Friday, May 25, 2012

We win, motherfucker.

After years of fighting with them, the bank finally gave my brother a trial modification. If he keeps current with the new payments, which he will, then the mod should become permanent and his house will be safe. It's about fucking time. The only advice I can give anyone else going through this is to keep fighting. Once you've decided that you want to save your house and you can afford to pay something, keep fighting until you get it. Call the bank everyday. Call every number you have. Send letters. Follow up obsessively. Good luck.

Friday, August 13, 2010

Adventures in Foreclosure- Part 4

Recently, I called the bank’s loss mitigation hotline and found out that the bank had closed our application for a modification because it did not receive some new documents that it decided it needed. (Utility statements, which the bank is not entitled to as utility payments are not included in FHA-HAMP calculations).

I asked to speak to a manager immediately and the rep put me into someone’s voicemail. Surprisingly, that person called me back later the same night. He gave me his last name and everything!

Then he asked for additional documents, the workout package, the hardship affidavit, the pay stubs.

In short, everything that had been provided to the bank at least ten times before. When I explained that we had already done this exercise at least ten times, he said he would make sure it got to a loss mitigation processor if I could give him everything all at once. I agreed to do this but demanded the name of the manager in the loss mitigation department to whom he would be sending this packet. Surprisingly, he gave me a name.

Maybe now. Maybe now we’re on a path to success but I’ve looked at the experiences everyone else has had and I no longer hold out much hope that simply applying for the modification and meeting all the qualifications will be enough because that is how the banks and their servicers roll.

They play dirty pool. They take taxpayer money. They sign contracts with the government to participate in the homeowner rescue programs. And then they string homeowners along until they can foreclose costing those homeowners their credit and all the equity they’d put into those homes. And then the foreclosed homes sit on the market for months. And then maybe a string of foreclosures drives down the value of the entire neighborhood. And then the remaining homeowners in that neighborhood find themselves in houses worth less than what they paid. And so it goes.

Despite all of this, I will keep fighting because I still believe this is a fight we can win.

Government links:



Class Action Lawsuits:

Adventures in Foreclosure- Part 3

I’m mostly a corporate lawyer now. But I went to law school, like most lawyers, I think, to protect the vulnerable. So, I jumped into this mess with both feet and a big sharky grin and ran straight into the same wall my brother and millions of other homeowners hit before me.

First, I wrote to the bank stating that I was representing my brother with regard to the loan modification. Then I rejected the bank’s HAMP determination on the ground that it was incorrect and submitted a new workout packet with documents. Then we waited.


While we’re waiting, I’ll tell you why the bank's initial determination- “Negative cash flow. Ineligible for HAMP”- was bullshit. First, my client didn’t actually have negative cash flow. He had meager cash flow and he was barely scraping by, but he did not have negative cash flow. Second, if the modification had been granted, he definitely would not have had negative cash flow. And isn’t that the more rational inquiry? Finally, this is not even a legitimate reason to deny a homeowner’s HAMP application.

The correct inquiry is whether the homeowner will be able to afford the mortgage and certain other obligations if the loan is modified by either a) extending the repayment period; b) lowering the interest rate; or c) reducing part of the principal and turning it into a subordinate second mortgage on the property to be satisfied either at the end of the first mortgage term or upon sale of the property, whichever is first. (This does not account for homeowners who are now underwater due to declining home values. Those homeowners really need some kind of reduction in principal.)

Any of these options will lower the homeowner’s monthly payments and in all of these scenarios, the homeowner gets relief and gets to keep his home and the bank gets its money back in the end, pursuant to the parties’ original bargain. Further, it saves the bank from the immediate and long-term economic cost of foreclosing and the risk that the homeowner will file for bankruptcy.

At least, that’s the idea. But HAMP is flawed. Perhaps fatally flawed and it just doesn’t work the way it was supposed to.

Aaaand we're back where we left off.


Then I called the bank’s loss mitigation hotline and could not get anyone to talk to me about the workout packet. Instead, the representative told me we needed to provide more documents. I said I hadn’t received a request for more documents and the representative said the request went to my client. I said I am the attorney; you need to send requests to me and not to my client. (This would prove to be a recurring problem with the bank. It constantly ignored the fact that I had been retained as the homeowner’s representative). So, I provided more documents. And waited.


