Keep Home Your Own : New York Real Estate Lawyers & Attorneys : Rubin & Licatesi Law Firm : NY Loan Modification, Foreclosure : New Jersey, Long Island

This recent Fourth of July weekend, celebrating 235 years of our nation’s independence, motivates a sense of humility as we face a modern day separation of so many previously interwoven seams in this country. Job loss, credit loss, investment loss - all these economic threads from our lives, perhaps unforgivingly taken for granted during the good times, have now risk been lost by many homeowners who live here. These tattered fabrics are slowly unraveling for our families, neighbors & clients, now facing new crises, challenges and foreclosures throughout our great nation.

Perhaps in New York we may rely upon the wisdom and strength ceded to us in our nation’s great instrument of independence when we summon the courage to keep home our own following the start of a foreclosure action. Our law firm remains focused in bringing protection and defense to the forefront when called upon by clients who will not give up their homes to strangers as plaintiffs. These plaintiffs bear little if any resemblance to the lenders they most earnestly relied upon to transform their dreams into homes.

Justice Schack takes a stand
A most respected and honored jurist has recently, and once again, braved these troubled waters to preserve the integrity of another family's residence. Brooklyn's Honorable Justice Arthur M. Schack, in refusing to permit foreclosure of a Crown Heights, NY home, enforced the laws of our state, protecting the respect for homeownership in the courts. Assignments of loans without procedure, conflicts of interest and erroneous facts would not stand the tests and standards for the loss of a home before this Supreme Court.

Michael Powell of the New York Times first described Justice Schack’s decisions in 2009: “Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages — with terms good, bad and exotically ugly — then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage.”

Fighting the taboos of foreclosure
For a practicing foreclosure defense attorney, even in the face of this malignancy of foreclosure epidemic, we witness the enforcement of the laws of this State. We witness a family as it stands up against the taboos of foreclosure and seek to protect their rights in the courts of New York. We witness these great events and bear testimony to others who come after and speak with them of their rights, defenses and ability to keep their homes.

Soon, as word of these decisions spreads, a sense of this Fourth of July, and the message and spirit of this holiday to stand up and rally around the rule of law will also be echoed by new clients. "Do I share in that case..."; "Can I keep my house...." ;"Will my children remain in their bedrooms..?". These questions will be heard and discussed in the offices of our law firm for years to come as the foreclosure crisis spills across our country without caps. The beauty we see in this comes from the honorable families who discard their fears, and fight to "keep home your own".

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In our neighborhoods and backyards, our friends are sure to share many similarities. Whether we live in the outskirts of Buffalo, (which parenthetically is home to the largest foreclosure law firm in New York State), or in a more run-of-the-mill community akin to Garden City, (which is where our law firm is based and houses a much more modest foreclosure defense law firm), we are sure to see a senior citizen who is a neighbor and homeowner, one who moved in many years prior to us and who remains somewhat as the "watcher of the block".
These senior neighbors are reliably quick with a set of very specific instructions on things like where you may park your car and when you can put out your garbage cans or even the days they prefer not to have your lawn mowed. These senior neighbors may also not be quite as vocal, but prefer to remain in the background of community affairs, coming out only on the rare occasion. Would you ever care to guess what’s going on in their backyards and living rooms during these most hard pressed of times?
Last week, unable to cure their own ills of foreclosure, I received two inquiries concerning the plight of our senior citizens and a foreclosure action. The cases were as different as night and day but both cases were almost exactly of the same concern. Similar worries and nightmares were shared by different people in the metropolitan area. I listened with extra care as the case unfolded. My inrterest was immediate, as the new clients were golden-agers, people over 62 years of age, homeowners, and both deeply involved in their own quest to keep their homes.
They told me that they received a notice several months ago. Maybe it was a summons and complaint and they recently appeared in court, without an attorney. After submitting many papers to their lenders, their loan modification requests were denied and their cases summarily transferred out of the safety of the foreclosure settlement part of the case. One of the clients phrased it that her home was "released" from the part and the foreclosure case was moving forward again.
In our law firm, we find this a most unforgivable ending. Our blog “KeepHomeYourOwn” is written and intended to prevent the destruction and chaos of a foreclosure sale. With respect to seniors and the foreclosure process, we spoke with Martin Dekom, Jacob Dean Mortgage, a senior reverse mortgage specialist. We spoke in great length on the topic of terrified homeowners who have paid their bills for decades and now have earned this most unjust reward of foreclosure. He has a solution, it refers to the Brooklyn Dodgers, and he isn’t crazy.
Decom says, "Many older homeowners have a solution in the reverse mortgage. The basic qualification is you must be old enough to remember the Brooklyn Dodgers (that is, you must be of a certain age). This is a program without a monthly payment, available to those 62 and older who live in the house as their principal residence and want to keep their home. The loan only becomes due when the homeowner dies, sells or moves out. Foreclosure is not a part of this process. A homeowner in foreclosure can be saved with a reverse mortgage if the amount owed is 60% or less of the value of the home. This number varies with the age of the borrower: the older the borrower, the more money is available, up to about 80%, with a maximum of $495,000. Cases of negotiated short payoffs can also be developed to save the home and avoid foreclosure.
It can be nerve-wracking, but bear in mind that lenders don’t want the homes; the lenders want their money. Consider three things: experience, cost and cost. Comparison shop before moving forward with a reverse mortgage and keep it in the toolbox as a resource to save your home from foreclosure”
We are currently in the process of discussing a reverse mortgage loan analysis for these clients, in addition to reviewing the court documents and producing a functional defense to help keep their homes. Quick decisions rarely bring value to complex situations. Seniors were fair game in the years of free money, deceptive lending practices and sub prime loans. It is now our obligation and responsibility to peer over our fences and ask of our senior neighbors if help or consultation is necessary as they suffer silently the disease of the distressed loan. Help with reverse mortgages is available at KeepHomeYourOwn.
 

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In 2008, Bank of America assumed ownership of Countrywide Financial Corp., which at the time was the top mortgage servicer in the United States.  This month witnessed a $108 million dollar settlement in a case brought by the Federal Trade Commission which affected more than 200,000 consumers who may be in line for refunds for foreclosure fees which were excessive and deemed illegal.  This sum is staggering, but far less so when compared to the fact that its portfolio was greater than $1.4 trillion dollars.

In essence, a mere distraction. 

In numbers far more understandable for most, lenders have “ramped up the face of completing those forestalled foreclosures” according to RealtyTrac. Monthly recordings of foreclosed properties show more than 400 homes were lost in the foreclosure sale process.  New filings continue to climb from a similar period last year with Suffolk Nassau and Queens County pre-foreclosure warnings leading the pack in New York State.  Homeowners must be served with this “90 day” notice as a mandatory and regulated warning under our state laws before a foreclosure summons and action can be initiated by a lender.  

Loan modification: Fallen out of favor?

This data confirms a recent speech by Hon. Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation (FDIC). Blair states, “Sustainable homeownership is a worthy national goal.  But……when there are other, equally worthy solutions……homeownership may not be the right answer”.

  We find ourselves right in the middle of our nation’s absolute worst financial and economic crisis as it affects homeownership.   The bigger numbers show trillions of dollars in pooled loans and investor and servicing agreements most certainly far beyond our imagination.  The more comprehensible figures detail hundreds of homes and thousands of families in default and at risk of losing their homes. But our Federal Government and its agencies’ speechwriters and presenters now seem to choose phrases noticeably absent of the words which we have grown to take comfort from.  

Loan modifications and incentive plans to keep home your own appear to have lost favor.   Chief executive John Taylor of the National Community Reinvestment “ because of a home’s appreciation, which gave people the opportunity for wealth creation that would otherwise have remained out of reach”.  These are not causes and issues for debate at a time when a family calls our law firm in crisis.  Not a single client debates whether the social pathos is a logical choice or if their belongings and children’s bedrooms should be emptied by a Marshall doing his job at a foreclosure auction.  

Where is HAMP now?

To state the obvious, HAMP was designed to save our homes, our communities, our churches, stores and neighborhoods. But has it?  We care little if the multi-million dollar loan pools and the model makers were right or wrong in buying, trading and selling our home mortgages.  There is no uncertainty that the Wall Street creations dating back to the beginning of this century have left millions of Americans now searching for paths of solution when served with a foreclosure summons. 

We read that our government’s inventory of housing stock, through Fannie Mae and Freddie Mac, represents the largest landlord in this great nation, with new foreclosed homes coming “every 90 seconds during the first three months of the year” according to numbers written in an article by Binyamin Applebaum in the NY Times. 

When I meet with families involved in a foreclosure action, many of them have no recollection of the papers signed or the significance of the paperwork contained in their files.  I implore them to search for these documents and to bring them in to the office.  Together, we find a way, and the absurdity of losing their home at a foreclosure sale begins to formulate a definite path and defense.  

The potential for millions of illegal loans

Consider the millions of loans closed with perhaps the trillions of documents created; the potential for excessive and illegal fees in the origination process as well as other defects now being realized for the first time. As these loans are litigated and brought into the courtrooms of New York State, our judiciary is called upon, for the first time in our history, to analyze and question the ability to proceed to foreclosure. 

There is no such concept as indefensible power, and our law firm focuses upon foreclosure defense to protect and keep home your own.  With the new laws and statutes enacted by the Legislature of our state, we do not yet have a firm grasp on the results of many of the foreclosure cases.  However, I witness on a regular basis solutions and saved homes for families who would otherwise become victims of the foreclosure crisis.  

The power to defend against foreclosure is now a protected right in New York State and we argue against foreclosure and tragedy on a daily basis.  If you face a pre-foreclosure notice or a foreclosure summons, keep home your own and call us to consult and discuss your rights to defend and protect all that you earned when you decided to become a homeowner.  Keep home your own is a mantra to be jotted down and read often, to keep focused on avoiding foreclosure.

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There is much more ahead in the current mortgage foreclosure crisis. Temporary assistance programs designed to benefit those in desperate need have seen record numbers of applicants. Our scheduled foreclosure sales and related foreclosure court parts have rapidly expanded to meet the growing demands of our nation’s largest lenders. Loan modification companies have been branded outlaws. Non-profit housing counseling agencies and local bar associations offer pro bono services to the homeowner in distress and remain hugely under-funded. Welfare, foreclosure, mortgage defaults and economic shockwaves with record job losses are ripping up the very fabric of American dreams and aspirations.

We are a country torn to pieces. And yet we continue to scan for hopes and rays of ways to keep our homes. Even in the first days of this crisis, homeowners sought out methods and created new initialed programs to save our homes and neighborhoods from the permanent scars of a foreclosed home on our block. Have our bankers and financial decision makers designed anything of substance to tilt the balance of delinquencies back to successful modifications?

One might think that the repayment of the TARP loans by the largest lending institutions would give pause to auction sales, and lend a great weight to the recovery, After all, with Detroit now competing successfully against the biggest of the foreign automakers, and Congress’s measures to strengthen and guarantee absolute continuity for our largest banks, the shockwaves felt during the past several years cannot reoccur. The unexpected has been measured and the Treasury Department has seen us through the worst of times. Have we saved ourselves?

