Archive for September 30th, 2010

Temporary Loan Modifications – the ultimate scam

I’ve seen a ton of horror stories in recent weeks with loan modifications, but this one takes the cake.  As a matter of routine,

Banks are telling homeowners they’re being considered for a loan modification, and their lawsuit is “on hold,” even though the banks’ lawyers are moving the foreclosure lawsuit forward, full speed ahead.

What particularly frustrates me about these situations, aside from the fact that banks are lying to homeowners time and time again, is that homeowners are pinning all of their hopes into a loan modification process that is an absolute scam.  It’s not just that the lawsuits are still going forward – the loan modification process itself is a joke!  As I’ve said before, hoping a temporary modification evolves into a permanent one is like waiting for Santa Claus to come down the chimney on Christmas Eve.

To illustrate, take a look at this Temporary Loan Modification that came into my office today from a potential client.  It requires the homeowner to make monthly payments in October, November, and December of more than $1,800/month.  What does the homeowner get in exchange?  Read the second page – absolutely nothing.  Wells Fargo has ”no obligation to enter into any further agreement.”  Hence, it has no obligation to approve a permanent modification, even if the homeowner makes all of the payments.  In fact, page two specifically says “the loan must be brought current or an arrangement to satisfy the arrearage must be executed.”  That means the homeowner has to pay up once the three-month period is over.  Even worse, “the lender, at its option, may institute foreclosure proceedings according to the terms of the note and security instrument without regard to this agreement.”  Yes, incredibly 

Wells Fargo is giving itself the right to foreclose even while this agreement is in place!!! 

In other words:

The foreclosure case against this homeowner can proceed, even if the homeowner is paying!! 

The document is titled “Forbearance Agreement,” but if Wells Fargo isn’t agreeing to halt the foreclosure, even temporarily (i.e. “forbear”), then what’s the point?  All this agreement does is put more money into the bank’s pocket – the end result of foreclosure is still the same. 

To illustrate, and this is the most sickening part of all:

Even after entering this “forbearance agreement,” and making the first payment, Wells Fargo still sold this home at a foreclosure sale! 

The homeowner paid the October payment early, in mid September, and Wells Fargo kept the check, but it still proceeded with the sale!   Think about that for a minute. 

This homeowner entered a temporary modification agreement, paid what she agreed to pay, and her home was still sold at a foreclosure sale!

Now for the legal stuff.  Let’s say I represented this client, filed a motion to vacate the judgment and cancel the sale, and the judge agreed with me.  Even if  I “won” and got the Final Judgment vacated, this agreement was only good through the end of the year.  Hence, even if this client “won” in court, come January, Wells Fargo could still set another hearing on a motion for summary judgment of foreclosure, and short of defeating summary judgment, there’s nothing this homeowner could do about it! 

I sincerely hope this example illustrates an important point; typically:

Temporary loan modifications are a SCAM

Usually, as we saw here, banks enter temporary loan modification agreements as a way to induce homeowners to make more payments, even as the foreclosure lawsuit proceeds full speed ahead.  I’m convinced banks do this without any intention of entering permanent, meaningful modifications (as homeowners want), but as a way to collect more money prior to a foreclosure being entered.  If you disagree, let me ask you:

How did this agreement help this homeowner? 

She paid more money and still got foreclosed! 

This brings me to the final, most important point of all. 

If your bank is proposing a temporary loan modification or forbearance agreement, make sure you bring it to a competent foreclosure defense attorney.  And do not, under any circumstances, let the bank convince you that your case is “on hold.” 

If a bank tells you your foreclosure lawsuit is “on hold,” tell them “Good, send me a letter saying so.”  When the bank refuses, that should be a wake-up call for you.  Chances are, YOUR CASE IS NOT ON HOLD!!  (Even if the bank agrees, and gives you proof in writing, I’d still be careful – I’ve seen instances where the bank put it in writing and still proceeded with the foreclosure suit.)  To sum it up:

Temporary Loan Modifications are a SCAM!

They put more money into the banks’ pockets and don’t keep homeowners in their homes.

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Congressman Grayson Speaks

This is an awesome clip – a “must see” for all, particularly if you’re unfamiliar with foreclosure issues in states such as Florida.

Congressman Grayson Speaks

It’s a shame more people in positions of authority don’t realize the problems cited by Congressman Grayson.

I applaud you, Congressman Grayson.  Thank you for having the integrity to stand up and say “enough is enough.”

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It’s here … Title Insurance Problems

With the recent news about GMAC and Chase, I’ve been telling everyone who will listen that it’s only a matter of time before title insurance companies start to change their business models (if they can keep writing policies at all).  In fact, I blogged about this at length, below, just the other day. 

This morning, word broke that Old Republic has stopped issuing title insurance policies on GMAC properties until further notice:

I fear this is just the tip of the iceberg and that more fallout is coming.  The ramifications could not be more severe.  Property values are already depressed.  It’s only going to get worse if title insurance companies won’t issue title insurance on foreclosed properties.  After all, who wants to buy a property without assurances that title is clear? 

I sincerely hope that everyone, particularly the judiciary, realizes – before it’s too late – that continuing to push through foreclosure cases at the current pace is going to have far-reaching negative consequences for the entire economy. 

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