Banks dragged their feet for months now. They told people that before they can get help they must stop paying their mortgages, so they can qualify for a loan modification. They eventually even sped up the process of giving people temporary modifications.
Now they're starting the final round: foreclosing on homes even after people were promised a modification. Foreclosure problems are reported in almost every state, but the most in depth report was done by The Chicago Reporter.Melissa Huelsman, who specializes in the areas of predatory lending/mortgage fraud lending litigation and foreclosure rescue scam litigation in Western Washington, told me that "unless you have something in writing from the bank that says they will not foreclose on your home," you can't believe the person on the telephone. Only a piece of paper promising you that the bank will not foreclose will protect you protect from foreclosure. When you start the modification process you do sign a piece of paper acknowledging that the foreclosure process can proceed if you fail to get a modification.
Huelsman thinks that if you're having trouble making payments your first call should be to an attorney who specializes in predatory lending or foreclosure rescue. She said there are attorneys taking cases at reduced fees or pro bono in almost every state. You can also make contact with a HUD housing counselor. She definitely does not think you should try to go it alone with the banks. The National Association of Consumer Advocates can help you locate a lawyer near you. Even if you started the modification process, it's not to late to seek help from a lawyer or HUD housing counselor.
Huelsman explained you need to work with an attorney in your state because each state has different foreclosure laws. In fact 35 states allow non-judicial foreclosure, so you won't even get your day in court. Foreclosure and mortgage modification have an "entire vocabulary all its own that people aren't used to. It's this lack of understanding that gets people into trouble," she explained. She also said if there is a second lien holder, they can obstruct the process.
She's had several run ins with Chase and its chairman and CEO Jamie Dimon. She thinks, "Mr. Dimon will spend the bank's money to fight rather than work out solutions." I found that to be true when Chase told me it won't consider principal reduction, even though all other major banks now do put that on the table.
Your state may even offer foreclosure mediation programs. You can find out more about the 26 programs now in operation working with the National Consumer Law Center (NCLC) at the Center's Web site.
In addition to the foreclosure mediation programs, NCLC, with its co-counsel, filed four class action suits on behalf of Massachusetts residents to challenge the failure of Wells Fargo Bank, Bank of America, J.P. Morgan Chase Bank and IndyMac Mortgage Servicers/OneWest Bank to honor their agreements with borrowers to modify mortgages and prevent foreclosures under the United States Treasury's Home Affordable Modification Program ("HAMP").
NCLC says, "These complaints are filed with the United States District Court for the District of Massachusetts and assert claims for breach of contract, breach of the implied covenant of good faith and fair dealing and promissory estoppel under Massachusetts common law arising from the financial institution's alleged failure to keep its promises to modify eligible loans to prevent foreclosures against homeowners who have lived up to their end of the bargain as required by HAMP."
Clearly, you should not try to go it alone with the banks. They have lawyers on the payroll and you have little chance of being able to defend yourself. Don't wait until its too late and the bank already completed its foreclosure process while you patiently wait for an answer to your modification application.
Lita Epstein has written more than 25 books including "The 250 Questions You Should Ask About Avoiding Foreclosure" and "The Complete Idiot's Guide to Personal Bankruptcy."
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