Toxic Loans: Gone Missing?
Where, however, are the millions and billions of dollars of toxic loans gone? Our houses and bricks are still here. Although we are told that our debt crisis has been solved, who has identified the mass exodus from these mortgage delinquencies? Clearly these complex trails of destruction lead to the thousands of pieces necessary for the picture puzzle solution.

From experience, and first hand participation in the trenches of this foreclosure crisis, the pieces connect when a family reaches out with a call to our law firm looking to keep home their own. Perhaps an email describes a homeowner’s many months of non-payment, followed by years of submitting pay stubs and tax returns, letters of hardship and financial statements, only to result in a notice of sale for a week from Wednesday. The harsh reality of a Marshall entering the front door and demanding that you take your children, parents and loved ones and vacate immediately begins the process of connecting the pieces. On the surface of such a call or an email is fear, but beyond the fear of loss is the unremitting intention to prevent the foreclosure sale and the desire to sustain the home which pushed the homeowner to reach out to our lawyers.

Successes, One by One
This is not about your lenders controlling the process and the evictions. It is about our clients beginning to read and witness that the litigation path is a roadway of success and solution. One by one, a home is saved. One by one, a family talks about an order to show cause and a motion to vacate a default judgment. One by one, a family discusses the sewer-service method banks use to take away their homes as readily as they would discuss a trip to the supermarket.

In our law firm, we argue for education and to bring about an in-depth analysis of the foreclosure laws which present opportunities to the many who choose to keep their homes. You are a named defendant in a foreclosure summons because you own your home and you can continue to own your home by engaging the pieces and challenging the lending practices of the past to bring about the modern agreements and settlements so often seen in our courts on a daily basis. The pieces are in the box but there are moments and observations which are not mere research ideas. These pieces fit together but require your hand and intention to “keep home your own”.

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It’s always an awkward moment at best, and one which leaves traces of indecision, guilt, sleepless nights and sheer panic. An anonymous collections call destroys any momentary peace of mind. Or a doorbell rung at early evening hour by a process server brings an end to months or years of mortgage arrears. Some homeowners threatened by foreclosure simply freeze, paralyzed by not knowing where to go for help or what options are available to them. Foreclosure paralysis has set in. They wait for the banks to act, as eventually banks do, unaware that they had options had they sought them, and feeling lost and alone.

The total number of American families who no longer can take great pride in the struggle for homeownership increases on a daily basis. Just Google the phrase “hardship letters”, a seemingly unknown phrase several years ago, and you can find pages and pages of definitions, examples and related businesses all trying to capture the necessary information for you. Bankruptcy filings have defied imagination and we are told that the current level represents more than an 80% increase over 2007.

It is not unusual for new clients to share with me their experiences over the past several years, using credit cards to pay for daily living expenses and amassing debt well over $50,000. Blame the banks, blame the credit card companies and now we learn that we are also to blame the high priced universities allowing hard pressed students and their families to enter their halls of learning.

Ron Lieber writes in his Sunday N.Y. Times “Your Money” column: “So in an eerie echo of the, mortgage crisis, tens of thousands of people are facing a reckoning. They and their families made borrowing decisions based more on emotion than reason, much as sub-prime borrowers assumed the value of their houses would always go up”, He details the familiar tale of a lifetime of hard work, high morals and devoted effort, yet somehow gone wrong. Yet despite the crash, there is hope and there is recovery.

This is what worries me. Our law firm has taken particular notice of the phone calls, e-mails and test messages from clients, neighbors and families seeking nothing more than an option or choice when faced with the complex issues surrounding their receipt of a foreclosure summons, a notice of foreclosure sale and the countless default demands from their lenders and servicers filtering into their lives. The questions posed are familiar, as I have heard them through the months and years, many times. Will filing bankruptcy stop the foreclosure and help me pay my mortgage? Should I hire a company to negotiate my credit card bills? What about the modification company that advertises they can save my home?

When my clients go these routes, they want to take command but cannot afford to learn the answers and many of them return to our offices with devastating tales of loss and frustration. It’s like the Lost and Found box, where we all go when we leave our violin, briefcase or shopping bag on the train or in a taxicab. They expected a return to tradition where anonymous do-gooders take our precious belongings and entrust them to faceless clerks behind counters and windows to hold until the rightful owner is found.

In a similar return to tradition for those of our clients who face foreclosure and default, we turn to our Courts and judiciary who have been empowered by our legislature to carve out foreclosure settlement parts, conferences and judicial solutions to the economic and social chaos created by financial institutions and their sub-prime borrowing standards. The laws in our great state and our judiciary can serve to protect your rights in a foreclosure action. If you are a defendant in a lawsuit, and as defendant, you have the ability to seek copies of the closing and loan papers signed so many years ago. You can reflect upon the legality of the papers you signed. You may also demand copies of underwriting standards and show whether the lender complied with Federal and State statutes. You may even challenge the manner in which the foreclosure action was commenced against you.

These are your rights, and our courts and judges stand ready to afford you each and every right to which you are entitled as a defendant in a lawsuit. We return to our courts to deal with our national foreclosure crisis. A return to what our great country has always done best as a nation of law and order. We experience immeasurable comfort when we read a decision in favor of a homeowner who has stared down the barrel of a foreclosure action and has come out the victor.
These values are our traditions, many of which our clients know very little about. In our law firm, we don’t expect you to know these skills. We urge you to come in and discuss your concerns and express your families’ intentions on keeping your home your own. Two or three years ago, when we began to focus on helping clients in foreclosure and mortgage arrears to keep their homes, we did not have our present laws. Now, with a certain degree of experience and comfort, we most publicly welcome our clients into the judicial process to discuss the exercise of their rights.

This happens across the board, in and among families and neighbors of all persuasion. As you face this decision, some might ask, “Who can’t participate and who can’t come into court?” The more cynical might even suggest that the homeowner created his or her own dilemma. There may be thousands of wrong reasons not to look at the choices now available to save your home. However, you only need one good reason to overcome your mortgage paralysis and that is to decide to fight to “keep home your own”.
 

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“If mortgage delinquencies are not yet clearly improving, it also appears they are not getting worse. However, a bad situation that is not getting worse is still bad” according to Jay Brinkmann, chief economist for the Mortgage Bankers Association. A Newsday article  by Emi Endo offers additional statistics as it reports that “nearly one in seven US homeowners fell behind on mortgages or were in foreclosure from January through March and roughly one in 10 borrowers nationwide, a record high, missed at least one payment in the first quarter of 2010.”

We are living in a homeowner’s house of cards. Our clients have no margin of error in their family’s financial planning. Some kitchen tables, essentially reserved for family gatherings and mealtime sharing for school reports, job talk and daily exchanges are now resting places for unpaid credit card statements, demand letters from creditors and other evidence of mistaken debts taken during times of plenty. Suffolk and Nassau counties sadly share rankings by the Federal Reserve Bank in the top 50 for distressed mortgage ratios.

Success stories amidst the statistics

Yet despite such seemingly oppressive and disturbing statistics, I witness success stories while working with clients who have received summons and complaints from their lenders seeking to foreclose upon their homes and families. These are not missteps of judgment made while blind to the risks and consequences of unforeseen dangers. These were purchases of homes made by fathers and mothers and people of all persuasion who committed to many of the American dreams and ideals that are almost inborn and inbred from coast to coast.

I like what I see and hear when a new client calls and relive their experience and hope. These clients are the people who listened to our political leaders, our Presidents and Governors and bought homes, bought appliances, bought new cars and created jobs, new schools and new neighborhoods. Our clients waited patiently until they could hardly wait another instant and entered the board of real estate. We have now learned that the foreclosure crisis has invaded not only the subprime market but reaches into the nonprime loans and conventional marketplace. In our law firm, we focus in discussing these issues, not as potential bankruptcy matters and insolvencies, but as a platform to advocate and represent our clients who have received notices of delinquencies and foreclosure summons. Our purpose is to save these homes and investments from foreclosure..

New legislation encouraging

Our legislature has adopted laws, and our courts have enforced these laws. These are effective avenues that encourage homeownership retention but require new commitments on the part of our clients. You can keep your home your own, even in the face of months and months of non-payment. Many solutions and settlements depend upon your new commitment to maintain the stability of your desire to keep your home. Our judges have much less tolerance for the one sided and heavy handed position of yesterday’s lender’s demands to auction off your home.

HAMP and Treasury Guidelines, with servicer agreements, favor so many homeowners who partner their wishes with well placed actions and monthly submissions of income, residency and hardship evidence. Foreclosure settlement parts provide a steady hand and experienced leadership to afford the homeowner the necessary confidence and increased support to keep their homes.

This hopeful message leads to the predictable conclusion that our clients’ closings, their dreams of backyard barbecues and gatherings were not errors of our past. The lending criteria were piled with errors of judgment made by financial giants, many of whom have faded away. But each client who visits with us is a reminder of the strength of our dream of American homeownership. Our homes, shopping areas and office buildings remain as a constant reminder that yesterday’s goals are not to be forgotten.

Our lending and borrowing patterns and programs over the past eight years have saddled our neighborhoods and communities with an enormous sea of debt. In the face of this crisis, new rules have emerged. It is much more than wishful thinking when we say that these new commitments which are offered to save your home can reveal solutions and opportunities to keep home your own.

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Two days ago, after tireless efforts to reach an amicable resolution to a homeowners’ mortgage default, the borrowers transferred title to their home to their lender in a process commonly referred to as a Deed In Lieu of Foreclosure. Many of our clients who have received default letters and correspondence from their servicers have read or have heard that this too, qualifies as a successful modification alternative.

Even a careless examination of this definition would lead many to share a similar conclusion with me that this is not a noble outcome. Were there other key issues to explore that went unanswered before entering into this settlement? We spent months and months discussing alternative options: submitting modification and financial statements, hardship letters, medical opinions concerning the clients, tax returns and pension statements. All this was intended to cause a program and allow this family to recover.

Although our best efforts may have been put forth, my clients gave up. We explored issues of short sale programs, the pros and cons of loan renegotiation, the tax consequences of this process because we were not yet in litigation with the bank. Notwithstanding, the end result was that the course of history was changed for this family, as well as dozens of families in the neighborhood as the stark reality of a deed in lieu of foreclosure challenges their property value when it is recorded.

Staggering Statistics
The trend in our neighboring communities of foreclosures and defaults increases despite reported Federal and State programs allegedly initiated to protect against the loss of our homes. Long island alone witnessed an increase of 3.5% in repossessions by the banks and a double digit increase from the March statistics. Experts can argue whether the servicers and lenders are loosening the requirements, but the numbers  remain staggering and even more urgent when considered in light of the current depressing job opportunities and lay-offs.

Under the Home Affordable Unemployment Program  effective July, 2010, the Treasury Department has enacted an entirely new payment relief program for homeowners who have lost their jobs. Under this program, an eligible homeowner can request a forbearance plan to temporarily suspend their monthly mortgage payments for a minimum of 3 months. These borrowers must meet the HAMP eligibility criteria, have lost their job, receive unemployment benefits and request this forbearance plan before they miss 3 monthly mortgage payments. The publications emphasize the non eligibility factors apply to those in a permanent HAMP modification and it similarly does not apply to FNMA, FreddieMac or FHA serviced loans.

