Novel approaches to mortgage modification
Feb 24th 2010 3:00PM
Updated Feb 24th 2010 9:27AM
Not enough data in to spot a trend, but news out of Boston Wednesday does suggest a relatively new approach that more distressed homeowners may eventually wish to try: suing.
In U.S. District Court in Boston the other day, two separate law suits were filed against both Wells Fargo and Bank of America claiming, according to the Boston Globe, that the two "too-big-to-fail" financial institutions "have not followed federal rules for mortgage loan modifications, leaving some homeowners stuck in foreclosure' limbo'."
For example, one lawsuit basically claims that the plaintiffs followed all the rules that were supposed to lead to a permanent mortgage modification, only to be given the shaft at the end of the mandated trial period.
"When a large financial institution promises to modify an eligible loan to prevent foreclosure, homeowners who live up to their end of the bargain expect that promise to be kept," says lawyer Gary Klein in his complaint obtained by the Globe.
As for the banks, one, Bank of America, claimed it had not been served so couldn't respond; while the other, Wells Fargo, released a statement saying that the reason some folks don't end up with a permanent loan modification is because they simply do not qualify!
A congressional solution?
While suing to get your mortgage modification is one somewhat novel approach, there are others: such as getting congressional help!
In Nevada a few months back, while homeowner Denise Fuleihan filed suit against her bank for failing to modify her home mortgage, according to the Las Vegas Review-Journal, Gloria Lucas took the congressional route.
She called the office of Sen. Harry Reid, D-Nev, who she credits with helping reduce her mortgage payment from $1,322 a month down to less than $800. Not only that, the senator apparently managed to get Mrs. Lucas something few distressed homeowners get on their own when negotiating a mortgage modification with their bank: an 18% reduction (around $30,000) of the actual mortgage balance!
Charles Feldman is a journalist, media consultant and co-author of the book, 'No Time To Think-The Menace of Media Speed and the 24-hour News Cycle." He has written about real estate related issues for several years.