Be Cautious of Your Mortgage Company and Loan Modifications

Many Americans who can't afford their monthly mortgage payments have tried to cure the problem by filing for a loan modification.  Numerous lenders have created in-house mortgage negotiators to review deficiency loans and determine if something can be done.  The federal government also stepped in with the Making Home Affordable Program to help with the problem.  A whole industry has also developed over the past few years to assist homeowners with the loan modification process.

In most cases, the loan modification process doesn't work.  It usually leads to more problems and increased debt.  I have met with hundred of clients who have attempted to modify their mortgage with their lender.  Most of these clients were denied after months and months of waiting - sometimes spanning a year. 

Each mortgage company follows the same bizarre pattern.  They tell the homeowner to stop sending payments of any kind.  If the homeowner sends money, the mortgage company will send it back.  This makes very little sense - but nearly every lender does this. They will then request a giant packet of information (such as paystubs, bank statements, tax returns, etc).  My clients have all complained that once they send the documents, the lenders keep asking for it.  The negotiators claim to have lost the information or never received it.  This happens over and over and over.  The mortgage company will then tell my clients that the modification is "under review."  As the months go by, payments are not made, and the loan falls further and further behind.  The whole process is a joke.  It affects your credit report, causes more debt, and puts you at risk for foreclosure.

One trouble with home loan modification is that banks are not playing fair. A federal lawsuit was recently filed by the State of Nevada Attorney General against Bank of America, the nation's largest home loan servicer, alleging deceptive practices.  A class action lawsuit is also pending against BOA in Massachusetts.  These laws suits claim that BOA misled and deceived consumers into depleting their savings by making promises about the loan modification process. The lawsuits allege that BOA accepted $25 billion from the U.S. government in 2008 as part of the Troubled Asset Relief Program (TARP), but has failed to participate in programs such as the Home Affordable Modification Program (HAMP) aimed to minimize foreclosures.

If you are behind on your mortgage and think loan modification is the solution -- think again.  I have met with too many people on the brink of foreclosure who had the same thought.  The mortgage companies are simply not following through on their promises to save your home.  If you are currently "under review" for a modification, chances are you will be denied.  Don't get caught in the trap.

The best option to save your home and catch up on the back mortgage payments is through Chapter 13 Bankruptcy.  Chapter 13is a guaranteed way to catch up over time and avoid foreclosure, provided you qualify for this relief.  You may also strip away a burdensome second mortgage, depending on the value of your home.   To learn more about your rights, please  call the Law Office of Nicholas R. Westbrook at 713-893-6204. The road to financial freedom starts here.