An outraged judge acts

The warm sounding initials of this new Federal effort may soon become another largely ineffective tool that will produce little impact on an ever increasing, struggling American family destined to face the hardships of mortgage default. Our New York State Laws offer considerable protection for these families and friends who have received a foreclosure summons and complaint. In the recently reported opinion by the Hon. Jeffrey Arlen Spinner in a case entitled Emigrant v Corcione,
the Court squarely denied summary judgment to the bank and rejected its request to appoint a Referee to sell the home and awarded $100,000 in damages to the homeowners. Problem solved?? Hardly! We will be unable to entertain the decisions which will be reached in the underwriting offices of our mortgage lenders after debating the outcome of such a decision.

Nevertheless, we are certain that as more and more homeowners become aware of the potential to keep their homes, even when faced with mortgage arrears, loss of jobs and other hardships, and as the protections afforded in our Courts become more widely accepted in the mandatory foreclosure settlement parts, we can make our mark and take aim at the rising tide of foreclosure sales and repossessions which are destroying our American dream. We can turn the negative into a positive despite the service of a foreclosure summons and complaint. We can witness the constantly changing environment which allows for good faith discussions to settle monthly mortgage arrears. On your calls to our office, we can emphasize that the broad possibilities of this complex problem are truly containable and we can work through this ordeal together.
 

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In  the course of many client conversations, new phrases and areas of pointed discussion focus on the grim topics at hand for family life. Many face great struggles and contemplate their survival after the early dawn and late evening arrivals of strange faces delivering thick booklets with colored construction papers. These publications appear to be offering a seemingly transparent hint at a glimpse of “Help for the Homeowner,” only to be found concealing their true object and intention: to take away your house.

Their circumstances are much like those of many others. The mortgage has not been paid this month, nor the last month. More than likely, the mortgage has not been paid in months and months. Hundreds of agonizing days, thousands of hours spent worrying about finances, mounting credit card bills, job security (or more precisely, insecurity) and otherwise few bright spots in our economic forecasts. The Federal Reserve Bank of New York published recent statistics papers  showing nearly 40% of the sub prime loans in our communities are in some form of default, with thousands more on the brink. Many more are yet to be included in these records as our property values receive mixed views of stability and equity during these challenged times.

The Treasury Department’s HAMP makinghomeaffordable.gov/  rescue plan has apparently failed, leaving millions of American families without a solution, and leaving us with the latest program, referred to as HAFA, the Home Affordable Foreclosure Alternative Program. Clutching at thick files of loan closing documents and more often, only scattered pieces that might have represented a mortgage application, clients and those in trouble call and visit in our offices asking “Where do we go from here? My spouse or partner doesn’t know about the summons; must we take our children out of their schools soon; how much time do we have left in our house and what can we do to keep our home our own?”

Many read last week that the semi-governmental agencies, Freddie Mac and Fannie Mae, reported some of the worst mortgage losses in their histories of operation. Delinquencies in the sub-prime and conventional loan markets reach into the trillions of dollars with little hope that this gushing well of adversity is readily capable of a lid to cap the substantial woes we face.

Our clients, in their phone calls and files, are the heart and soul of these statistics. These folks are in foreclosure actions and have taken action to keep their homes. The focus and notions of initiating legal defense to the receipt of a court summons are much more than fascinating ideas in scholastic circles. They are real live people, in all works of life who have no room for academic debate. Our clients are bus drivers, office workers, lawyers, doctors, wall street financiers, all of whom have decided to engage the courtrooms, judges and personnel in New York State Supreme Courts, and request enforcement of their rights to keep their homes their own.

To many, the process has worked, and they will eventually have witnessed and signed settlement and modification documents. We have challenged “sewer service” and asked our Judges to support these families in their quest to remain homeowners. Time after time, our judiciary has taken the lead and adamantly refused to allow foreclosure sales. Foreclosure Settlement Parts now preclude the auctions and mandate and require good faith attempts to utilize the HAMP and HAFA programs.

Servicers and investors cannot maintain a veil of secrecy as we look to uncover the true identities and discover who, what and where their alleged right to take away your homes are based. The loss of a home is not a certainty. Friends, family members and partnerships, all working together are able to engage the seemingly conflicted paths with their lenders and develop real changes in the foreclosure activity. Confidence in the defense of a foreclosure action is a family affair. A daily shift can be seen in the phone calls received in our office for once you make the decision to take action and save your home. Things can only get better. It’s a family affair.

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If you are in the foreclosure process, you will undoubtedly be asked to write a hardship letter by your lender. Banks want to understand your situation, and need to know if you are a suitable candidate for modification. The hardship letter is a way of going beyond the numbers, to evaluate your particular situation. This is an important step for anyone considering a loan modification, as well as for persons trying to sell their house to get out of a mortgage, or simply trying to give it back to the bank.

One thing a hardship letter is NOT is a place for a borrower to make excuses, point fingers of blame or vent anger over being in an unfortunate financial situation. Your lender doesn’t usually care what brought you into the situation. He wants to know what chances he has of getting all or at least some of his money back. If you appear to be a good candidate, your lender probably may be willing to offer some kind of loan modification.

Before you sit down to write your hardship letter, first think about who will be reading it. Your audience likely will be a member of the bank’s loss mitigation team, and it’s not a particularly inspiring job. He or she spends 8 to 12 hours a day working on unpleasant and tragic problems. Your reader will be working on hundreds of cases similar to yours at the same time, and will have read possibly thousands of hardship letters before seeing yours. Your audience will be incredibly risk-averse, and work in a highly pressurized atmosphere of saving every penny they can for the bank.

So what does the loss mitigation team want to know? Two things, actually. First, they want to know your circumstances. Why did you stop making payments? Was it a temporary problem such as being downsized from a well-paying job? Or are you permanently unable to work due to injury or other circumstances? Explain your current situation, explaining why you are unable to repay your loan.

The second point you need to make letter is to show the lender that loan modification is part of your overall solution. Is there a chance you may get rehired, or may get a similar position with a different employer? Are you planning on taking several part time jobs until you can regain full employment? Do you have any other sources of income which may relieve your situation in the near future such as an inheritance, the sale of property or other financial benefits? Showing them a workable plan makes you appear to be a good risk.

Keep your letter short. A single page is best. Avoid a rambling explanation of your circumstances and don’t allow yourself any “woe-is-me” tale telling.

After you’ve written your letter, read it over and see if it focuses on your two points. If you find anything that doesn’t talk about defining your situation and how you propose to resolve it, delete it and read it again. This is the beginning of a conversation you will have with your lender. Stick to the facts and focus on your goal, which is convincing your lender that you are a good candidate for loan modification.
 

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More than 3 million friends, neighbors and families currently share similar messages among their intimate groups of friends, neighbors and family members.  Their common thread is one of homeownership fears, mortgage arrears and home equity loss.  These are the phone calls, e mails and texts we see in a regularly increasing tide of new clients calling our law firm.

Foreclosure worries and an apparent and readily foreseeable fallout most certainly blizzards our radar screen.   For many of the past several years, those on the sidelines watched with great interest and listened as they sat somewhat tucked away from the chaos and crisis.   Never having doubted the American struggle to keep home your own, the monthly payments were not just an “old fashioned” commitment.  

Now, many of these bench warmers are fully engaged after suffering a job loss, hardship or unseen economic downturn.   Process servers and bankruptcy petitions are leading edge indicators when business in those sectors are booming.  This is not a moral crisis faced during a short slump in family earning power. Essentially, many families are forced to recognize that their entire mortgage debt and repayment abilities need an overhaul. 

While most of the analysts continue to debate the reasons for the paucity of progress in loan modifications, a Suffolk County Supreme Court decision scrutinizes the lending practices of the past and sets the barrier in favor of a homeowner who seeks to keep home their own.  Justice Jeffrey Arlen Spinner was assigned an action entitled Emigrant Mortgage v Corcione and on April 16, 2010 published his findings in the foreclosure action. 

The facts are probably not much different for many of you who have visited our office or for those who are in the throes of a foreclosure action.   Perhaps it was a mortgage loan taken within the past several years with hope that shortly after, another refinance would be undertaken to bail out of a loan which had a high interest rate or adjusted or had other terms most unfavorable for long term borrowing.   Shortly thereafter, unexpected hardship, reduced income and real estate downturns create new and unfamiliar landscapes of non payment and credit score failings.   Visits and phone calls produced little, if any realistic hope of a restructure of homeownership debt. The loan modification process fails after scores and scores of faxes, e mails and submissions to your servicer. 

The homeowners in this action sought legal counsel and found refuge in the New York State Supreme Court.   Justice Spinner’s decision unfolds the process, revealing that the bank delayed modification to collect pre-action late charges, tax and escrow advances, lender legal fees and other foreclosure related fees from the defendants.  In a far reaching decision, projecting previously unfound protection for the homeowner, the Court ruled that these homeowners no longer are to be judged by the moral dilemmas attached to a foreclosure action.   Mortgage foreclosure actions are now litigated matters and procedural or substantive federal and state laws will be engaged to protect the rights of the homeowner. 

Our citizens in New York State have been provided with mandatory settlement conferences in foreclosure actions, and these very same laws “mandate that the parties to such an action act and negotiate in good faith……….In short, the conduct of Plaintiff in this matter has been over-reaching, shocking, willful and unconscionable, is wholly devoid of even so much as a scintilla of good faith and cannot be countenanced by this Court.”  

Justice Spinner’s “moral compass” found bad faith conduct on the part of the lender and awarded damages in favor of the homeowners to “serve as an appropriate deterrent to any future outrageous, improper and wrongful activities.”   This decision permeates the air in every foreclosure settlement part that I have attended. Lawyers, hearing officers and court personnel openly debate the long term reliance upon such a decision as the appeal process may ultimately determine the final outcome in this action.   However, the spin and the stir of this decision may have adjusted the compass to point to a plan of recovery. 

 As a result, homeowners and clients who now visit with our law firm or others focused on the protections of the home against foreclosure are encouraged that the failings of the loan modification process do not represent the end of the road.   The compass points to new ingredients of judicial enforcement and social change emanating from the Courtroom of Justice Spinner.   The emphasis on failing and foreclosure is no longer an option for those who choose to seek to keep home your own.

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We often are asked by clients facing foreclosure if a loan modification is worth the time and effort. Our answer is simple: if you want to keep your home, then absolutely yes.
Loan modifications can be drawn up to affect a variety of aspects of your mortgage:

LOWERING YOUR INTEREST RATE
Getting a more reasonable rate than those offered during the predatory days of mortgage lending can often be enough to reduce payments to affordable levels.

AGREEING TO MAKE THE MORTGAGE CURRENT
Absolving past missed payments and starting fresh is a simple fix which homeowners who faced a one-time hardship (temporary loss of a job, for example) may find helpful.

ALLOW INTEREST-ONLY PAYMENTS
A period in which borrowers are required to pay only interest is helpful to troubled homeowners and also means the bank will eventually get its money back.

REDUCING HOW MUCH YOU OWE
Lowering the balance of a mortgage is like a cash gift from your lender, but be careful. The IRS may construe it as income and tax you on the amount reduced.

FIXING AN ADUSTABLE RATE
Eliminating a balloon date and fixing the interest rate can help those stung by high adjustables.

DEFERRING PAYMENTS
Sometimes, all a borrower needs is a little time to resolve a temporary hardship.

