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Foreclosure Defense Florida

Lenders Working Hard to Avoid Mortgage Modifications.

HAMP-weidnerThe reports from the federal government regarding the number of homeowners that have obtained permanent mortgage modifications under the HAMP program show once again how hopeless it is to rely upon government programs to resolve the mortgage crisis.   Clients and advocates continue to ask me, “Why won’t the lender work with me on a modification?” I believe the answer is both simple and complex.

The simple answer is money….I believe the lenders have been incentivized not to approve modifications from their own financial perspective because they are getting both tax and subsidy benefits from their non-performing portfolio.   The complex answer is I believe the program requirements are so complex and difficult to comply with that in order for the lender to obtain the subsidy benefits described above, they must obtain so many records and comply with strict documentary requirements.

The result is a maddening clash between servicers and homeowners who are working hard to obtain mortgage modifications.   I attach below a recent exchange between a homeowner who is working hard to resolve an outstanding mortgage claim….reading this will make you want to pull your hair out….

This letter is a demand for additional review of Bank of America’s recent denial of my home loan modification.  I have sent copies of this to various officials, agencies, and others via email or first class mail, which you can find listed below.

After careful review of your denial letter, I find your denial to contain fallacious reasoning—one which is nothing but a red herring,

Further, I have reviewed the PSA of CWALT 2005- 66 (which includes my loan) and the Guide referenced within this PSA, also known as Freddie Mac’s Single   Family Seller / Servicer Guide, which will be referred herein as the Guide.

Your letter states:

The investor has declined request for modification. Since the loan is not delinquent, for both a traditional modification and to qualify for HAMP, you needed to demonstrate imminent default hardship. One of the imminent default is defined as a long term disability status after the origination of the subject loan. Based on the documentation provided by you, including your statement regarding receipt of Medicare since 2001, you were receiving assistance prior to the origination date of (2005). As such, you are not a borrower and further the loan is not in imminent default as the assistance you received existed prior to the subject loan origination.”

There are serious and potentially litigious issues brought up in the above statements:

1. You state: The investor has declined request for modification.

My response: Why is this up to the investor? The PSA clearly states “…the Master Servicer may waive, modify or vary any term of any Mortgage Loan ….”. See Section 3.11 (b) pp.49-50 (CWALT 2005-66)

2. You state: Since the loan is not delinquent, for both a traditional modification and to qualify for HAMP“¦.

My response: One does NOT need to be late for HAMP; one needs to show a hardship where imminent default is likely. You (the servicer) are supposed to abide by the PSA.

Section 3.01 (b) of the PSA states that you SHALL follow certain rules/regulation such as Freddie Mac’s Single Family Seller / Servicer Guide which, states in part that:

“In pursuing loss mitigation, Servicers must first consider Borrowers in accordance with the requirements of Chapter C65, Home Affordable Modification Program.”

So, we turn to Chapter C65, which states in part:

Borrowers who are current ,”¦”¦.. but who, due to hardship, may be in imminent default, are also eligible for modification under HAMP. See: C65. 4

See also:

See question #22 from the above link. Do I need to be behind on my mortgage payments to be eligible for a modification under HAMP?

No. Responsible homeowners who are struggling to remain current on their mortgage payments are eligible if they reasonably believe they are very likely to default on their mortgage soon (often referred to by loan servicers as “imminent default”). This might be because a homeowner has had (or will have) a significant increase in the mortgage payment (due to a payment adjustment or rate adjustment upwards); “¦. or some other significant reduction in income; or some other financial hardship that will make the mortgage unaffordable.

3. You state: “¦.you needed to demonstrate imminent default hardship.

My Response; I did demonstrate imminent default— Loss of household income, change in household circumstances, significant increase in the mortgage payment if the Truth in Lending statement is correct. This was all documented at length in my hardship letter.

4. You state: One of the imminent default is defined as a long term disability status after the origination of the subject loan.

My response. I understand that, but it doesn’t pertain to my case. This is the red herring.

Disability is NOT the main issue. The main issues for imminent default as detailed in my hardship are 1) Upcoming increase in the monthly mortgage payment in 2010, 2) Loss of household income & 3) change in household financial circumstances, 4) Rising costs of living expenses, and 5) I briefly mentioned disability. I only mentioned disability in the hardship letter to let you know that my chances of returning to work do not look good and because I receive disability payments.

5. You state:   Based on the documentation provided by you,

My response: Did you read my hardship letter?

6. You state: “¦.including your statement regarding receipt of Medicare since 2001, you were receiving assistance prior to the origination date of (2005).

My response: You asked me for this information and I provided it to you. I wasn’t sure why you wanted this information, but it now appears you are trying to divert the main issues and doing everything you can to block my attempts for an affordable loan mod.

