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updated: 1/8/2011 11:03 AM

Suburban firms help homeowners negotiate mortgage solutions

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  • Adam Ackerman, left, a real estate investor who helped start the Foreclosure Defense Group in Rosemont, chats with homeowner David Johnson of Villa Park.

      Adam Ackerman, left, a real estate investor who helped start the Foreclosure Defense Group in Rosemont, chats with homeowner David Johnson of Villa Park.
    Tanit jarusan | Staff Photographer

By Jean Murphy
Daily Herald Correspondent

You know the real estate market is in trouble when lawyers have to get heavily involved. When times are good, real estate attorneys are retained to facilitate closings. When times are bad, like now, many find themselves handling the myriad negotiations and transactions necessary with lenders to successfully complete short sales of homes. A few even have sued banks to prevent foreclosures altogether.

Gary Lundeen, a licensed and practicing attorney with 31 years of experience who is based in Roselle, now specializes in short sales. These involve houses valued at less than the amount of the current mortgage. In a short sale, the homeowner is permitted to place their property on the market for less than the amount remaining on their home loan, and the bank agrees to take whatever amount they can agree upon with a new buyer as payment in full.

Mark Laskowski and Adam Ackerman of The Foreclosure Defense Group in Rosemont, on the other hand, help homeowners who choose to fight a pending foreclosure by directing them to an company-affiliated attorney who will examine their loan documents and, if warranted, help them sue the lender over violations and misrepresentations in the mortgage paperwork, which will hopefully lead to the negotiation of a new, better loan and keep them in their homes.

Although he has closed more than 1,300 short sales of residential properties over the past 20 years, Lundeen finds himself exceedingly frustrated by the way in which short sales are currently being handled in the marketplace. In fact, since late October, he has written four letters to mortgage giants Fannie Mae and Freddie Mac, as well as to a few legislators, urging an overhaul of what he considers to be a broken system.

"Real people are suffering through a horrendous moment in history," he wrote in a recent letter to the lending companies. "The moment can and will last if you continue down this current path of insanity."

Lundeen's complaint stems from the fact that real estate agents and attorneys working with buyers and sellers to clear the backlog of short sales do not have a concrete number to work with when ascertaining the value of each house or piece of property. The way the system now works is that a real estate broker is retained to value the property but, according to Lundeen, is instructed to value it based on only conventional sales in the area where the house is being valued. No other short sales, foreclosures or bank-owned properties may be included.

And the valuation amount decreed by the broker is told only to the bank. No one else is ever allowed to see it so those trying to facilitate the sale of the property are shooting in the dark when making very time-consuming offers, Lundeen said.

In one letter he explained the folly of the system like this: "If I am a grocer and I price my canned corn at $10 per can, based on my cousin's opinion that the store is located in a high-end area, how many will I sell? … So my corn sits on the store shelf for a year collecting dust at $10 a can. The expiration date on the can is ready to expire. Instead of reducing the price to other stores' comparative value ($1.29 per can), I hold fast. Later, when the cans are sold to hog feed at 2 cents per can, do I learn a lesson from this experience, or do I continue to market all of my new corn inventory at $10 per can?"

Lundeen is proposing that Fannie Mae and Freddie Mac and all of the banks learn from their unproductive experiences over the past several years and adopt a new way of doing things. He suggests that, in order to put everyone on the same playing field, sellers be required to hire licensed real estate appraisers to value their property at the beginning of the process, instead of having the lenders hire brokers to provide a valuation. Lundeen further proposes that the listing agent be required to list the property for the appraised value, with the appraisal attached, and that all parties, including the buyers' lenders, be required to accept the independent appraisal presented at the beginning of the process.

"Licensed appraisers have to protect their licenses so they will be very careful to give an accurate appraisal," Lundeen said.

When everyone is working with the same value, attorneys and agents won't waste time sending lenders bad offers and they also won't run into the problem of the buyer's lender coming back and saying their appraiser doesn't agree with the value of the property.

It would be the attorney's or agent's job to make sure an offer they present nets the mortgage holder at least 85 percent of the appraised value before they send the package to the bank, Lundeen said.