EXTENDING THE TERM OF YOUR MORTGAGE
Adding ten years to the life of the loan can greatly reduce the amount of monthly payments and means the bank gets all its money back.

ELIMINATING BANK FEES
If you’ve racked up a load of late fees and penalties, having them absolved can often help.

In the larger picture, of course is the fact that modification’s entire purpose is to prevent foreclosure and allow homeowners to keep their house. This takes convincing the bank that with the modification, the borrower will be able to continue to make payments, albeit adjusted ones.

A lender looks at a modification as a way for them to get at least a portion of the money owed them, and decides what kind of modification terms will accomplish just that.
Therefore, it is very important to understand how to state your case and present your financial situation to the lender. Loans that appear likely to be repaid because of the changes in terms of the mortgage are going to be most attractive to lenders.
 

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Could 30 million Americans, completely unnerved and destabilized from the ravages of their home mortgage foreclosures, benefit from a decades old and time proven theory of recovery -  compulsory integration?   Is there anyone who can argue successfully that our country is in troubled economic times and that the present day recovery system is working?  Certainly not says the Rev. Patrick H. O’Connor of the First Presbyterian Church in Jamaica.  Jim Dwyer’s Sunday New York Times article, which reinvents the sub-prime mortgage chaos into the food chain in his “When Pizza Becomes Predatory” front page headlines and announces the pastor’s news and analysis of a slice of pizza.  “You have a $2.50 slice of pizza bought with a debit card, and if the person is over the limit, the card is not rejected.  Instead, you have a $35 fee.  So the slice of pizza is $37.50”.

The cancellation of the purchase may not have proven of immediate benefit to the pizza parlor nor the consumer, but in the weeks to come, little would have resulted if the purchase had been declined.   Except of course, to state the obvious, our friend would not have ended up having to see a bill for $37.50 for a slice of pizza. 

Magnified millions of times over, the declination of each request for modification also leads to long standing and potentially permanent chaos in our struggle for a return to stable neighborhoods, job optimism and highly respected middle class values of credit scores and financial responsibility.  It is a given that so many families have taken on mortgage loans which far exceed their ability to repay or no longer bear any relationship to the value of their homes.   Our return to real estate homeownership is not going to be geared towards statistics of whether our local quarterly reports indicate a decrease in homes foreclosed from last year’s figures.  

The stated facts are that the volume of foreclosure activity and bank-seized properties does not benefit from subtle increases or decreases in statistical timelines.   Foreclosures in our communities litter the weekly and local community newspapers, no longer advertising simple sub-prime defaults.  This year we are set to watch out for the defaults for all of our friends who have lost jobs and income. This collapse is most certain to occur, and we witness the margins dip on their spread between rainy day accounts and bill paying.  The refusal of our Federal Government to intercede in mandatory regulation will turn back the recovery process for decades to come. 

Every several months, newly touted solutions grab the attention of the real estate community.  The Home Affordable Foreclosure Alternatives  (HAFA) have received much attention in the past several weeks, serving those whose goal is to achieve a short sale.  The Treasury Department, in partnership with the major servicers, specify a thirty day window after which we are told whether a short sale may be approved.  What follows are lines and lines of procedures, caps on real estate commissions and time limits to re-sell and avenues to obtain broker price opinions.  The losers in this process will far outnumber those who prosper. 

 During the past several years, TARP,HAMP,HAFA and scores of freshly minted initialed entities entered our daily conversations.  Quietly, we have asked for recognition in our negotiations with lenders and foreclosure conferences in court, to establish well defined reviews of our financial statements and accountable methods for assignments with bank representatives who can discuss our loan modification requests from the “international” and far flung offices of our lenders and servicers.

Continually, we often find deaf ears or untraceable extensions as we seek to communicate with bank representatives.  This has also unfairly resulted in our lenders shouldering an intolerable burden of unpaid debt, with the new law in the state of New York. This law requires that the lenders now must maintain the properties which they have seized in foreclosure actions.  Our lenders backlash against this law and the unfair consequences which may continue to restrict future lending has also missed the mark.  

The argument to punish the lender is as unfair as it is to destroy our neighbors and friends. This spiraling trend of inefficient and costly failures in the loan modification programs also leads to taxable issues for discussion and balance sheet reviews.   When our home loans reach default stage and arrears mount and short sale approaches are looked at by buyers and lenders and sellers, the Internal Revenue Service also looks at this cancellation of debt issues. 

The insanity of failed loan modifications and denial of responsible requests to restructure our monthly debts is a recurring invitation to participate in the destabilization of America.  The humbling realization after working with hundreds of families is that we have the process to recover and we have the alternatives available to prevent forced seizures of our homes. 

Poor results and statistical failures have resulted from the lack of compulsory integration of the HAMP solutions into our requests for responsible loan modifications and foreclosure defenses.   Our courts are now witnessing challenges by homeowners to enforce the present HAMP regulations.   HAMP must become an obsession and dominate the discussions. 

We are short changing both our lenders and our homeowners by permitting anything less than rigid adherence to those stated goals of recovery.  HAMP is not a bargain nor is it a bailout.  It can be an effective method for mandated and compulsory integration.   We have seen the challenges and downfalls in our history for turning our backs to social injustice.  

Years and years of waste and family destruction can be avoided by re-integrating the past successes of mandatory integration of these vital economic recovery programs.   Failure is not an option and cannot be tolerated.   When you are faced with mortgage arrears or the service of a summons and complaint, we must be certain that exercising the right to recover and save your home, be heard in the offices of our lenders and throughout the courts of our state. 

The attorneys who serve the lenders in their quest to foreclose, must refrain from any conversation or discussion with the very homeowners they sue, unless it is to direct these families to private counsel, not for profit agencies or Bar Associations.  These are dangerous lawsuits and any attempt to diminish the severity of the foreclosure action by either the actions of the lender or their attorneys must be viewed with harsh consequences. We cannot measure the cost of failure, for it will linger for generations:   a child evicted from his room, a senior now out on the streets, uncles and aunts now living in new states or unknown shelters.  We hear about divorces, separations – “Addressee Unknown” when we receive Christmas cards back from friends no longer living in their homes.  

Our recent history recognizes us as a strong people, solving this madness. We too can use the strength of our Nation to cure our present day economic ills.  We are not a nation of invertebrates.  We are a people of backbone and when pressed we will rise, conquer and with the ability to listen to all sides, frame mandated and compulsory procedures to solve the foreclosure crisis.

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In my efforts to remain current on all private and government trends and currents, I have come across some interesting, if not required, reading. The United States Department of Treasury, under Help for America’s Homeowners, Making Home Affordable Program, published on March 29, 2010, Home Affordable Foreclosure Alternatives - Short Sale and Deed in Lieu of Foreclosure Update says regarding short sales: “The options help preserve the condition and value of the property by minimizing the time a property is vacant and subject to vandalism and deterioration. In addition, these options generally provide a substantially better outcome than a foreclosure sale for borrowers, investors and communities.”

Another interesting quote comes for the NY Times Sunday Opinion, April 11, 2010, but this time we read the published statements from a former Secretary of the Treasury and former director of Citigroup…”We all bear responsibility for not recognizing this (financial crisis), and I deeply regret that….” And his colleague, Charles O. Prince III, former chairman and chief executive officer, Citigroup…”I’m sorry that the financial crisis has had such a devastating impact on our country. I’m sorry for the millions of people, average Americans, who have lost their homes. And I’m sorry that our management team, starting with me, like so many others, could not see the unprecedented market collapse that lay before us.”

Apologies, short sales and lost homes, now we are literally “Home Free”. Circumstances being what they were, millions of Americans entered into the housing market during the years of the Bush Administration, with mortgage bankers creating “home free” opportunities- no income, no assets needed or required; no need to consider repayment or the consequences if the market collapsed. No need to pay heed to the model makers in the financial marketplace whose responsibility to oversee and render opinions would have laid bare the recklessness of the mortgage products being sold to our American families.

We now witness the results. Another reading requirement is to view the reports of the Financial Crisis Inquiry Commission. This commission has as one of its duties a direction of its process to enable the government to assist the reform and correction in our financial marketplace. Aside from these apologies, commission duties and recent supplemental directives to move forward with short sales and lost homes and titles, we must return to the solution.

For the past two years, we have made great strides to struggle against the banks’ foreclosure activities and have received tremendous benefits in our New York Courts. Our judges, court clerks and attorneys participate in daily foreclosure settlement parts, implementing the progressive HAMP programs which are evolving into solutions for many homeowners who have chosen to exercise their rights and remain in their homes. Those eligible borrowers have seen a slow and steady up-tick in the number of families destined to survive the unannounced visit by a process server with a foreclosure summons and complaint.

Foreclosure actions are now met with a rising tide of suspicion and investigation in our courts. These lawsuits are now required to proceed with a due recognition that our homeowners and families have a set of rights that cannot be routinely and cavalierly trampled upon by nameless and unaccountable lenders. Those families who entered the front door “home free” and have suffered the indignities and break ups caused by the errant judgment of lenders and financial leaders, now see that these dreams of homeownership will not make them “home free”.

These newly published regulations are not in any way a set of solutions for our homeowners. It is a return to the past failures of our government, by allowing and encouraging another lost home. Washington tested the waters and compiled a series of rules and regulations for mortgage lenders and eligible borrowers to follow which have ultimately allowed hundreds and thousands of families to remain in their homes, communities, schools and neighborhoods. With these latest procedures, it has created a diversion for implementing the solution which is so very vital to the success of the HAMP program.

We are well aware of the current and ongoing tidal wave of defaults and foreclosures, and we are also well educated now to see that the current recovery allows for much optimism. By utilizing the efforts and programs now in place and defending against an unopposed foreclosure action, the current movement towards foreclosure and short sales can be avoided. We must keep your home your own and we can do so. Your visit to our office can provide the opportunities and solutions for success. You can finally be “home free”.

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In a March 2010 publication from the Office of the Comptroller of the Currency, (Office of Thrift Supervision, Washington D.C., fourth quarter 2009) performance data confirms “the increase in seriously delinquent mortgages was most pronounced among prime borrowers, where the number of seriously delinquent mortgages increased by 16.5 percent.” More reading gives little hope for success with the manner in which loan modification and loss mitigation programs are handled when it is stated that “servicers reported that they expect new foreclosure actions to increase in the upcoming quarters as many of the mortgages that are seriously delinquent may eventually result in foreclosure as alternatives that prevent foreclosure are exhausted.”

Those who have seen limited success in trial payment modifications have not received permanent help. “Short sales continued to grow as an alternative to foreclosure... more than doubling from the same quarter a year ago.” We are not surprised. Neil Barofsky, the special inspector general for the Troubled Asset Relief Program(TARP) was quoted in the Associated Press article by Alan Zibel that the “lack of planning, has resulted in constant changes that have bewildered the more than 100 participating mortgage companies”.
 

Standing back and looking over our shoulders at these comments and summaries clearly evidences a series of salvage plans, almost doomed to failure from their inception. Millions of families, trillions of dollars, banks, servicers, homeowners and Obama Administration officials are taking aim at the mortgage and foreclosure crisis without any commitment to succeed. This week, many have seen new headlines, with new life boats launched to underwater mortgages and families struggling against the wave of foreclosure actions. The Federal Government publishes eligibility requirements for unemployed borrowers who have not missed more than three payments, are receiving unemployment insurance benefits, all with a mortgage loan of less than $729,750 and provides initiatives for a loan modification to these previously unattended folks.