Let me ask you””do you routinely ask others how long they have worked at a job and get such proof from the employer? If not, this act certainly appears to be discriminatory.

7. You state: As such, you are not a borrower

My response: This is a legal issue and you know that, especially due to the conflicting documents you sent to me. But if you insist that I am not a borrower– please file for a Satisfaction of the Mortgage since I signed the Adjustable Rate Rider promising to pay you every single month, among other things. Please review the Adjustable Rate Rider and the Rider to the Note for this predatory Pay Option Arm loan.

8. You state: “¦”¦.and further the loan is not in imminent default

My response: You appear to be ignoring the facts that there will be a ” significant increase” in the mortgage payments later this year, which is one of several reasons for my request for a loan modification now. Also, what about Loss of Household Income? What about the Change in Household Financial Circumstances and Rising Costs of Living Expenses?

9. You state: “¦as the assistance you received existed prior to the subject loan origination.

Like I said, this is a red herring. Please read my hardship letter.

I request an immediate review of my file and an immediate re-evaluation of my request for a modification. Your reasoning is faulty, and may be discriminatory. Please be assured I will do all I can to save my home, and I hope to be able to come to an agreement about an affordable loan modification in the very near future.

Thank you for your time into these serious matters.


  • amicusman says:

    Homeowners who want a loan modification are just misinformed anyway. If they only knew: A loan modification only digs the homeowner a into deeper hole. Secondly, a large portion of homeowners are “underwater,” they’d be better off doing a short sale, to come back again in a couple of years when the housing market has hit rock bottom to pick off a mortgage in most cases 50% less than their original. Lastly, with the amount of problems most mortgage transactions have, especially in Florida where we’ve found appraisal fraud in almost every loan transaction we’ve examined, the homeowner is now in the power position to SETTLE a potential lawsuit instead of begging for a loan mod–BIG difference!

    Storm Bradford
    President & CEO

  • michael says:

    When Bank of America was in financial trouble the US Treasury lent it $45 billion in cash, back-stopped (guaranteed) another $118 billion, and of course rescued Fannie/Freddie so they could pay their mortgage insurance claims which has cost another $900 billion or so and is still climbing.

    Treasury did this with virtually no documentation whatsoever and before the bank defaulted on its obligations. In fact, the US Government rushed to help BOA so that it didn’t default on its obligations.

    The only hardship the bank was facing was the result of its own bad business decisions. There had been no loss of job, no “medial problem” .. nothing except bills higher than they could afford.

    So, why the double standard? Don’t regulators, Congresspeople, and Bank of America itself see the hypocrisy?

  • RodgerD says:

    Investors have lost their shirts with the mortgage crisis. They want to recover what they can AT ANY COST. Why would they want to wait 30 years on a renegotiated NOTE… when they can just foreclose and CASH OUT. Even if the returns are substantial over 30 years the real reason is deniability.

    Most of the mortgages 2003 to 2008 anyone with half a brain can see that they have a very difficult time showing capacity or legal standing.. YET the Judges and system are completely biased against the home owner as a dead beat.

    PUBLIC and LEGAL remifications are MUCH higher for the BANKS if they renegotiate a mortgage that they didn’t have legal rights to in the first place…

    What happens if I pay my house off the day after my loan gets modified? While I ever see a title. I’d bet that 90% of the subprime loans where the Original Bank imploded and is now BANKRUPT will never see a modification.

    The simple reason is BECAUSE the bank KNOWS it does not have legal standing, does not hold the original note and only claims too..

    The easy route for the servicing banks left holding the mess is just to file a PRETATORY FORECLOSURE .. in the hopes that the homeowner will be scared and fold… walk aways… not fight… which will allow the SERVICING BANK to CASH out to wipe the slate clean..

    PEOPLE go to jail for stealing cars…

    YET the Justice system does not see that similarity yet between a CAR THIEF and a HOUSE THIEF.

    The only difference is that instead of using a set of picks.. to steal the car..

    The Servicing Banks are stealing homes by claiming they have a NOTE from a BANKRUPT bank.. Creating their own assignments transferring ownership to themselves and slamming down a SUMMARY JUDGEMENT.

    The average working person DOES not have that capacity or time to fight GOLIATH in days such as these where unemployment is high wages are low. So the banks continue to steamroller the AMERICAN public in the largest FRAUD, CAPITAL THEFT, scheme ever to be seen in the HISTORY of the USA.

    God help us all.

  • Toliakety says:

    I have question – why names of investors who own our mortgages are hidden? Why their “right” to make profit tramps our right to have shelter and not to be thrown away from our houses?

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