Tired of waiting, I decided that I would fax my client’s workout packet to everyone at the bank whose fax number I could find online. So I did. Eventually someone who was not even involved in loan modifications called me back. She gave me some additional phone and fax numbers to try but it didn’t help.

Instead, while I was submitting documents and calling the bank and trying to modify my client’s loan, the bank started foreclosure proceedings.

Let me clarify. The bank started foreclosure proceedings after rejecting the certified check that my client sent in payment of the total amount due in back mortgage payments as directed by the bank (which our mother lent him from her retirement account).

I defended these proceedings very simply- by first rejecting the bank’s ability to foreclose while my client was applying for a loan modification and then by sending a check to the bank’s lawyers for the amount that my client had originally been told to pay by the bank plus assorted fees and the current month’s mortgage payment.

Then I submitted a new workout package. Only this time, I did all the calculations for the bank pursuant to the FHA-HAMP guidelines and calculations available through the U.S. Housing and Treasury Department websites so that the loss mitigation personnel would not be able to wiggle out of granting the loan modification, or so I thought. I also referenced all the income information and hardship affidavits that the bank already had in its file and provided updated information in my packet. And then I waited.


Then I called the bank’s loss mitigation hotline and found out that the bank had lost the paperwork and/or never got it and/or that they needed additional documents that they had never requested before. So we sent those in.


And the entire process started all over again.

Adventures in Foreclosure- Part 2

When the economy was at its lowest point and my brother was entirely without work, he started using his savings to pay his mortgage, gas, food, utilities. He used the rest of his savings to pay for an unexpected car repair and for his wife’s emergency dental care.

Then it was gone and he started falling behind on his mortgage payments. By the time work picked up, he was several months behind and there was not enough available work to make up the difference.

When he fell behind, his bank sent him a loan modification workout package to fill out and said he might qualify for a loan modification under HAMP. In a story that will be familiar to far too many homeowners, my brother filled out the workout application, drafted a hardship statement, sent the bank all of the documents it asked for and then waited.

Then he called the bank’s loss mitigation hotlineand found out that the bank had lost his paperwork. So he sent it in again.


Then he called the bank’s loss mitigation hotline and found out that the bank needed more documents. So he sent those in.


Then he called the bank’s loss mitigation hotline and found out that the original loan modification processor who had been assigned to his account had resigned and all of the voicemail messages he had been leaving during the prior months hadn’t been picked up. The bank told him he needed to start over. So he filled out the workout application, drafted a hardship statement, sent the bank all of the documents it asked for and then waited.

By this time, he was back on top of his mortgage payments but he was still struggling.


Then he called the bank’s loss mitigation hotline and was told that he needed to be at least three months behind on his mortgage before the bank would help him. That, of course, is a lie. But he didn’t know that. He thought if he was a few months behind, then he would qualify for HAMP, and everything would be ok.

Is this starting to sound familiar?

After my brother was several months behind in his payments, the bank advised him that it was rejecting his HAMP application. Its explanation? “Negative cash flow. Ineligible for HAMP.”

So now we’re full circle. A little over a year ago, my brother finally told me what was happening and asked me to help him. And at that point, it was almost too late.

Adventures in Foreclosure- Part 1

For over a year, I’ve been fighting with a U.S. bank to get my brother’s home loan modified under the FHA-HAMP program, which was enacted by congress to save homeowners from foreclosure in the wake of the recent economic crisis.

My brother is not a flipper and he did not buy outside his means. He purchased a small house for himself, his wife, and his two children in a lower-middle class, semi-rural Connecticut area. At the time, he was employed as a journeyman in a union shop working at least full time and making a comfortable living. His wife was taking care of their children and working one-off and part time jobs.

Then AIG. And Lehman Brothers. And Indymac. And WAMU. And then the bottom started to fall out of the housing market. As everyone knows now, the effect of that collapse spread from the center and rippled through the country.

As it did, the economy contracted. Banks stopped lending. Spending slowed. Salaries plateaued while prices for food and consumer goods rose. Companies began reducing the workforce. Homeowners started struggling to conserve their dwindling resources. New construction slowed and then stopped in many areas.

And as the construction industry declined, so did my brother’s ability to make a living. Now, he’s barely scraping by.

My brother is the homeowner that HAMP was designed to help. Through absolutely no fault of his own, he is temporarily unable to make a living in what is generally a reliable American industry.