Without spending much time on that program (are there really unemployed families in such categories??) we have yet another plan for homeowners whose principal residence has suffered the ravages of economic decline. Servicers now are charged with creating solutions which envision the write off of a portion of the borrower’s loan until it reaches a level where statistically, payment can be accomplished and rewards are provided to those who participate and complete three years of timely payments.

Other voices concur. David Streitfeld, writing in Saturday’s NY Times asks, "Will it work this time? Howard Glaser, a housing consultant says, “The housing market is the Vietnam War of the American financial system. The federal government is in so deep, they have to keep ramping up to find a way out.”

We have watched hree years of initialed programs, HAMP, HAFA,TARP,  during three years of Treasury Department. We have listened to FDIC officials and Administrators of National Banks. We have read three years of Mortgage Metric Reports, These all come from extremely educated and experienced federal officials, with well placed initials and highly valued post graduate degrees, all collaborating to provide and originate home retention programs, looking for eligible borrowers to participate in loan modification programs. Yet, the power, speed and intelligence of these plans is tantamount to placing bets on which witch has the fastest broomstick. There is no window at Aqueduct or Belmont or the jai-alai or dog tracks engaging in such wagers. The portfolio of salvage plans are not reaching the servicers and the lenders and the mortgage backed security trustees.

Simply stated, whatever is being done seeps through in mysterious and unaccountable manners and platforms. Calls to our lenders are overwhelmingly met with little success. Recent client visits to our offices have witnessed foreclosure actions that went unanswered for the past several years, with referees and foreclosure auctions on the horizon. Foreclosure defense litigation for these families is a current focus and feels uncomfortable at first.

But for these underwater homeowners, jumping into shark infested waters and hoping to stop the judicial sale of their homes is the only means of survival at this point. Judges, foreclosure settlement court appointed referees and attorneys and court clerks are now called upon to enter this new world of foreclosure defense litigation. It is possible that an imminent sale can be postponed and that your home can be saved.The only guarantee is that if you do nothing, nothing will happen to stop the foreclosure sale. This portfolio of broomsticks, some might argue, is perhaps our best hope in a system where modification files are handled by faceless and nameless, sometimes even foreign, servicer and bank representatives.

However, with the mandated New York State laws and foreclosure settlement conferences, and with committed court personnel, delays can be allowed and foreclosure sales can be halted, even if only on a temporary basis. This allows time for the banks to review our submissions and consider evidence of ability to repay. The fears and paralysis of a visit from a process server and delivery of the foreclosure summons and complaint are genuine, but ultimately can be tempered by a strong commitment for negotiation and investor review. Many mortgage holders have reacted to the federal programs and contracted to participate in reviewing eligibility for success. These plans and blueprints can be modeled to “Keep Home Your Own”.

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Our Federal Government has already failed many American homeowners in its stated effort to halt the massive foreclosures on the books today. Its inability to mandate action has left American home owners scattering like monkeys from a fallen tree. Now, the federal government has enacted an extension of these disastrous programs. It now provides us with yet another initialed program, H.A.F.A., the Home Affordable Foreclosure Alternatives Program.

After enacting H.A.M.P, the generally ignored Home Affordable Modification Program, one would conclude that the Treasury Department, some thirteen months later would offer additional tools to help an already mortally wounded nation reeling in economic woes beyond its imagination. To the six million families and homeowners who are behind in their mortgage payments and at risk of losing their homes, HAFA should read that they now can be soothed and calmed as the easing of the short sale process will restore order to their lives.

Short sales to the rescue?
In the short sale process, we are told that these borrowers may receive pre-approval by their lenders to sell their devaluated homes at realistically stipulated prices below the amount owed on their mortgage loans. This would allow them to market their homes with a reasonable degree of certainty and with deadlines to keep these mortgages from creating new disasters in their lives on a timely basis.

Skeptical readers however, bear in mind that under HAFA, these families who lose their homes, dreams and credit ratings may be eligible to receive up to $1500 for moving expenses. Some might argue from this that the Treasury Department has changed its direction and its intentions of keeping Americans in their homes through the implementation of its guidelines and regulations that mandate home modification. Instead, it seems the government has reversed itself, by now seeking a no holds barred reimbursement to the lenders, banks and servicers.

These benefactors of the government’s largesse are the same financial wizards who miserably failed their customers by ignoring the existing mandates to modify loans and work out a troubled loan portfolio. The fall-out created by these lenders spreads even further and the screws turn even tighter as new listings enter the marketplace only to find the very same lenders declining mortgage loans because the comparative sales prices have decreased tremendously due to recent short sales.

This presidential initiative, announced only one year ago to encourage loan modifications and thereby making stability of our housing market a number one priority, now proves out to have fallen on the deaf ears of unreceptive lenders and servicers. These financiers seem completely unprepared to alter the delinquencies and foreclosures and the ragged remnants now beginning to unfold in programs like HAFA.

Unemployment still feeds the flames
Michael Winerip's New York Times, "Generation B" article tells how a group of New Yorkers interviewed a year ago after losing their jobs were doing one year later. It comes as no surprise that nothing good happened. An executive who has been unemployed for the last twelve months stated quite simply, "I did not get a job until this January and it's only temporary. I was just renewed for two more months, so that's a relief for now."

His situation might have turned out differently had the Obama directives for renewed hope in the loan modification programs been sustained. Homeownership drives our economy, creates jobs and supports consumer confidence. New washing machines, added dormers and carpenters actively swinging hammers are our ladders of hope.

These dreams have also been scattered by the fall of the loan modification program. FICO scores, credit ratings, and home values are plummeting while delinquencies, bank repossessions and job losses continue to convert new statistics in our lives. Ellen Yan, writing for Newsday,
said it best..."snow slows foreclosures. Not only did it delay traffic, it might have slowed foreclosure-related filings quicker than any loan modification program." Few of us would have ever considered such a radical idea as to employ weather as a national solution.

We acknowledge that excesses ran uncontrolled in our real estate investment models, in our culture, and in our society. These excesses supported many of these delinquent loans. Whether we care to admit it or not, there are few, if any, who can stand blameless today and hawk that the ends justify the means. But this express lane into foreclosure must be stopped and the federal and state laws should be employed because they can be an effective method to solve our homeownership crisis. We must advertise that the solutions are already in place to save our homes. A foreclosure summons is an invitation to participate in the recapture of our goals. We need not turn to wholesale short sales and temporary fixes. We have solutions and procedures which can be discussed and if utilized, can stop the scattering of Americans from the fallen tree of the American home mortgage disaster.
 

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“Huge sums forge their own anchor, and our future advantage, if any, will be a small fraction of our historical edge”. Graham Bowley, in his Sunday NY Times article, quotes Warren Buffett and provides his readers with keen insight into Mr Buffett’s strategies and formulas in the face of the economic hardships during the past several years. Buffett invests much like the J.P. Morgans and Vanderbilts of the early 20th century – stocking up on capital during the good times and investing when hard times bring prices down. Says Buffett, “We’ve put a lot of money to work during the chaos of the last two years. It’s been an ideal period for investors: A climate of fear is their best friend”.

Granted that few of us can draw personal parallels or easy comparisons to a gentleman with a company whose net income is in the billions and a share of his stock in the thousands. On the other hand, when it comes to dealing with collapsing family and personal incomes and mortgage loan payments, the underlying similarities give great hope when faced with a foreclosure or default on your home loan.

Homeowners’ crisis begins with banking excess
The beginning of this century saw unheralded dissatisfaction for the frustrated many who watched as real estate brought huge profits and lifestyle advantages to others who jumped into the market. Financial institutions literally opened the flood gates and developed a mortgage loan product for just about anyone who asked. We now move forward in this cycle, realizing the damages these financial decisions have passed on to homeowners. Mortgage loan arrears, defaults, over-valued homes and lost jobs are daily concerns in our law firm.

Even so, there are a number of touch points which allow for a process of recovery in so many cases. Our fundamental challenge is to avoid the foreclosure sale of your home. The front-line professionals, both lenders and borrowers attorneys, as well as housing representatives, all agree that the banks would much prefer working out a series of steps designed to defer the foreclosure sale. Homeowners should begin this process by meeting with an attorney or with one of the many organizations counseling homeowners in these situations. Loan modification discussions, court foreclosure settlement conferences and trial work-out or forbearance plans are good news solutions to the many clients who so courageously take plans of action.

What does it take to avoid foreclosure?
Lenders often times will take on these added tasks and forego an immediate foreclosure sale if homeowners can provide them with details of hardship, potential income, and prospective job offers. Gathering the paperwork and putting together the often daunting package of required materials can be laborious and frustrating. However, this work will often pay huge dividends. Many observers to this process foresee a huge increase in successful outcomes.

There are no “smoke and mirror” tricks to this process. It requires vast amounts of time, effort and patience, all of which are necessary as the numbers of submitted pleas for assistance to our mortgage lenders and servicers grow each day in unthinkable numbers.

What to do when the process server comes
While loan modifications are an option for many in early stage default, there are increasing numbers of homeowners who are served with a summons and complaint, requiring the intervention of a Judge and court action. Most experts agree that meeting with an attorney as soon as you are served with these court papers and presenting an answer and attendance in the court process also allows for loan workouts.

The laws in New York State provide a well defined extension to the hostile foreclosure sale. It is not uncommon to see these resources used in ways that encourage, through diligent and dedicated effort, a loan workout. Failure to answer the summons promptly can erase the many legal rights that homeowners have been granted and these rights can be exercised with great dignity and respect. There is no stigma attached to appearance in the foreclosure settlement conferences and the court staff and personnel are well sensitized and understanding in these parts.

The difficulty is greatly enhanced when dealing with client’s who have lost jobs and wages. From the lender’s standpoint, the homeowner may have decided that it is a lost cause and there is little hope. This is, without a doubt, the most difficult situation in which to create a pathway for positive solutions. Nevertheless, if properly managed and guided, and the rights of the homeowner are protected by caring counsel, this temporary income loss is frequently reversed. Experienced attorneys can present the new information and adapt to the lender’s review programs even at late stages of the foreclosure process.

The best first step: Having a one-on-one with your lawyer
Recognizing the new levels of tolerance towards mortgage loan defaults, neighbors and friends who have rarely if ever called upon the services of attorneys and housing professionals must now address the “what to do’s” when served with a summons and recognize that this is not an incurable problem.

I often get calls from homeowners I’ve never met who ask my opinion or want suggestions over the phone. I am totally without the benefit of knowing them, or their background. While I am sure there are cases in which opinions can be freely given after a brief conversation, more often than not, a one-on-one meeting is in order. In many cases, a slight pause and the wait until an office appointment can be convened is probably one of the best opinions I can offer.

When facing foreclosure on his home, a homeowner needs to realize that there are tips, benchmarks and strategies that can be discussed to save his home or soften the financial blow of hard times. Looking for courageous options and solutions often turns our conversation from a chaotic pulse of doom and gloom to a rallying point that, as Buffett says, is also an opportunity in this financial crisis.

