Posted on February 23, 2015 in Debtor and Creditor
It happens all the time. Homes are entered into the foreclosure process and/or sold, while the homeowner and the mortgage company are right in the middle of negotiations towards modifying the loan. Loan modifications take many forms, including a reduction in interest rate, placing the back payments at the end of the loan and/or extending the due date, reducing the principal amount due and/or changing the financing term from an arm to a fixed rate. However, do not take the mortgage company’s offer to modify your loan as an opportunity to fall into a comfort zone. Foreclosure is still an option!
Today, I received a call from a woman who has been going thru some personal family issues, including taking care of a seriously ill family member. The long term and on-going issue prevented her from making the past eleven (11) mortgage payments. Although the family issues were overwhelming, she did manage to properly seek help from the mortgage company. Following a call to the lender, with an explanation of the circumstances, the mortgage lender quickly agreed to start a loan modification process. Thereafter an application was forwarded and an exchange of required information began.
During the process, a flurry of mail, notices and other communications began to flood the house. First, they needed verification of the loss of income. Then they required, copies of her paystubs to verify her ability to make any future reduced payments. Following that, they required that she send in copies of her 2012-2013 tax returns. Of course, following their receipt of the tax returns, they required that she complete an official IRS Form 4506-T, which would allow them to obtain copies of her tax transcripts themselves. Next, they wanted her to write a hardship letter as to why they should modify her loan. To make matters worse, they then lost some of the documents and required that she re-send them again. Following her submission of the missing documents, there were days and weeks, wherein she was unable to get anyone on the phone. Finally, after three (3) additional months had passed, she was able to make contact with the 3rd “loan specialist” that was assigned to her case, but the process was finally underway, with the mortgage now fourteen (14) months in arrears. Knowing that they had all of her documents, she took a sigh of relief and waited for their final answer. About a month later, she inquired as to the status, only to be told that the house had actually been sold the week prior. How could this be? Unfortunately, what she did not know was that, due to the seriousness of the delinquency, the loan had been simultaneously forwarded to the foreclosure department for sale.
In the middle of the modification process? Yes! Few homeowners are aware that lenders regularly operate on a “dual-track” (Frankly, I call it the two-faced system). While they “work with you” towards modifying your loan, the lender is also proceeding on a foreclosure track. Of course, they sent the required notices, however, like many people who contact me, she gave the notices little attention, believing that the matter was being resolved by way of a good faith attempt to modify the loan. Especially, when there had been no decision with regard to the pending application.
Most times, people realize what is happening in advance of the sale date and I am able to help. Unfortunately, however, there are a good number of homeowners who find out when it’s too late. By the time I am contacted, the home has been sold and plans must now be made to vacate the premises.
Don’t let this happen to you. If you are in the middle of a loan modification process, of any kind, know that different processes can go on at one time. If you are unsure about what any document means, don’t assume anything; don’t bury your head in the sand thinking it will go away; sit down and carefully read all documents; phone the lender and ask questions and if all that fails, schedule a quick legal consultation, so that an experienced attorney can take the time to explain the process to you, but most importantly, open all mail! Don’t believe the myth that legal proceedings can’t go forward if you have not received formal notice. NOT TRUE. The foreclosure will ultimately go on whether you pick up the certified mail, from the post office, and/or open the regular first class mail. delivered to your home or not! Grandma didn’t say this one, I did: “Go get and READ your mail – You cannot fight what you cannot see”. In other words, how do you battle something that you don’t know is happening? Well, you can’t. So go ahead and open the mail, and if you find yourself unsure about anything, call me immediately for the help and guidance you need. Why? Because You Deserve Good Counsel!
Thanks for reading. Please note that I am licensed to practice law in Maryland and the District of Columbia. Please feel free to learn more about my practice at www.kelseylaw.net and to seek legal advice when you feel it necessary.
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