Thankful for Loan Modifications?
I’ve had many clients come into my office recently, having paid tens of thousands of dollars pursuant to loan modification agreements with banks. This Memorial Day, I’m so thankful for the honest bankers who cared enough to work out agreements with these homeowners so as to avoid foreclosure, enabling these allow hard-working homeowners to make monthly mortgage payments and remain in their homes. OH, WAIT.
These hard-working homeowners paid tens of thousands of dollars, diligently made all monthly mortgage payments, and did everything the banks asked them to do to stay in their homes and avoid foreclosures. But the bankers weren’t honest and, and these loan modifications were nothing to be thankful for. It was all a fraud. A farce. You see, these homeowners entered a loan modification agreement and made all of the monthly payments required thereunder, but they got sued for foreclosure anyway, often waiving all defenses to that foreclosure as part of the loan modification!
Please, please don’t make this mistake. Please, please don’t fall into this trap. Please, please, please read these articles:
Tempoary loan modifications are the ultimate scam!
Loan Modifications can CAUSE foreclosure!
Banks Offer Loan Modifications to Dupe Homeowners!
I’m not trying to say homeowners should never do a loan modification. My point, simply, is this … banks know how desperate many homeowners are for a loan modification, and bankers prey on that desperation, resulting in agreements that are terribly one-sided and, yes, even fraudulent. If you’re going to enter an agreement like this, you have to do so with both eyes open.
I could write pages and pages of terms that I think a loan modification should include. I could give horror story after horror story of homeowners who made tens of thousands of dollars in payments yet got sued for foreclosure anyway. Instead, I’ll put it like this … if you’re adamant about entering a mortgage modification, and you have a bank willing to do so, I’d make sure, at worst, of the following:
1. The loan modification is in writing, signed by you and the bank. A bankster telling you over the phone that you have a deal is about as trustworthy as an email from Nigeria telling you that you’ve won $10,000,000 and that you need to mail them a $10,000 check to claim your prize.
2. The loan modification specifically says, in writing, that the bank will not sue you if you make the monthly payments, or, if a suit is already pending, that the suit will be dismissed (upon your entry into that agreement). That might sound obvious, but what good is a loan modification – and what purpose does it serve to mke monthly payments – if the bank can still sue you for foreclosure anyway?
3. The loan modification has some type of written representation from the bank that it is the owner/holder of the Note and Mortgage. Incredibly, I often see loan modifications where the bank asks the homeowner to represent that it is the owner/holder of the Note and Mortgage. This is bass ackwards. The typical homeowner has no idea whatsoever which bank owns that Note/Mortgage – that’s something the bank should have to represent, to the homeowner, so the homeowner has some recourse if it turns out to be false.
4. The mortgage modification is recorded in the Official Records of the county where the property is located. If it’s not recorded (or not in a format that it can be recorded), chances are pretty good that it’s not real.
5. The loan modification agreement does not require you to waive all defenses to foreclosure. If I’ve seen this once, I’ve seen it 100 times. A homeowner is desperate for a modification, so he/she will sign anything, even something that says all defenses to foreclosure are waived upon any default in the modified agreement. This might be kosher for homeowners who know they won’t re-default, but few are in that boat. Even if you really want a loan modification, do you really want to be in a position of not being able to defend a foreclosure because you’ve waived all defenses?
If we all stand up, and insist on these basic terms, then perhaps we can collectively force banks to enter loan modifications that aren’t so one-sided.
Mark Stopawww.stayinmyhome.com
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