Banks now forced to cooperate with loan modifications by lawyers, legislators and courts.
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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.
