.

By 2006, Wells Fargo, which had been assigned the mortgage, had initiated a foreclosure action against the house. Bradley found a lawyer and quickly stopped it, temporarily, in court.

The next few years were dominated by frantic appeals and uncertainty. Bradley kept the house while the court proceedings continued – it would be two years until the case was finally heard in Rockingham Superior Court. On that day, Wells Fargo presented an offer: They gave him the name of one of their agents to call and said she would get the mortgage problems squared away.

In court, a lawyer argued that there was no need to continue the case; the parties had worked out a solution and the bank was no longer pursuing the foreclosure. Bradley’s action was dismissed.

Bradley finally saw hope. “I was very encouraged. I was excited. I was like, ‘Okay, this is going to be resolved,’ ” he said. He called the agent three times that day, and dozens of times through the week. But she never took his call, he said, leaving him without a clear path forward.

Meanwhile, Bradley made regular attempts to reach out to the lending companies and continue making mortgage payments, he said. But with his mortgage in uncertain straits, he was continually rebuffed. The debt and late fees accumulated, with little for Bradley to do but wait.

It was a frustrating period, Bradley recalled.

“I always had money,” he said. “I always had income. I was working, you know, my DJ business was successful. I didn’t have problems paying. I just had problems reaching them to pay.”

By 2011, Bradley was at wits’ end. He had struggled for years to make payments and gather updates. In 2009, at a mortgage company event at Gillette Stadium in Foxborough, Mass., he had approached Home Q, the original mortgagee, for information. A representative could not find his mortgage in the system.

Later that year, when he found a different lender who offered to refinance the mortgage, Bradley says Wells Fargo refused to sign it over.

Bradley did have one source of solace. Back in 2007, the Superior Court judge had said that the dismissal was made without prejudice to further action: If the bank attempted to foreclose again, he would have the same right to protest as he had the first time. And eventually they would reach out; they wanted his payments.

But as the years went on, he harbored private doubts. “I didn’t know what’s going to happen,” he said. “I was like: ‘Eventually we’re losing this. What can I do?’ ”

Still, standing in his yard in April, 2011, Bradley was taken aback. He didn’t expect to lose it the way he did.

Under New Hampshire law, a lender must carry out two actions before carrying out a “power of sale” auction and foreclosing a home. First, the auction must be advertised in a local or state-wide newspaper for three weeks. Second, a certified letter – one in which the recipient signs off on to a delivery person – must be sent to the homeowner detailing the intended auction and giving information on their options.

One problem: The law doesn’t require the homeowner to sign off on receipt of that letter before the foreclosure may go ahead. When Bradley’s letter was sent home, he was caring for his father in Hampton. His warning letter was returned to the bank without his knowledge or signature.

The auction went ahead without Bradley able to challenge it again in court. Days later, the dumpster arrived in the yard.

“I was devastated and in shock, really,” Bradley said. “Completely in shock.”

Since his eviction, Bradley and his lawyers have sued Wells Fargo, seeking damages and loss. But there’s nothing they can do to reverse the sale of the house, presently occupied by a family Bradley is on good terms with.

Meanwhile, an initial suit was dismissed by the United States District Court in Concord – and upheld First Circuit Court of Appeals in Boston – on the grounds that New Hampshire law does not require acknowledgement of the foreclosure notice. Bradley is now seeking a re-trial in Rockingham Superior Court.

Briana Curran, a Wells Fargo representative, declined to comment at length on Bradley’s allegations, amid ongoing litigations. But she said the bank had done what it could to help him.

“With regard to Mr. Bradley’s situation, we work hard to help keep people in their homes when they encounter financial difficulties and view foreclosure as a measure of last resort,” Curran said.

The eviction rippled through the Bradleys’ lives. After shielding them for years, Jeff Bradley was forced to tell his daughters everything. Rumors about the foreclosure were flying around the school; as he DJ’d the prom, it was all he heard about in conversation. The action accelerated Jeff and Theresa Bradleys’ ongoing divorce, itself the result of the strains brought on by their uncertain condition.