Your home, your anchor
The huge housing debt taken on several years past, during a time of rising optimism and real estate fever, is not to be ignored. Our homes are our anchors and the loan problems we now face, if evaluated and addressed, are human problems and will be sorted out and solved by the people in government, banks, courts and neighborhoods. There is no confusion; there are no blind corners and there are no painful debates when you are faced with the possible loss of your home, commercial property or investment parcel. The property is your anchor, and if secured properly, will permit you to hold fast and face the storm of uncertainties until you can implement an effective strategy for paused consideration, unique alternatives and loan workout solutions.
 

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Thousands of our friends and neighbors have gone to the front door at dawn to pick up the morning paper, only to be greeted by a process server handing them a foreclosure notice. These people have been compromised by the ongoing failure of our federal and state governments. How? These government entities have failed to partner up with financial institutions and resolve our national housing instability. Without this resolution, every well written summons and every complaint seeking the foreclosure of a mortgage loan will result in a forced, judicial sale of the house. So is there life after being served notice? There can be.

A mortgage plainly states that if you do not pay the monthly payment, keep the house insured and free of violations and a number of other conditions, you will be sued in State or Federal Court and eventually your house will be sold at a foreclosure sale. A homeowner will listen to this at the closing table while signing a thick stack of documents and concentrate on anything but these potential chaotic results.

How federal and state government has failed foreclosed homeowners
There is little doubt that the overwhelming number of mortgage loan defaults do not result in sustainable loan modifications. Over one year ago, a group of 15 Attorneys General, including our New York State Banking Superintendent, joined in a letter dated February 2, 2009 to the Comptroller of the Currency and the Director of Office of Thrift Supervision stating that "the majority of loan modifications in the past year have not led to meaningful payment relief to homeowners. We are concerned that either the institutions supervised by the OCC and OTS have thus far failed to offer homeowners sustainable loan modifications, in contravention to guidance issued by the federal banking agencies...."

Almost one year later, this State Foreclosure Prevention Working Group issued its Data Report No.4, January 2010, and published its findings that the number of homeowners in default continues to grow; loss mitigation efforts are backlogged; principal reductions are rare; and that our lenders and servicers have "not succeeded in turning the corner to reduce the high levels of foreclosure." Newsday, February 11. 2010, Ellen Yan details these striking considerations in her article that the "number of newly started foreclosure cases on Long Island went up last month." Notwithstanding, she writes of some positive trends that are now forthcoming and reports of a successful loan modification for a Nassau county homeowner, even after the lender started a foreclosure proceeding.

Ms Yan described this process in her earlier article that "state law will require settlement conferences for all borrowers in the foreclosure process". She reported that court officials are "hoping to keep these people, more of them, in their homes." Many people who have come face to face with the process server feel no need to reach out for guidance, counsel and assistance. Each foreclosure summons is required to provide phone numbers for counseling agencies and each court house provides a Clerk's Office for homeowners to enter and seek information.

Strategies for life after foreclosure service
Let me provide you with a few positive and success oriented strategies and posture that there is life after service of the foreclosure action. Our law firm has a significant focus on "life after service" and we regularly meet with homeowners who have been served with a foreclosure summons and need counsel and defense to the possible loss of their home. A meeting in our office often gives the security that they seek and enables the confidence that there is a process for solution. The guarantee is that if "you do nothing you will get nothing" so work with an attorney that will help you understand and search out for answers to avoid foreclosure.

The wonderful thing about meeting with us is that the potential to succeed is limitless. I realize that when you greet that process server who explains that he is only doing his job, you most certainly will feel the weight of the world crashing down. You must take action. Look to mentors, neighbors and professionals who have had experience in this area. The statistics are overwhelming--- one out of seven borrowers are behind on their mortgage, according to the Mortgage Bankers Association 3rd Quarter 2009 survey. This absolutely means that you are not alone.

But it also means that someone won't magically appear in your living room to describe what actions you need to consider. To succeed, it means that you must begin the process of rebuilding your financial confidence and recognize, once you begin to search for the solution, that you will be assured of meeting someone who has had a similar problem but has done something to motivate and initiate a process that will defend the foreclosure action, slow it down to the point of engaging your lender in Court at a foreclosure settlement hearing, submitting for a loan modification or if necessary, take all other appropriate actions in the legal process to protect against a foreclosure sale.

The past three years have seen enormous actions from our financial institutions to engage this revolutionary concept of modification rather than foreclosure. There are steps now in process to implement a Treasury Department plan to modify eligible borrowers who have a second mortgage lien. These concepts are bold and innovative and require much on the part of the lender, but also on the part of the homeowner. Remember, that there is life after service and you can head in the direction of a solution.

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Would you believe that recently, a record number of homeowners and lending institutions  have partnered in the largest and most heralded effort in the history of this great country to save homes from foreclosure sales?  I didn’t think you would. I wouldn’t believe it either.

Few, if any, who face the issues of mortgage default would find such a statement to hold water.   In fact, most people who have entered this arena bear witness to a process that finds them discussing their woes with bank representatives in foreign countries, or with loss mitigation center counselors who have no e mail addresses, no last names and no phone numbers that reach them at their desks. 

Clearly, the loan modification process and accountability measures now in place are less credible than the rancher who says he can herd cats into a barn.  In search of a solution, we read that our Federal government has enabled its Treasury Department for the past 9 months to develop enormous crates of rules and regulations known as the HAMP program.  National lending institutions and mortgage servicers have signed up to comply with these concepts.  

So, why are we still suffering this madness?  Where are the solutions HAMP promises and why are they not being followed?   Few people are equipped to take the temperature of these topics and provide us with real-time answers.  Richard Thaler has given his readers this past Sunday in his Economic View column in the NY Times a very distinctive point of view.  He similarly concludes that "Lenders have been reluctant to renegotiate mortgages, and government programs to stimulate renegotiation have not gained much traction."

Thaler suggests a vastly different approach which hardly requires reams of regulations to implement.  "The bank would be required to reduce the mortgage by the average price reductions of homes in the neighborhood. In return, it would get 50 percent of the average gain in neighborhood prices-if there is one-when the house is eventually sold". 

Sounds simple, but is it too simple to work??  This supports all economic theories that foreclosures are just bad business for our neighborhoods and create instability and chaos in every facet of our lives.  Of course, we will hear the cries that the hunted have outfoxed the hunter; that the borrowers and homeowners who have defaulted in their loan obligations are being given a free pass for their failures. 

We will just have to cope with such criticism and shoulder these moral dilemmas for our neighbors and friends.  Moreover, we must continue to hold forth hope and solutions to the millions of Americans who are now facing such problems, as well as to our national lending institutions who are our partners in recovery.  We must allow our local courts to enable the present legislation to hammer out foreclosure settlements and we must educate our friends and clients that there are real and definite paths to follow after receipt of the foreclosure summons and visit from the process servers.

We must be aggressive in our outreach to those in need of creating new ideas and developing new approaches to handle a foreclosure, and we must begin to imagine that homeownership can be restored.  Credit scores will once again become a vital and sought after statistic and people will willingly and with great hope, visit such sites as CreditKarma.com or Quizzle.com and other credit sites as a source of pride. 

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The past several days have shown repeated sightings of pending Board approvals for chiefs at some of our major lending and banking institutions.  One such article stated that James Gorman, the chief executive at Morgan Stanley is in line for an $8.11 million dollar deferred stock bonus for his work and efforts in 2009.  Bonuses, it seems, are being taken for granted.  It is merely a question of how much. 

I would like take this moment to reflect upon the enormous devotion of time and analyses that must have been spent in order to present this bonus package to the Board for approval.  And maybe the time spent in such reflection allows a bit of a respite for us all, as my days are not ordinarily spent pondering such concerns. 

For most of us, the realities of the current economic crisis are quite a bit less pleasant than Mr. Gorman’s. Yesterday I met with a very humble client, a person who could so easily live right next door to any of us, a client who is responsible to her family and children and also responsible to a very large and respected corporation to show up for work every day, at exceptionally inglorious hours. 

 My client initially visited me the day before our country celebrated Independence Day, in the midst of an incredible summer rainstorm.  My impression was that she had a most serious issue to deal with. She most certainly must have been motivated to make such a drive, especially the night before a holiday weekend. She shared with me a notice she received earlier that week, stating, quite simply, that her house was going to be auctioned to the highest bidder in several weeks.  Her family had become an "endangered species".  

Our conversation explored the history of her ownership, and several interim departures and returns to the residence. But her family's commitment to stay in their house remained the consistent thread of our conversation.   We discussed short sales, refinancing, loan modification, considering all the possible solutions. Unfortunately, time was not on their side.  Now, some seven months later, the signs of her loss are once again apparent.  Cold trails of short sale contracts, mortgage loan applications, credit reports, mortgage consultants and court appearances may have held her hopes hostage for the last time. 

New clients also call with similar and dangerous experiences with process servers, foreclosure consultants and loan modification experts.  The reactions of these clients are quite typical.  Disbelief, anger and frustration head the list of emotions surrounding homeownership problems.  Each family that enters our doors has had their dreams of backyard barbecues, gatherings and holidays evaporate before their eyes. None expected it when they bought their homes.  I have yet to meet the borrower who entered the closing room planning foreclosure several years hence.   

This New Year provides the opportunity for relief.   Our state legislature has enacted stronger laws for our courts and judges which may hold off the foreclosure process and provide means of settlement and modification.  Changes can be immediate for those who find a foreclosure summons in their mail.  We know today that there are routes to travel and that the only shame is to do nothing. 

Monday morning I will be starting my day with a client who received a trial loan modification offer in the mail, after submitting reams of documents, pay stubs and bank statements over the past 5 months.  His unhappiness was capped by the suffering of his family and friends in Haiti.  Nevertheless, he will make his way to my office and when he leaves, more than likely, he will have one less problem on his plate, at least for the next several months. 

No one knows why he received a loan modification, although we can speculate on such success. For that matter, no one knows why the file next to his has been denied or not yet acted upon.   What we can definitely state is that there are sufficient and recognized methods that can be utilized to defer and perhaps overcome the foreclosure process.   It requires commitment on the part of the homeowner and a desire to change; a need to keep an open mind on the potential outcome; and a deep seated belief that reinstatement may be an achievable goal.  

True, I do not plan for million dollar bonus proposals and the lobster dinners this year were few and far between, but this is a time for resolutions and challenges to the silent majority of homeowners facing chaos and losing a little more sleep each night.  These are not illusions and the nervous worries are reality striking hard. 

These very same insecurities can become assets if turned into action.  Going to visit an attorney, bar association or foreclosure counseling center is no big deal.   This may seem obvious, but for so many, paralysis is the natural reaction.   If there is one thing that I can guarantee, it is that amazing results can happen with the synergy of programs and legislation now in place.   

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The statistics are reported everywhere we turn - 3.3 million loans which may qualify for loan modification have actually resulted in an incredibly meager number of modifications, helping only some 31,000 families. You do the math on that one, and don't spend too long looking for a calculator that can handle 15 digits. Off the top of my head, it sounds like the White House HAMP program to date has failed miserably for the millions of families who qualify but remain underwater.

