Stop Foreclosure Answer

On Thursday, November 19, a judge in Suffolk County New York handed down a decision which shocked the mortgage industry to its core.  The judge wiped out the $525,000 payments a couple owed on their mortgage.  As a result of his decision, they now own their home free and clear.

What Led to This Monumental Decision?

Diane Yano-Horoski and her husband Greg Horoski bought their home 15 years ago for less than $200,000.  In 2004 they refinanced their mortgage for $292,500.  Their new mortgage was a subprime loan through Deutsche Bank.  The interest rate on this loan was adjustable.  It started at 10.375% and soared to 12.375%.

Deutsche Bank sold the mortgage to IndyMac Bank.  When IndyMac went bankrupt, the servicing of the loan was picked up by OneWest, a California bank.

Greg Horoski had health problems.  Because of these the couple started to have trouble making their monthly payments.  In July of 2005 IndyMac sued Diane and Greg.  In January of this year a foreclosure was approved. 

At that time Diane asked for a court settlement conference.  This was available to them under a 2008 law.  The law indicated that people with subprime loans who were facing foreclosure could request court supervised mediation.

OneWest Refused to Cooperate

The judge called OneWest’s conduct on the case unconscionable.  He said that the company

• repeatedly refused to work out a deal,
• misled him about the amount of money owed, and
• mistreated the couple during the months of the hearings. 

In his decision he said that OneWest had to be sanctioned and deterred from abusing the couple again.  With that he wiped out the balance of the principal owed which was about $291,000 and interest and penalties amounting to $235,000.  The Horoskis now own their home free and clear.

Apparently OneWest is involved in a similar case in California.  There the company is trying to foreclose on an 89 year old woman even though there are two court orders telling them to stop. 

A Significant Change

Throughout the foreclosure crisis mortgage companies have been able to call the shots.  There have been many complaints by people facing foreclosure and trying to save their homes about how poorly their mortgage companies have treated them.  However, the mortgage companies did very little about this.

There are many posts about this on my blog.  Here you will also see that mortgage companies frequently have only responded when there has been a public outcry about what they have done to individual people.

State Courts Have to Step Up

Many people are unaware.  States have jurisdiction over foreclosure matters.  This dates back to the time when mortgages were done by local banks.  The banks loaned the money for the mortgages out of their own money.  When people made their monthly payments, their money was actually used by their local banks to make other loans.

Since this was local money, the banks were regulated by state law.  So foreclosure naturally fell under state law too.

Over time the system changed.  Now while a bank or a mortgage company loan money for a mortgage, that is not out of the money the bank or the mortgage company has.  The mortgage is sold to investment firms on Wall Street and these firms, in turn, see it to investors.  One mortgage can actually be owned by many different investors.

Although this change has occurred, the laws never changed.  While the mortgage industry now should probably be regulated by the federal government, it still is regulated by the states.

If people facing foreclosure are having problems trying to get loan modifications from their mortgage companies, state courts need to deal with this.  Up to the present time there have been very few cases where this has been done.

One thing is certain – the decision by this judge in New York has been monitored by lawyers everywhere.  His decision will be reviewed closely.  In the future there will probably be many more suits filed against mortgage companies over how they have refused to work with people facing foreclosure and how they have mistreated them.

If you have requested a loan modification from your mortgage company and you feel that they have mistreated you or refused to work with you, you may be able to take legal action against them.  Please consult a lawyer who specializes in foreclosures on this. 

Regardless of where you are at in the foreclosure process, you need to know as much as you can about the process and steps you can take to save your home.  This is not a complicated subject.  You can become an expert in a short time.  I have written an EBook which will give you much of the information you need.  If you want to find out more about it, please click Stop Foreclosure.

Much Success,

Mark Elkins

There is an important notice on the website for the Making Home Affordable Modification Program that I needed to bring to your attention.  If you applied for a loan modification under this program and were approved for a trial loan modification prior to October 1, 2009, here is the notice on the website:

“If your first Trial Period Plan payment was due on or before October 1, 2009, the deadline for signing an agreement for a permanent Home Affordable Modification is December 31, 2009! If you do not sign a Permanent Modification Agreement by this deadline, you may lose your eligibility for a Home Affordable Modification.”