He estimated that approval times for short sales could be cut in half if everyone, nationwide, agreed to work off the licensed appraisal instead of relying upon real estate broker opinions and varying appraisals.

"The problem of stagnation in the real estate markets would be so easy to fix if this plan were implemented on a national basis," Lundeen said. "The economy would turn around quickly because the real estate sector is so important to its overall health."

The Foreclosure Defense Group, on the other hand, works on behalf of those who are already in foreclosure and have found their lenders unwilling to work with them on a loan restructuring or short sale. The firm matches clients with attorneys who can fight lenders in court and work to restructure mortgage loans in favor of the borrower.

Adam Ackerman and Mark Laskowski are experienced real estate investors who understand the business and first put their knowledge to work for Adam's father, whose home was being foreclosed upon.

"He tried all of the traditional methods of working with his lender but over six months' time they lost his paperwork seven times and ultimately denied his request for a loan restructuring," Ackerman said.

"We looked over the loan documents, including the income statements and 1099s, and found discrepancies. So we retained a top foreclosure defense attorney for my dad and my parents are still in their home as the case works its way through the courts," he said.

"No one is looking for a free ride, but the bank wasn't willing to work with them so we felt we had no other choice," Ackerman added.

Laskowski and Ackerman estimate more than 80 percent of residential loans written since 2003 contain fraud and predatory lending violations in the form of tax returns that don't match income statements, inflated home appraisals and other misrepresentations.

They found one instance where an underwriter misstated on a mortgage application the salary of a young woman who made $15,000 per year. They wrote her application to read she earned $15,000 a month in order to get the loan approved. That proved to be grounds for a lawsuit.

Another problem tripping up lenders is a law requiring a mortgage note -- a "chain of title" documenting a loan from origination to close -- to be kept with each mortgage. Since most mortgages were transferred multiple times and packaged together and sold to investors, a lack of documentation has also been grounds for lawsuits.

FDG's attorneys have also questioned whether a loan servicer, who originally made the loan but has since sold it to another group, has the right to foreclose on anyone. The firm also has jumped on recent news about banks robo-signing affidavits -- basically having a few employees sign court papers for thousands of foreclosures -- claiming they have read documents for each loan and they are accurate.

"Signing those without reading them is like committing perjury," Ackerman explained.

The easiest loans to litigate, from the homeowner's standpoint, however, are the tricky loans involving negative amortization and adjustable rates because the paperwork was often done incorrectly, so full disclosure was not provided to homeowners and people were sucked in over their heads, he said.

"The banks have engineered the lending industry over the past several years to be able to constantly profit from the same loans," Laskowski said. "And they aren't used to being challenged."

Unfortunately, most homeowners don't realize that they can challenge the banks. So FDG has made it their business to educate homeowners in trouble.

"Approximately 300 families were still in their homes for the holidays that wouldn't have otherwise been there because we showed them that they had legal rights," Ackerman said.

FDG urges homeowners to take proactive, assertive steps to ensure a foreclosure is stopped for good. They use subpoenas, lawsuits, discovery and other strategies to get the bank's attention and let them know the homeowner means business. The aim is to void the original agreement and demand new terms, such as a principle reduction and a lower interest rate.

These strategies can buy the homeowner many months of additional time in their home, so they can save money and get back on their feet. They push for a settlement that involves a new mortgage the homeowner can afford.

"We want people to understand that if they want to keep their home, they need to aggressively fight back against the bank, using an attorney," Ackerman said.

"I can't imagine being put out of my house," Laskowski said. "It doesn't need to happen."

And restructuring someone's loan is really also in the best interests of the lender. Statistics show banks get 48 cents on the dollar when they foreclose and sell homes as "real estate-owned" properties, Ackerman said.

"But if they write a home down to its fair market value and have someone who already wants to pay for that home, they are way ahead of the game," he said.

The cost for an attorney's services through FDG range from $600 to $750 per month.

"Keep in mind that the program is very affordable compared to what the homeowner has been paying in principle, interest, taxes and insurance. In my opinion, I would rather pay an attorney $750 per month to fight to keep me in my home for the next 12 to 24 months and protect my legal rights than rent an apartment for $750 per month," Ackerman said.

For more information about FDG, call (630) 915-2076 or visit