Under the Obama plan, borrowers who meet the standards, rules and regulations enacted by the United States Treasury Department in 2009 should be able to modify the loans which they refinanced and purchased in 2005 and thereafter, during the "boom times." You can do the math on that one too, but I would say that considering the declining property values, destroyed credit ratings and uncontrolled unemployment, the Obama process just doesn't seem like it is working.

Richard Wilner, in last Sunday’s NY Post's article "Options to Keep Home Yours" announced that a new, untouched, unexplored and unreported crisis is the multi-billions of dollars that banks are carrying on their books for second mortgages. "Bank of America is exposed to $154.2 billion dollars; Wells Fargo is exposed to $127billion; JP Morgan Chase $124.8 billion; Citigroup $59 billion.” If banks do give the mortgage a serious rate cut to keep a family in place, then the value of the second lien on the home - which the banks carry on their books- could be wiped out. And that could be enough to make several banks insolvent. Perhaps that is why B.Of A. has concluded just 98 permanent modifications. The same is true of every major bank." Do the math on that one and I don't even have to comment.

It gets even better. Open the financial pages, go do your shopping on the internet and call your mortgage brokers. You’ll hear that mortgage rates in the United States have dropped to their lowest rates in the past 70 years. It’s just another well intentioned plan with fantastic mathematical possibilities down the drain. Borrow at lowest ever levels, yet deny access to these historically low interest rates. Like the old, yet trusted expression, it’s like giving away ice in the winter.

For any of those of you who have looked into the possibilities of re-financing or purchasing, you have personally witnessed some of the most expansive and intrusive questioning into your personal and professional lives. Refinancing could save you hundreds and thousands of dollars but yet this traditional source of credit is scarce and difficult to find, even for the very best and elite, much less the first time homebuyers or middle class families.

Taking this another step, Mr. Wilner extends a well pointed finger.."In an ironic twist, the only thing worse than HAMP's failure would have been the absolute success of HAMP. Can you image saddling the banks with 2 percent 40 year mortgages should there be inflation? If you think the banks are bad at lending money now, they would never lend money under those circumstance."

The rumor mill is working overtime. Neighbors are sitting at their kitchen tables and wondering if the little signs of disrepair in their neighborhoods are signs of foreclosure and arrears. When our friends are unemployed and tales are told in our elementary schools and upper grades of their moms and dads unemployment, it's a sign of the times. The super growth of mortgage arrears have created huge rubbernecks and tie ups for our major lenders to handle, even during their unprecedented struggles to remain viable and productive.

Go past the math and statistical reports. Look around and witness the unparalleled demise of the American home ownership program as we know it. My advice for Realtors, bankers, buyers, sellers, landlords and tenants, or anyone with a keen interest in the economy and a sharply honed desire to strike it rich is-----buy Kleenex. Simply stated, until we get the math working and producing loan modifications, we will all see a steadily growing demand for tissues to wipe away the tears.

As a post closing note to those of you following Judge Spinner's "Horoski Dismissal Case,” Carl MacGowan in Saturday's Long Island Newsday, reports that OneWest, the parent company of IndyMac Mortgage Services, admitted that it erred in sending the family a demand letter even after the judge dismissed the case." This case will be followed closely as it winds it way thru post judgment and appellate practice. Keep this one right on your radar screen because it may prove to be our modern day version of David v. Goliath.
 

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This past week witnessed the testimony of Douglas W. Roeder, Senior Deputy Comptroller for Large Bank Supervision, Office of the Comptroller of the Currency, before the Committee on Financial Services, before the United States House of Representatives. (Just try to imagine all that went on before this testimony happened; what went on during the testimony and what will go on in the future.) Without placing this thought into one of our pending time management departments, we’ll try to keep our summary of the Senior Deputy as simple as possible.

The Federal government, and now with increased legislation, state governments as well, have decided that banks and servicers have insufficient personnel to handle the number of pending mortgage modification submissions, regardless of whether the present program guidelines are met by the homeowners. To that end, our Washington representatives, whether elected or somehow federally employed, have created an untold number of departments, sub-departments, secretaries, senior deputy positions and perhaps even some clerks, to follow the much heralded foreclosure and delinquent mortgage problems in just about every State in our nation.

It’s about time. Homeowners' equity has evaporated; credit scores are at their lowest ever; banks will not provide refinancing to "at risk" customers and our homeowners who have applied for modification receive temporary solutions that solve nothing. Unemployment puts this whole process on the verge of total collapse, yet the Department of Treasury has mandated banks and servicers to modify. We have added regulations, laws, testimonials, mortgage metric data and now new accountability standards.

Bob Tedeschi, in a recent Sunday NY Times article  December 11th, "Short Sales, Long Process", adds still another rung to this ladder leading nowhere. "Homeowners can continue to expect a painfully slow process that sometimes fails, and can ultimately lead them back to foreclosure". Adding this short sale practice into the mix of loss mitigation efforts, he states " further strains the bank's ability to handle them in a timely manner".

Overall, it seems quite clear that all indicators point to rapidly increasing homeowner defaults, bank and servicer personnel challenged to account for their responsibilities and rising homeowner complaints with no effective way to curtail these failures. The directives, laws, court opinions and public outrage have all been heard over the past two years seeking to manage homeowner assistance. But none have resulted in even the slightest meaningful success ratios.

Consideration of these failures may lead some to the inescapable solution that without mandated "teeth in the process" we will continue to report on foreclosure statistics, boarded-ups homes and devastated neighborhoods of shame. Perhaps we have had enough thought given to rules, regulations and hearings and we should return to the old fashioned way of doing business and getting business done. We need our federal government to send a meaningful economic directive to our servicers and lenders to pay the piper for failure. Denials of modifications where they should be granted must become an actionable basis to avoid foreclosure. With all due respect to our Senior Deputies and Chairmen and Senators, enough is enough.

Return to our local courts and governing bodies as Justice Spinner has done and bring the parties to Court, one by one, when the existing laws have not been followed. Spinner’s much discussed opinion of canceling a mortgage in Suffolk County has now resulted in his Order to the parties to return to Court and explain why the bank took further action despite his ruling.

Sometimes less is more. We do not need additional laws to restore home ownership goals. We have the tools we need, and there are those who will see that we can all add to the core qualities of our lives without more.
 

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This past week, the Obama Administration reported new efforts to spearhead a national drive to help borrowers in arrears to modify their mortgages. In fact, the new Chief of the U.S. Department of Treasury’s Homeownership Preservation Office, Phyllis Caldwell, was quoted “We are encouraged by the pace at which trial modifications are now being made to provide immediate savings to struggling homeowner’s and will lead the campaign to convert the trial modifications to permanent ones. This Treasury Announcement contains continued representations of the government’s Herculean efforts to serve the nation and ensure that all who come forward can use these trusted resources. But is it really a case of “seek and ye shall find??”

Let’s run through some of the articles which we’ve been cutting out and saving in our desk drawers over the past year. Local Newsday articles, going as far back as February of this year, quoted housing experts, presidents of real estate associations, community leaders, and even Pres. Obama, all expressing confidence in these policies, announcing opportunities galore to save our homes from foreclosure. The U.S.Treasury “doubling its $200 billion capital commitment to Fannie Mae and Freddie Mac” directed to keep our homeowners in their homes. Fast forward, 10 months later to the Sunday NY Times article by Gretchen Morgenson. “After months of playing pretend, the Treasury Department conceded last week that the Home Affordable Modification Program, its plan to aid troubled homeowners by changing the terms of their mortgages, was a dud”.

So what happened? Where did the $75billion dollars go? Where did the $200 billion dollars go? Was it ever there, or did our neighbors, colleagues and friends, all who are desperately in need of help, just decide to forget about it? Did our citizens forget about the chaos in their families, marriages, businesses and jobs and bury their heads in the sand as their homes and communities fell into foreclosure?

Ms. Morgenson provides fascinating statistics and the dire consequences of this enormous Federal failure to secure modifications and solve the problem. It doesn’t even stop there. As Ms. Morgenson pointed out, “You (also) have to address the second liens.” Many experts agree that this expanded and troubling issue has not yet entered the national discussion.

Imagine if these positive “Plan B’s” were focused upon by our national leaders who are committed to nothing less than success. The monetary penalties and sanctions against the servicers are included as a part of the recent Treasury accountability bullet points. Those active and concerned in the modification field rarely hear from the borrowers a demand for such action. They don’t seek punishment, embarrassment or penalties against their lenders and servicers. They are desperately seeking solutions to what they perceive to be a “till death do us part” mortgage vow at their closings. Our neighbors do not want foreclosures and board-ups and forced short sales. They are seeking that “Plan B” as called for by Ms. Morgenson. The federal dollars have been committed; that’s what we are told. Unfortunately, it is not getting done and is failing despite submissions for loan modifications. Maybe it takes the Court decisions of voiding mortgages or other sanctions to “solutionize” the process for loan modifications. This ultimate “divorce” is not what I see and hear. I see and hear the concerns for settlement and modification, for counseling rather than divorce, and in essence, for these families and neighbors to return to their closing vows.
 

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How long does it take to get a loan modification? Of course, the answer is that there is no sure-fire answer.

Loan modifications rely on several factors; responsiveness and policies of the lender, the effectiveness of the mitigation company, preferably a well versed attorney, and of course, the commitment of the homeowner. There are many parts that sometimes come together for a quick solution (less than 60 days), but usually take much longer. Let’s look at the issues that effect how long a loan modification can take.

The Mitigation Company

Lenders are strict and have rigorous requirements, an effective mitigator is important to moving the process along quickly.

In the beginning, there is a lot of preparation work that includes compiling financial information and other pertinent information to your case. An effective law practice will have a proven process and will ensure that you are providing the necessary information in a timely manner.

Once your file is at the lender, your attorney will ensure that the inevitable requests for updated documentation are relayed to you and processed quickly. Valuable time is often lost if responses are not met immediately

Responsiveness and Policies of the Lender

This is by far the most variable and important issue to the modification duration. It is usual to take around 4 months, but can be highly variable. In some cases the process may take six months or even a year depending on the complexity and commitment of all the parties.

Some lenders are committed to the modification process and are organized in such a way that they can move quickly. However, it’s more common to see lenders taking their time and dragging out the process.

If you attempt to do a loan modification on your own, expect to get the run-around. Lenders are often looking for reasons to deny a loan modification. You probably won’t find them too responsive to your requests for immediacy. In many cases, they are understaffed, but often, their policy dictates a long, drawn out process.

Commitment of the Homeowner

If you do decide to use an attorney your commitment is vital to the process. There are established methods of doing things and the process can move quickly, but without your cooperation, it does not work. If a homeowner does not comply with documentation update requests, it kills the process and can result in setbacks in the case. Always respond quickly to any requests whether they are from an attorney you hire or the lender itself.

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A New York judge’s ruling to deny mortgage foreclosure sends a message to banks and bureaucrats. In a recent blog Felix Salmon of Reuters outlines the  judgment  Indymac v Yano-Hiroski making Judge Jeffrey Spinner of Suffolk county The Hero of the Day.

“If wishes were horses, beggars would ride.” Harsh sentiments indeed, but that statement describes nicely how federally mandated orders for banks to modify loans and reduce foreclosures have been ignored. Recent headlines screamed to readers that the United States Treasury Department's Assistant Secretary for Financial Institutions has now concluded, "The banks are not doing a good enough job" and that “some of the firms ought to be embarrassed, and they will be."