The Treasury Department predicted that by the end of this year, on 375,000 loans trial modifications would be converted to permanent ones.  As of mid November, it was estimated that only 1% or somewhere between 3,750 and 6,500 were converted to permanent modifications.

As you can see, the number of permanent modifications thus far is almost non-existent.  Not only may there be far fewer than 375,000, the actual number may be just a fraction of that.  The Treasury Department is concerned and is looking for answers.

Needless to say the mortgage companies are claiming that they are not responsible for this.  They have said that most of the people with trial loan modifications have not sent them the necessary paperwork to convert the modifications from temporary to permanent.  

If your trial loan modification started prior to October 1 and you have heard nothing about a permanent modification there are two steps for you to take:

1. Verify that you have sent all of the documents to your mortgage company that they require.  Please click here. You will be taken to the “Request a Home Affordable Modification” page.  Go through and make sure that you have sent your mortgage company all of the documents asked for on that page.
2. If you have submitted all of the documents required and still have not heard anything, contact your mortgage company and ask them what they need from you to make the modification permanent.  One form they require is a Permanent Modification Agreement.

Please make sure to make notes of any conversation that you have with people at your mortgage company.  Get their name and phone number and write down what they tell you.

If they ask you for more documents, get these to them as quickly as possible.  Keep copies of what you send them.  Also make a note of when they were sent.

If you need help with any part of this, call 1-888-955-HOPE (4673).  This is a toll free call.  Ask for MHA HELP.  A HUD-approved housing counselor will assist you.  The counselor’s services are free.

The mortgage companies have stonewalled the Making Home Affordable Modification Program right from the start.  It is hard for me to believe that the reason that there have not been more permanent loan modifications is that people have not followed through and submitted required information.

I am sure that as time goes by we will find out that the mortgage companies did not follow through on what they were supposed to do.  There will probably be many instances where they have lost documents which have been submitted to them.  There will probably be instances where they never requested documents they needed. 

The sad thing is that some permanent modifications won’t be approved.  Most probably the mortgage companies’ will be at fault.  However, there won’t be any way to prove that they were responsible.  Don’t let this happen to you.

If you have followed the posts here on my blog, you have seen that the mortgage companies have not made it easy for anyone facing foreclosure to get a loan modification at any point in the process.  Can you see why anyone who tries to represent themselves is more likely to have many severe problems getting their loan modified? 

If you aren’t represented, get a lawyer or an expert in loan modifications to help you.  Also learn as much about the process and the steps you can take to save your home as you can.  You will be one step ahead of the people at your mortgage company.  I invite you to check out my EBook.  You can get more information on it by clicking Stop Foreclosure.

Much Success,

Mark Elkins

Many times I have commented on how poorly mortgage companies are handling the applications for loan modifications for people facing foreclosure.  Here is a new one.

Arizona Couple’s Home Wrongfully Sold

Recently a couple in Phoenix, Arizona came home to find a notice on their door.  The notice said that they had five days to vacate their property.  The sale of their home in the foreclosure had been finalized.

The only problem was they had been given a trial loan modification.  After they were given it, they had made all three of the mortgage payments required by the modification on time.  They were waiting for notification that their trial modification was being converted to a permanent one.

The Notice of the Sale Blindsided Them

They contacted their mortgage company, JP Morgan Chase who checked their records.  The company found that a mistake had been made.  The foreclosure process had not stopped when the trial loan modification started.  It continued on and their home was sold in error.  Representatives from JP Morgan Chase started to work on their error.  However as of early November the couple had not gotten their home back.

Can you believe that?  This occurred because the people in the loss mitigation department did not communicate adequately with their legal department where they were at on the loan modification.

