| As you may expect, home mortgage loan mitigation is | | | | not want your home and most will work diligently with |
| not a one size fits all endeavor. The universe of | | | | a law firm to avoid foreclosure. Litigating mortgage |
| possible solutions is vast. Always use an attorney for | | | | fraud and predatory lending cases can become costly |
| ALL loan modifications that will thoroughly review your | | | | for both sides and should be avoided unless the lender |
| circumstances and desires before recommending a | | | | will not comply or there are significant damages to the |
| course of action. Your financial circumstances, existing | | | | borrower. Our clients retain us to make a best effort |
| loan documentation and legal rights should always be | | | | at resolving their hardship and to fight for their rights. In |
| reviewed and considered. An attorney will work with | | | | most cases, the client's goal can be realized without |
| you to achieve a solution which fits for you and your | | | | costly litigation by using existing relationships to find an |
| family. While other organizations may simply submit a | | | | amicable resolution to stop foreclosures. |
| loan modification request, which may be ignored by the | | | | A loan modification proposal offered by a law firm |
| lender, an attorney will actively and aggressively | | | | may result in a more favorable loan modification |
| negotiate the most advantageous solution for their | | | | agreement than your lender will offer you directly. |
| clients. | | | | Many modifications offered by mortgage lenders and |
| In many cases, an attorney will contact your lender | | | | loan servicing companies are forbearance agreements |
| and get them to delay the foreclosure process without | | | | and are not a true modification to the terms of your |
| filing bankruptcy. Such a scenario allows an attorney | | | | mortgage. These types of agreements generally do |
| the opportunity to negotiate a "win win" resolution for | | | | not benefit the borrower in the long term and home |
| both sides. Foreclosure is generally a very costly | | | | owners facing foreclosure should consult with a law |
| option for lenders. In certain instances, a modification of | | | | firm and fully understand the terms and ramifications |
| the existing loan is a good solution. Depending on | | | | before signing any of these documents. |
| circumstances, a deed in lieu, also known as "cash for | | | | In cases where neither refinancing nor a loan |
| keys" or "walk away" may be the right solution to | | | | modification is a possibility, a short sale or a deed in lieu |
| keep a foreclosure off your credit report. There are | | | | may be among the best options to both avoid |
| many possible solutions to resolve a situation where a | | | | foreclosure and a deficiency judgment. An attorney |
| homeowner is either behind on payments or likely to | | | | can help borrowers navigate through the possible |
| fall behind in the near future. Such possible solutions | | | | options to determine which resolution is best for your |
| include a modification or restructuring of the terms of | | | | particular circumstances. A real estate short sale |
| your current loan to lower your mortgage payments, a | | | | occurs when the lender agrees to discount the loan |
| recapitalization and principal balance reduction, a | | | | balance and accept the sale proceeds in full |
| rescission of your current loan (up to three years) or a | | | | satisfaction of the outstanding debt. In such cases, the |
| lawsuit against the mortgage company for predatory | | | | lender has the right to approve or disapprove of the |
| lending violations if determined to be appropriate after | | | | proposed sale. Lenders are generally inclined to agree |
| a proper loan document audit. There are many other | | | | to a short sale if they determine such action will |
| possible resolutions as well. An attorney will assist you | | | | mitigate losses as compared to foreclosure. The |
| to determine which possible option is best for you. | | | | advantages of a short sale to the borrower include |
| Currently, Aurora, Citibank, Chase, Countrywide, | | | | avoiding a foreclosure reported on credit history and |
| GMAC, Litton, Wachovia and WAMU are among the | | | | mitigating or eliminating a possible deficiency. A short |
| major lenders routinely offering loan modifications. | | | | sale is generally faster and less expensive than a |
| Although many lenders are willing to consider loan | | | | foreclosure. In summary, a short sale is a negotiation |
| modifications, many lenders are unable to keep pace | | | | with a lender resulting in a payoff less than what is |
| with the current demand for loan modifications. Even in | | | | currently owed. |
| cases where the borrower is currently in default, a | | | | Not all lenders are equally amenable to short sales. |
| lender offered forbearance agreement may not be | | | | Many lenders have pre-determined criteria for such |
| the best resolution for the borrower. An attorney may | | | | transactions. Distressed lenders may accept any |
| be able to stop foreclosure by negotiating a loan | | | | reasonable offer. However, junior lien holders such as |
| modification; even in cases where a previous | | | | second mortgages, HELOC lenders, and HOA (special |
| forbearance agreement has failed. Because we | | | | assessment liens), may also need to approve of any |
| process many loan modification requests, our current | | | | short sale. Objectors to short sales sometimes include |
| relationships with lenders and loan servicing companies | | | | tax lien holders (income, estate or corporate franchise |
| may allow us to bypass overwhelmed loss mitigation | | | | tax - as opposed to real property taxes, which have |
| personal and negotiate directly with asset and portfolio | | | | priority even unrecorded) and mechanic's lien holders. It |
| managers as well as the lender's legal department. | | | | may be possible for junior lien holders to prevent a |
| In order to secure a loan modification, an attorney will | | | | short sale. Additionally, lien holders who are not |