The statistics and reporting data bear out the good secretary’s accusations. Out of 500,000 loan modifications, less than 2000 have secured "permanent" status under the Obama Administration loan modification policies and regulations. Based on those odds of success, about one in 250, many people would see a greater chance of success in Atlantic City or Vegas.

But why should we be so pessimistic? After all, White House dignitaries, Secretary's of our Federal Government and chief financial officers and economists are all in agreement that these results are not acceptable. Now that we have this consensus and agreement, where is the written order to modify and stop foreclosure? Look no further than your own backyard.

New York Judge Jeffrey Spinner's decision in the Suffolk County Supreme Court on November 19, 2009, reciting standards reported more than 100 years ago, denied access to foreclose to a lender. This ruling is not a 3 month trial plan; not a trail of unanswered phone calls nor nameless lender representatives taking our calls. This ruling says, without question, “Come into our court with knowledge of the families and clients you have permitted to borrow money against their homes and in each and every case, you must work in "good conscience and justice." Can you imagine if only our elected officials in the highest offices throughout our land read this decision. Maybe this wish will be granted and we should all learn to ride.

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News stories about the economy have indicated recently that the worst recession since the Great Depression of ’29 is getting better. I can say in a word that for millions of homeowners in America who face foreclosure, (and yes, there are many more on the verge) it’s far from over. And banks continue to deny qualified borrowers the relief granted by President Obama.
The United States Congress has in place legislation requiring banks to grant loan modification if borrowers meet certain requirements. But banks don’t want to cooperate. One reason is they obviously don’t want to lose money on their loan assets. Another reason is that lenders rack up huge fees on the accounts of homeowners in foreclosure, fees that make it more profitable to delay than foreclose. So they drag their feet. In an article published by the New York Times Nov 28th, Peter Goodman states that the government will push lenders to reduce more loan payments. However, even when borrowers can get banks to consider their modification, the lenders are uncooperative. Federal law requires mandatory conferences in court regarding subprime mortgages before a foreclosure sale can be scheduled. (A new law is on the horizon extending this protection to prime mortgage homeowners as well, by the way). In an article published by Bob Tedeshi Nov 27th in the New York Times "Foreclosure Protection For All" he writes about the nearly 20 measures in the legislation. Mediation could provide the most relief for struggling borrowers, and it will require mandatory attendance in court by lenders' representatives, who are instructed to “come and be prepared.”
Unfortunately today, many of these conferences are worthless to the homeowners, who enter court with a hope that their loan modification submissions may actually be heard. The reason is that the law requires no accountability of the banks. When a lender's representative arrives in court with no information, or who shows no interest in making loan modification efforts, there is little recourse.
But finally, some borrowers are doing something about it. These few have spoken up, writing to their state and federal government saying, “If you believe in ‘no more foreclosures’, then do something about it, and do it now!”
Remarkably, government listened. And not only have our Albany officials heard our pleas, but our judges and class action lawyers are also in the fight. We are following a class action complaint where several homeowners are suing their mortgage servicer and several Government officials. This lawsuit seeks judicial development of remedies because these families have been denied loan modifications even though they meet the eligibility provisions of the Obama plans. It is claimed that over 500,000 loans are similar in nature and representative of inadequate attention to loan modification laws.
It gets even better! (Sit down for this next highlight,...please.) A Suffolk County Supreme Court ruling recently canceled a mortgage originated with IndyMac, now OneWest Bank, for reasons including the lender's continuing failure and refusal to cooperate and that it did not consider any loan modification proposals. If you are an IndyMac borrower, take a deep breath because this has to get their attention.
Our houses and neighborhoods can be saved by appropriate and well considered lawsuits and many of our judges are listening and ruling that the foreclosures must be addressed. Loan modification laws are on the books right now and can be effectively used to solve a foreclosure action. These laws and court rulings are tools that will be raised in defending a foreclosure action and actively engaged in our legislatures and courthouses.
Throughout these past several years we have witnessed the foreclosure actions pouncing on our neighbors and friends. People are on the edge of default, using credit cards to pay debt and supplement income, are struggling to save their homes and families through loan modifications. Finally, more attention is now being given to strengthening our laws and the courts are listening.
 

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Many of my friends and family have expressed their concern about getting good advice regarding loan modifications.

The word is out that there are many scams (PDF)  targeting financially distressed homeowners. Some  are ending up not only loosing their homes due to foreclosure, they are also loosing the precious few dollars they have left, by trying to save themselves.

This video clip from a recent ABC newscast will help you understand the correct steps to take to avoid the same thing from happening to you.

It is imperative that if you are in financial distress that you contact an attorney who is well versed in both loan modifications and foreclosures.

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Here in New York and indeed nationwide, many homeowners that once prided themselves on securing their dream "to own" and felt safe and sound in their homes, now find their lives roughed up and fraying along the edges. It could be with your principal residence or you could be experiencing serious difficulties with your vacation home or rental properties.

We are all living in the "perfect storm". Homeowners across our nation borrowed and bought, and are now faced with the common dilemma that they cannot refinance their home mortgage. On November 12th, 2009 the New York Times editorial "More Foreclosures to Come" predicted that even by conservative estimates, another 2.4 million homes will be lost in 2010, while prices will fall another 10 percent or so.

Negative equity, job loss, valuation - all problems which have emerged since 2006 when the real estate market began to shake and rattle, now prevents homeowners from curing their defaults or lowering their interest rates. The mortgage loan process has evicted its previous "precious" customers and no longer functions for our neighbors, family and friends. So what now that we look at the winter season with" holes in our boots" and we can't get a new pair?

The appeal of loan modifications and defending against foreclosure actions must broaden. President's Obama's speeches of two years ago have faded to a shallow gray along with our hopes and homeownership dreams. Federal and State programs plus initiatives to help our mortgage defaults have fallen short of even our lowest expectations. If we had received even the slightest commitment and achieved our lowest goals, we would have seen huge success in the revitalization of our neighborhoods.

Modifications have tremendous benefits and show a striking return of balance to those families who have toiled to obtain a loan modification or defend a foreclosure action in the courts. The promising signs for homeowners from Washington and the frenzy of hope have taken a distant place in the race for economic recovery. Many can debate whether the screaming needs to restore our neighborhoods should be quieted by other national pressures.

But one lesson is simple - we need "new boots" and without loan modifications and defending foreclosure actions, there just aren't any other boots to buy.

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It’s a fine line:...If you are concerned that a lifetime of savings, or whatever is left that is, including your retirement accounts, should be accessed to keep your mortgage payments current.

When you are receiving collection calls from your mortgage lender and are being told that foreclosure proceeding can be put on hold as long as you continue to pay and that you use all available savings plans, retirement accounts and loans against retirement savings plans in order to accomplish the goal of saving your home.  Clearly, an attorney's role is to counsel and advise what efforts and actions you may undertake in the loan modification area.

Some questions that might be running through your mind:

• Where monthly income is insufficient to pay the monthly debt, where do I draw the line on depletion of a lifetime of savings?
• How is it possible to overcome a situation where the house is well over leveraged and there is negative equity? 
• Should I consider depleting my lifetime of savings and retirement assets? 

There certainly are good reasons to protect your hard earned equity. If you have substantial equity in the house, many would counsel and advise to use all assets. However, is it worthwhile to enter into a temporary interest rate concession where the home has a negative equity problem? We anticipate several points of discussion along these lines. Loan modifications are designed for homeowners with hardships and certainly this situation qualifies for further discussion...

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During the past year, I have been speaking with so many of the Realtors and brokers who have personally felt the ravaging effects of the real estate crisis.

Frustrated by hard pressed attempts to remain active in the real estate industry, so many of our clients and customers focused on different means to combat the financial chaos they faced. Related businesses and ideas to reorganize credit card and family debt, loan modifications and foreclosure related services were brought in to create new streams of revenue while sales continued to slump. All the while, our brokers and agents continued to service their local neighborhoods and customers with these new ideas, trying to help these families in distress.

To paraphrase a well known proverb, “Realtor, heal thyself:……………………" This passage suggests that our colleagues, brokers and agents must begin this process of self recovery and take a good and hard look at their homes, loans and loan modifications. We have the tools, guidelines and procedures in place to process loan workouts and in fact we are talking with clients and answering their questions daily. However, many of our brokers have stubbornly refused to look at their own homes and loan modification needs during these troubled times and needlessly suffer the pangs and heartache of foreclosure notices without attending to these issues.

Whether you are a professional in the real estate industry, a civil service employee or private company worker or even a “physician”, you must recognize that loan workouts are a solution for you and your family. A step towards facing these credit issues and seeking a consultation with an attorney, in an economy like this, is a great step forward for you and your family.

Begin the process and “heal thyself” by confronting the issues because loan modifications may also be possible for you and your family.

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 "Who would have thunk?" The F-Word in the luxury real estate market. A recent office visit from a new potential client suggests to me that even the "upper classes" now believe in loan modifications & counsel sessions to discuss their homeownership woes and troubles. It is quite common that I receive a call from an upper middle class or a family that some might characterize as the "wealthy" side of the tracks. These homeowners are also suffering defaults in their mortgage payments and have huge losses in this economy.

Is it a "planned default" before the hammer hits or has their market value really fallen to new lows? The fact that these families are now seeking consultations in our law firm says that the decision to allow a significant loss of a credit or FICO score has crossed previously and well defined social, political & economic barriers. Despite the known fact that such defaults may be reported in their credit scores for 7 years, these new clients must increasingly face the anguished issues formerly known only by a far different segment in our neighborhoods.

Not only do these defaults lower their mortgage ratings, but their credit card rates & some employers may also consider the mortgage default. These are no longer academic debates. Homeownership defaults have crossed all lines and reach even into the heart of Manhattan condos overlooking Central Park and Park Avenue.

Consider talking to an attorney, it may allow and permit the consequences of mortgage default in your family to avoid bankruptcy filing and offer valued discussion in these often troubled areas of homeownership.

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Courts now routinely provide special parts & rules for foreclosure actions of residential mortgage loans. Clients are talking to our firm about loan modifications and what happens next, if the lender starts the foreclosure action. Borrowers' confidence and degrees of comfort rise during the modification months only to be assaulted again with a certified mailing or a process server delivering the foreclosure summons and complaint..

Lenders now are looking at recent court rulings no longer allowing the process to go without scrutiny when the homeowner challenges the lender to prove a case. Many homeowners no longer have any idea or clue who has sued them; the plaintiff in the foreclosure lawsuit was not the original lender to the homeowner.

Everyone starts looking for the Note, the loan document which evidences the homeowners' obligation to pay the loan. Simply stated, our Courts are being called upon to enforce loans & foreclosure actions which may not be evidenced by the original, signed loan documents, and some Judges won't permit the process unless the lender produces the Note.

The past several years has shown enormous growth in opportunities to keep families in their homes and avoid foreclosure through loan modification. The follies that families participated in by borrowing monies on their homes with Lenders' exotic products may now be coming to the end of the second act of this play...proving the existence of loan documents may be another incentive for Lenders to continue the growth of loan modifications and avoid foreclosures.

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