Just imagine the undue mental anguish this couple experienced. Falling behind on mortgage payments causes anxiety for anyone.  Being notified by your mortgage company that they are starting the foreclosure process increases the anxiety.  Then you apply for a trial loan modification and it takes forever for your mortgage company to approve it.

You are notified that your application for that trial loan modification is approved. At that point you breathe a big sigh of relief.   You feel that you have saved your home and you make the required payments on time.  You are at the last step – waiting for approval for the permanent modification.  Right then

Your Mortgage Company Pulls the Rug Out From Under You

JP Morgan Chase has seriously wronged this couple.  They have added to their anxiety level.  They should be penalized for what occurred.  In addition to restoring their home to them they should have to pay a substantial amount of money to the couple and pay a fine on top of that.

The Process Needs to Be Changed  

Ever since the start of the Making Home Affordable Modification Program, mortgage companies have been allowed to act on their own.  Many continue the foreclosure process while they are processing applications for trial loan modifications.  They normally do not stop the foreclosure process until a trial loan modification is approved.  That is wrong.

Mortgage companies should be required to suspend the foreclosure process at the time they receive the application for the trial loan modification.  They should only be allowed to resume it if the modification is denied.  If the companies were processing the applications as they were supposed to, they would not be losing much time by doing this.

Any mortgage company which fails to do this should have to pay a sizable penalty.

I don’t know if this Phoenix couple was represented by a lawyer or an expert in loan modifications.  Instances like this clearly demonstrate how valuable it is to have someone represent you.

People facing foreclosure also need to understand the process and the steps they can take to save their homes.  Anyone who understands the process would know their rights and what they could do in a situation like this.  My EBook has much information on steps people can take to save their homes from foreclosure.  You can get more information on it by clicking Stop Foreclosure. 

Much Success,

Mark Elkins

Many people and organizations in the United States are getting frustrated with banks and financial institutions giving executives and key management personnel bonuses in the midst of the foreclosure crisis gripping this country.  We all have seen or heard news reports about what groups have done to bring attention to this.

The latest was a protest outside the offices of Goldman Sachs in Washington, D.C. on November 16.  About 100 protestors organized by the Service Employees Union International and a group named Public Citizen carried “wanted” posters for Lloyd Blankfein, the chairman of Goldman Sachs.  They also carried a big red homemade vampire squid puppet with fangs and tentacles which was supposed to depict Goldman Sachs as a company trying to wrap its tentacles around humanity.

The main demand of the protestors was for Goldman Sachs to take the $23 billion in bonuses it had announced that it was going to pay its executives and key personnel and use it to help struggling homeowners avoid foreclosure.  Their logic here was how could a company pay such an obscene amount of bonuses when people were in foreclosure and Goldman Sachs was one of the financial institutions responsible for the mortgage crisis that caused the foreclosure problem.

While this protest got the attention of the news media, it did very little to help people facing foreclosure.  The protest occurred after the bonuses were announced.  At that point there was no way Goldman Sachs could go back, cancel the bonuses and set up a fund to help people having financial difficulties save their homes from foreclo0sure.

Let’s look at this from another side.  Say Goldman Sachs did take the $23 billion and divert it to help people facing foreclosure.  How would they get it into the hands of these people?  Currently there is no mechanism in this country to do that.  It probably would sit in an account for months until someone or some organization figured out how to do it.

While the protestors’ intentions may have been good, they really did not have a plan in place to get the money to the people who could use it if they were successful.  For that reason their protest was all show.  If they were successful, it would not have succeeded.

If you are facing foreclosure, don’t believe that something magical is going to happen.  Don’t believe that Robin Hood is going to show up at your home and give you the money you need to save your home from foreclosure.  Don’t believe that you’re going to wake up tomorrow and suddenly your problems are going to be over.  It is just not going to happen.

If you are not represented by a lawyer or an expert in loan modifications, get one to represent you.  Also learn as much about the foreclosure process and what you can do to save your home from foreclosure as you can.  That is you main way to save your home.  There is much useful information on this in my EBook.  You can find out more about it by clicking Stop Foreclosure.