And Bradley still faced the debt itself, still growing, still insurmountable.

“It affected all of us,” he said. “It destroyed me, it really did.”

For Bradley, the ordeal has been an isolating struggle. But Terrie Harman, an Exeter-based foreclosure attorney who represents Bradley, says it’s a problem she’s seen more and more. Homeowners fail to receive notice of foreclosure actions, learning of their evictions only when the padlocks appear on their door.

To Harman, Bradley’s eviction could have been headed off by a simple solution: judicial notice. If New Hampshire became a judicial foreclosure state, people facing the actions would need to be served the action by a sheriff of the court, guaranteeing them enough warning and time to make the case that the foreclosure was wrongfully issued, Harman said. She points to her clients in Maine, a judicial foreclosure state, who she says face far fewer pitfalls.

The issue extends across the state, advocates say. Stephanie Bray, the Concord-based Foreclosure Project Director at New Hampshire Legal Assistance, said she heard dozens of cases of homeowners failing to receive notice of evictions in time to contest them. “I wouldn’t say it’s common, but it’s not rare either,” she said.

And the problem might be broader still, Harman says. Facing the shame of losing their homes, many are presently too embarrassed to contest the actions or consult with attorneys, a hurdle that could be overcome with civil proceedings, she said.

“I honestly don’t know how many there are out there, and it makes me really sad,” she said.

HB 1682, which replaces the present procedure with a mandatory civil action by the bank, puts the power in the homeowner’s hands, Harman argued. Rather than a homeowner needing to know of the impending foreclosure and prove to a court why it shouldn’t go ahead, the bill would require the bank to go to court to prove why it should, she said. The end process could head off years of legal battles, she said.

Moreover, said Bray, the bill would bring the law for owners in line with renters – presently New Hampshire tenants have stronger legal safeguards during evictions than homeowners do, she said.

Rep. Kermit Williams, who sponsored the bill, called it an attempt to level the playing field – boosting the chances of the homeowners unfamiliar with the system against the banks that have mastered it.

“Having a court in the middle balancing things out makes sure that people are treated fairly,” he said.

But banks and representatives have argued that judicial foreclosure processes are slower, and will increase costs.

At a hearing on the bill Wednesday, Tom Fahey, vice president of government relations for the the New Hampshire Banking Association, said the bill would open up all foreclosures to judicial action, potentially adding months or years to the process. That, in turn, could force interested rates for all borrowers.

Jerry Little, Commissioner of the New Hampshire Banking Department, said in an interview that the department could not take a position on the bill. But he warned of general burdens associated with making New Hampshire a judicial foreclosure state. And he pushed back at the notion of predatory lending, arguing that banks stand as much to lose from foreclosures as homeowners do.

“Ultimately (the process) doesn’t prevent foreclosures from going forward – it generally makes it a much more expensive process for the financial institutions,” Little said. “And when it becomes a more expensive process for financial institituions, they don’t absorb those costs. They pass them onto consumers. So all consumers in states with judicial foreclosure tend to pay the price for judicial foreclosure.”

Fahey said that the safeguards against wrongful foreclosures already exist.

“I know people are saying, ‘Well the access to the courts isn’t what it should be, and it doesn’t provide protection that they’re seeking in this bill,’ ” said Fahey. “But it does say in the notice ... you have a right to petition the Superior Court. ... I do want to emphasize that borrowers have access to the courts now.”

The New Hampshire Housing Association opposes the bill too, saying it could worsen lending conditions and hamper investment.

But advocates point to examples surrounding states – Maine, and Massachusetts, to start – as examples that a judicial foreclosure system can be efficient and cost effective.

For his part, Bradley says a change in law could have made a significant difference.

“This bill is huge to protect families who go through what we went through,” he said. “Because we would have been able to prove it. Easily.”

(Ethan DeWitt can be reached at edewitt@cmonitor.com or on Twitter at
@edewittNH.)