MORTGAGE LOAN MODIFICATION –
Fighting Foreclosure and Making Homes Affordable for Homeowners
Michael D. Stewart, Esq.
A Mortgage Loan Modification is not a re-finance. It is a modification to your original mortgage loan. It changes the payments you make to the bank and can make your home affordable again. Today, given the change in our economy, homeowners throughout the country have had their mortgage payments escalate or have lost their jobs and are now unable to afford their mortgages. Homeowners around the country are late on their payments to the bank and are facing foreclosure.
Ignited by the Making Home Affordable, or "Obama plan", banks are now encouraged to assist homeowners in modifying their mortgage loans to allow them to stay in their homes on payment terms they are able to comply with. The encouragement by the government has not, however, been entirely successful. Under the Making Home Affordable Plan, only certain homeowners qualify, and the banks have been slow in successfully implementing this program, and others designed to assist homeowners.
To qualify for a mortgage loan modification, there are generally a number of factors taken into account by the banks. The bank will generally look for a documented financial hardship. Law Offices of Michael D. Stewart assists our clients in preparing the documentation to support a financial hardship. Included in this is preparing and analyzing a detailed financial affidavit showing the clients assets and liabilities and outlining how a mortgage loan modification can assist the client in making payments on the loan after it is modified so that the bank keeps a long-term paying customer, and the client is able to stay in their home at an affordable price.
The banks will often also look to whether the client has missed any mortgage payments. Initially, banks such as Countrywide (now Bank of America) stated a policy of refusing to work with homeowners unless they were at least three months behind. This "policy", however, no longer seems to apply with the banks, and they appear more willing to look to the totality of the clients circumstances.
Banks often look to whether the property is the client's primary residential property, with some initially refusing to negotiate concerning investment properties. However, even with investment properties, everything can be negotiated.
A package is prepared for the client detailing their hardship, including a financial affidavit, and providing documentation requested by the bank. Our law firm calls the bank to discuss the clients financials to see where the client can cut back on expenses to ensure that the modification has a good chance of going through. After we have spoken with the bank concerning the financials, the mortgage loan modification package, together with a Power of Attorney, is sent to the bank, which then begins to analyze the package. Weekly follow-up telephone calls with the bank are made to ensure that the bank is taking active steps on the mortgage loan modification.
Often, while analyzing our package, the bank will require the client to also fill out the banks own package. We also often have to apply for the mortgage loan modification online, as well as by fax and mail.
Problems with the banks are frequent. Banks often claim, after many weeks or months of negotiation, to have not received any documentation or that the documents have been lost. Some of our clients have even been told that our law firm has never contacted the bank and that the bank has received no documents, which can understandably very disconcerting for the client.
It is also very difficult to speak with the same person more than once at the bank. When the banks were initially encouraged by the government to grant mortgage loan modifications, there was a wave of applicants but the banks did not have adequate personnel (whether in number or in training) to handle this influx of applications. Whole departments had to be created by the banks to handle these applications. Now it seems that the departments are at least somewhat in place and at least some of the personnel trained in the bank policies on mortgage loan modifications.
One of the most frequent problems is of the bank initially and immediately denying the mortgage loan modification without reason. A typical letter from the bank will say that your mortgage loan application has been denied for the following reason, and then a blank space on the paper – no reason given. In these situations it is necessary to resubmit the entire package.
Finally, the bank will send a loan modification agreement, detailing the terms of the loan modification, including the new interest rate, payment, and what will happen with past due payments.
Often, with banks that are unwilling to initially agree to a mortgage loan modification, our firm will prepare a forensic loan audit which details violations the bank might have made at the origination of the loan. Often federal violations can result in significant penalties to the bank if litigated. The forensic loan audit is a good tool in certain cases to encourage the bank to act in the bests interests of the client (and often in the best interests of the bank as well).
Our firm will also request voluminous discovery from the bank as it is often unclear who actually owns the loan since they were sold or assigned between banks, managed by third parties, or placed into pooling agreements.
When in foreclosure a problem is that bank will appear to be working with the client, but meanwhile the lawyers for the bank will continue with the foreclosure, necessitating further active litigation measures to hold off the foreclosure.
A final, and extreme measure, in certain circumstance is for the client to file bankruptcy to stave off the foreclosure.
Law Offices of Michael D. Stewart assists clients throughout the United States in negotiating and obtaining mortgage loan modifications. The firm also defends foreclosure through litigation provides bankruptcy and other real estate and litigation services.
The firm can be reached Toll-Free at 866-438-6574 or by email ms@themiamilaw.com
Copyright 2009 Miami Law, LLC
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