Much Success,

Mark Elkins

A decision by a federal judge in Minnesota this past week will have ramifications on loan modifications throughout the country.

A lawsuit had been filed alleging that the Making Home Affordable Modification program violated the constitutional rights of people facing foreclosure.  The reason was that people who were denied a loan modification under this program were not being given a written denial and an opportunity to appeal.  The suit sought to halt foreclosures for people who may be eligible for a modification under this program until the government put in place a formal appeal process and other safeguards.

In her decision Ann Montgomery, a US. District Court Judge ruled that Congress never passed a law saying that people facing foreclosure were entitled to have their loans modified.  In the guidelines for the Making Home Affordable Modification Program the mortgage companies had some leeway in determining whether a person facing foreclosure was eligible to have their loan modified.

Let’s take a closer look at this.

The reason that the suit was filed is that all too frequently mortgage companies have denied applications for loan modifications under the Making Home Affordable Modification Program without ever telling the people who applied for the modification the reason for the denial.  The letter merely said their application was denied.  In some instances a letter was not even sent.

The people whose applications were denied did not know why they were denied.  Was it because they did not make enough money?  Was it because the investors would get a better return if the foreclosure went forward?  Was it some other reason?  Another question arises – Were the mortgage company’s calculations correct?

The lawsuit sought to bring this to a head.  The lawyers who filed it also sought class action status.  That means that if they won, all people facing foreclosure would be covered by it.

The Judge’s Decision Was Correct.

Mortgages are not covered by federal law.  They fall under state law. 

The Making Home Affordable Modification Program was not the result of a law passed by congress.  It was put in place by the Treasury Department.  It was primarily designed to cover loans which were sold to Fannie Mae and Freddie Mac.  The government technically owns both of these companies at the present time.  Any mortgage company that agreed to participate in this program agreed to consider loan modifications on all of their loans not only those that they sold to Fannie Mae and Freddie Mac.

Nowhere in a mortgage contract between the mortgage company and the person getting the mortgage does it state that the person is entitled to a loan modification if they fall behind on their payments.  The mortgage only specifies how the payment period will be accelerated if the payments are not made on time and how foreclosure will take place.

So US District Court Judge Ann Montgomery was correct in her decision.

Does That Mean That the Mortgage Company Won?

By no means.  The decision merely means that this is not a federal matter.

Any person facing foreclosure who files an application for a loan modification has the right to know why their application was denied if the mortgage company denied it.  I would expect that if they are being represented by a lawyer or an expert in loan modification, the lawyer or expert in loan modification would be on the phone immediately with the mortgage company asking why the application was denied. 

If the mortgage company did not want to give them the reason, I assume that their lawyer or representative would continue to go up the ladder in the mortgage company, even to the president or CEO if necessary, to find out why.  If that failed, they would bring it to the public’s attention.

I guess the problem arises for those people who are not represented.  Many of these probably would just accept the denial and not try to find out why.  They would allow the foreclosure to go ahead.

New Treasury Department Guidelines Will Help

The Treasury Department has issued some new guidelines.  In October they required mortgage companies to send people who are denied a modification a written denial within 10 days.  Earlier in November they started to require that a mortgage company stop a foreclosure when the person facing foreclosure challenges a denial and provides new information which may impact the denial.

What Should You Do?

If you get a letter from your mortgage company merely saying that your application for a loan modification was denied and does not give the reasons, call your mortgage company immediately.  Ask them for the reasons for the denial.  Ask them to send you a letter explaining the reasons.  If you have a lawyer or an expert in loan modifications representing you, get the denial to them immediately and ask them to find out what happened.

Go through each reason for the denial and see if it is correct.  If your mortgage company had the wrong information, get the correct information to them as soon as possible.

Remember – you should do all that you can do to save your home.

I hope that you have found this information helpful.  If you want to learn more about the foreclosure process and steps you can take to save your home from foreclosure, my EBook has a lot of information on it.  You can find out more about the book by clicking Stop Foreclosure.

Much Success,

Mark Elkins