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. http://www.scpr.org/news/2010/07/22/homeowners-stranded-loan-modification-limbo/
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.
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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.
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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.
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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.
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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.
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And the entire process started all over again.
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