| make use of the tools provided by federal law. Such | | | | mortgagees are generally unlikely to forgive the debts |
| federal tools include both the Truth in Lending Act | | | | owed to them. |
| (TILA) and the Real Estate Settlement Procedures | | | | While a short sale appears on a borrower's credit |
| Act (RESPA). Both state and federal laws require | | | | report differently than a foreclosure, a short sale may |
| mortgage companies to adhere to certain guidelines | | | | nonetheless have severe consequences for the |
| when originating home loans. Some existing mortgage | | | | borrower in the future. A short sale may appear on a |
| loans have TILA and/or RESPA violations. When such | | | | borrower's credit report as "foreclosure proceedings |
| a violation is determined to have occurred, an attorney | | | | started." While not a foreclosure, a short sale may |
| will utilize such violation as leverage to negotiate a | | | | prevent the borrower from obtaining a new mortgage |
| favorable resolution for our clients. Generally, lenders | | | | for seven or more years. Short sales are complex |
| will seek to avoid costly litigation and are more | | | | matters which should be handled carefully by |
| agreeable to reaching voluntary solutions when such | | | | experienced professionals. |
| violations are identified and brought to their attention by | | | | The loss mitigation industry is a recent advent and has |
| qualified law firms. | | | | become large as a result of the current economic and |
| During times of real estate booms, some brokers and | | | | real estate crisis. The loan modification industry is |
| lenders engage in unfair or illegal practices to close | | | | currently inundated with marginally qualified or unethical |
| loans. An example of these practices may include | | | | individuals, who are essentially salespeople, who have |
| charging unexplainable or unreasonable fees and | | | | accepted fees in exchange for half hearted efforts or |
| charges. Other examples include not fully explaining | | | | no efforts at all to provide loss mitigation services, loan |
| interest rate adjustments, pre-payment penalties or the | | | | modification or stop foreclosure services. As such, |
| implications of option ARM loans with minimum | | | | several states are currently considering legislation |
| payment options. Additionally, some brokers and | | | | which requires attorney involvement for loan |
| lenders illegally inflated or otherwise manipulated | | | | modification requests. |
| financial statements to qualify buyers who would | | | | Some companies offering loan modification services |
| otherwise not have qualified for their loans. Simply | | | | claim to be "attorney backed" or "attorney based" in |
| refinancing out of these inappropriate home mortgage | | | | their marketing. In such a case, borrowers should be |
| loans is now generally not an option because of | | | | aware they are not contracting with or engaging the |
| declining property value or debt to income ratios. | | | | services of a law firm. Some companies simply hire an |
| An attorney can help to identify if you have been the | | | | attorney for consultation to claim an association with |
| victim of such an issue. In such a case, we can | | | | an attorney. In such a case, the attorney does not |
| attempt to resolve these issues fast and efficiently so | | | | represent the borrower and the company is not bound |
| the borrower doesn't fall victim to foreclosure | | | | by the same ethical duties required by licensed |
| proceedings. Helping stop foreclosure and restoring | | | | attorneys. Additionally, no attorney client privilege exists |
| financial stability for our clients is our main goal. | | | | with such a company and statements made to them |
| There are additional reasons to conduct a detailed | | | | are discoverable. To be sure, the borrower is |
| review of the client's mortgage home loan documents. | | | | encouraged to request to speak personally with the |
| If a lender fails to properly provide adequate notice of | | | | attorney. |
| the borrower's right to cancel, the right of rescission | | | | "Attorney based" loan modification companies are not |
| may be available to the borrower for up to three | | | | law firms. As such, when you discuss the details of |
| years. When such right is extended for three years, | | | | your mortgage with these companies, there is no |
| the borrower may be able to rescind the loan during | | | | attorney client privilege. Any conversation you have |
| such period. In such a circumstance, the loan is treated | | | | with a non-law firm loan modification company is |
| as if it never existed. Essentially, the borrower | | | | discoverable by a state agency and not protected by |
| becomes entitled to all profits made by the lender as a | | | | attorney client privilege and therefore not confidential. |
| result of the loan. As such, the lender or other creditor | | | | Prosecuting agencies have become much more |
| would be required to refund all interest paid, all closing | | | | aggressive recently in bringing prosecutions for |
| fees, all broker fees, and even pay the borrower's | | | | mortgage fraud based on overly optimistic or inflated |
| attorney fees. This circumstance can create a | | | | representations regarding income or monetary |
| legitimate windfall to the borrower. The extended right | | | | reserves at the time of qualifying for the loan. |
| of rescission is a powerful tool to assist borrowers | | | | Therefore, if you are concerned that statements you |
| who have been victims of predatory lending. An | | | | made on your mortgage loan application could be |
| attorney can assist in determining if such a right exists | | | | construed as false and you are at risk for foreclosure, |
| and will assist its clients in exercising such right in | | | | please contact an attorney immediately. Do not |
| appropriate circumstances. | | | | discuss this issue with anyone other than a licensed |
| Mortgage and loan servicing companies generally do | | | | attorney. |