Very interesting post and I agree that the banks are not to be trusted. They are only looking out for their bottom line, always. You need to speak to a professional about all the options available to you. Thanks to Rick Misitano for sharing.
During the past few weeks we have been inundated with calls and e-mails from homeowners who were accepted for a loan modification agreement only to find their mortgage company pulling the plug on their agreement months later and now are facing foreclosure.
Basically, the lender or servicer contacts the borrower (who is in default) offering to do a “loan mod” provided (a) the borrower submits certain paperwork, and (b) the borrower agrees to pay significant sums either toward the promised modification or in connection with a temporary forbearance while a more permanent modification is being processed. In reasonable reliance on these affirmative representations (since they are coming from an agent of the "alleged owner" of the original mortgage note) the borrower complies by making the payment(s) and by submitting the paperwork. Invariably, however, the lender or servicer replies by asking the borrower for more paperwork, then more paperwork, then more paperwork (and more money) until finally the “lender” or “servicer” denies the modification due to “inconsistencies in the paperwork”, without identifying what these purported “inconsistencies” are.
One example involved a borrower who submitted their paperwork five (5) times. Another involved a borrower who paid $12,000.00 toward the modified loan, only to be denied due to “inconsistencies in the paperwork”, followed by foreclosure of the property.
This makes the appearance that what is going on here is quite possibly a well thought out scam where the lender or servicer (knowing full well they ultimately intend to foreclose) but mindful that they have to make an “effort” to work with the borrower before doing so (either due to state laws, court rules or to appease some government entity) go through the motions and put the borrower through a lot of effort and then ultimately deny the modification and proceed to foreclose, using the borrower’s good-faith payments to fund the fees they need to foreclose so these fees do not come out of their own pocket. The frequency of this fact pattern with borrowers in all different types of financial situations all over the United States (and with the lender or servicer never putting the “promised” permanent loan modification in writing) leaves no other rational conclusion as to what is really going on.
Government programs have been a disaster thus far. In fact, the acceptance rate on HAMP modifications is roughly 2%. (Only 2 loans out of every one hundred)! The highest “permanent modification” rate of any lender or servicer is less than 10%. This is an outrage! Especially to the homeowners who have a legitimate need for such assistance.
The bottom line is whatever the lender or servicer “promises” you, do not trust them. Know that in all likelihood their primary goal is to ultimately foreclose and string you (the borrower) along so that they can garner monies to fund their ultimate foreclosure. Moral of the story? Get your case together and have it reviewed by an attorney, so that if the time comes when you have to sue for breach of the “promised” loan mod contract or fraud for the lies told by the lender or servicer (or under any other theory) you have done your homework and are ahead of the game.
A homeowner has every right to file suit against their lender in order to challenge their lender’s legal rights to collect or foreclose in the first place. Many homeowners have a great chance of success by filing suit against their lender by challenging their legal right to collect or foreclose. Why, you may ask? Because many times the lender will not be able to produce the original mortgage note and therefore judges across the country have been deciding in favor of the homeowner by dismissing the lender’s pending foreclosure actions and granting the homeowner a indefinite stay of execution unless and until the lender can produce the original document.
This could be the best option for many homeowners as it could deliver the very best results for a homeowner seeking to keep their home. As a homeowner, you have every right to file law suite against your lender who is attempting to foreclose on your home in either Land Court or Superior Court (in order to challenge your lender’s actual legal rights and authority to collect and foreclose on you in the first place) by demanding your lender produce your original mortgage note.
Judges in Superior Courts across the country have been very reluctant to dismiss an alleged lender’s claim of debt in their entirety because of the “what if” factor (as in what if the alleged lender can eventually produce the original note). It is the court’s way of granting the alleged lender or investor the benefit of the doubt by giving the alleged mortgagee or servicer time to find the original note during the time of the stay of execution is granted to the homeowner.
However, more and more judges are now starting to realize the very importance of this issue and can now clearly see how these mortgage companies are simply trying to manipulate the system to their benefit. As a result, they are now discharging mortgage liens in their entirety because a mortgage without an original note becomes an invalid unsecured lien against the property and is therefore dischargeable under the law.
And if the homeowner’s mortgage was part of an asset backed securities package (that was sold and re-assigned a number of times to other parties or entities) the servicer, lender or investor will have no clue as to who, what or where the original document is. It more then likely was lost or shredded or thrown away in a dumpster and is sitting in a landfill somewhere and will never be found. Many times in these situations the alleged lender will eventually approach the homeowner to see if they can come to a compromise. This is when the homeowner has the true advantage and can ask for a new mortgage note to be drafted under their own terms and conditions. This is when a homeowner can truly obtain a meaningful and realistic “Loan Modification” in their favor by asking that their note be re-written based on their home’s current market value (if they are upside-down), reduced interest rate (2%), longer re-payment term (40 years), etc. There have been many homeowners who have been able to live in their homes for years because of this challenge and have not had to pay a dime to anyone unless and until the alleged lender can produce the original document as proof of them being the rightful entity.
And (in light of a recent Bankruptcy Court decision in New York and accross the country) it might be now be more advantageous for a homeowner facing foreclosure to file such a claim in Bankruptcy Court vs. Superior Court as they might now be successful in not only getting the foreclosure complaint thrown out, but also have their entire mortgage debt discharged in its entirety (potentially allowing the homeowner to retain their home free and clear). Below is a link to an article regarding that decision.
I hope this information is helpful to those who may need it.
All the Best,
Rick D. Misitano, Senior Paralegal
Law Offices of James M. Bosco & Associates
Methuen Executive Park
240 Pleasant Street
Methuen, Massachusetts 01844
Helping buyers and sellers since 2004. A Venice/Englewood Florida resident for almost 40 years, put my local real estate knowledge to work for you today. My coverage areas include Southwest Florida include Venice, South Venice, North Venice, Nokomis, Osprey, Casey Key, Manasota Key, Englewood, Rotonda West, South Gulf Cove, Grove City, Placida, Cape Haze, Port Charlotte & North Port which are located in Sarasota and Charlotte Counties
I absolutely would love to discuss with you how I can assist you with your real estate needs. Remember I am never too busy for your referrals!