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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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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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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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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We didn’t expect to be in this economic fix. We followed the lessons taught in our school. We took the advice of our parents. We followed the suggestions of our bankers and mortgage lenders. Our life patterns and ever increasing responsibilities allowed us to embrace the core values that we believed would make us succeed. But as the expression goes, "look at the mess we’ve gotten ourselves into now".
Trillions of dollars have been lost in home market values. Millions of families owe more on their homes than they are worth. Thousands of foreclosures actions have been filed. And the most telling statistic of all: each classroom in every school in America may hold at least one student whose family will lose their home.
As the number of new clients seeking help from attorneys grows, we see the ravaging effects of economic chaos: sleepless nights, family break downs, business closings, lost jobs and savings. Simply stated, many of our neighbors no longer have the ability to pay their bills and are losing their homes. Should so many of our citizens have known better? Can so many people be wrong at the same time?
Without hesitation, loan modification and defending against foreclosure actions must be identified by our homeowners, lenders and elected officials as alternatives to a foreclosure sale. We see some signs of our economy "bottoming out" or even on a path to recovery. The reduction of debt and monthly payments loan modification brings allows families the ability to pay and remain in their house. The lender's asset remains protected and intact. Our neighborhoods and localities are preserved and continue to benefit from the avoidance of a foreclosure sale.
The courts provide special parts and rules for settlement conferences in foreclosure actions. When a summons and complaint is served, mortgage holders should not throw up their hands in surrender as if all is lost. There are counseling agencies available, and attorneys who will provide guidance to help save their client’s home.
Clearly, it’s not a case of "we should have known better.” We purchased our homes and refinanced to better our lives. Now we face these challenging financial times and we do know better. We know there are solutions with loan modifications and defending the foreclosure action.
These solutions do not happen automatically but require borrowers to work towards these goals. If you are in foreclosure or in financial distress that may lead to foreclosure action, find an attorney to help you work through your situation, preferably sooner rather than later. You can find alternatives to your dilemma, and when you do, you’ll sleep a lot better.

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