Foreclosure Defense: The Loan Modification Dilemna

I hear it almost every day. “Should I keep trying to get a loan modification?”

Invariably, a homeowner has sent the financial disclosures to the bank several times, and the bank claims there are deficiencies, that the documents are out of date, or just admits that they lost the documents. My heart goes out to homeowners in this predicament. They are being abused. As a result, they are frustrated and feel either angry and/or nihilistic about the whole thing. My advice is usually the same: keep trying. Get help. Document every phone call, letter, fax, and email. Over explain everything. Treat the bank like a child. Check up constantly and memorialize every conversation with a letter (sent via Certified Mail).

There’s nothing to lose (besides than your tenuous grip on sanity). Remember that there is nothing to stop the bank from foreclosing on you while you are attempting modification. However, it is my observation that attempting a loan modification tends to delay the filing of a foreclosure lawsuit. The delay may vary. Sometimes it will take months, but in some cases years may pass before you are served. Of course, the bank can file at any time after default (i.e. missing a payment).

Another frequent question is what role a lawyer plays in loan modification. This varies widely from case to case. Sometimes, it is best for a lawyer to handle everything. In other cases, the lawyer reviews all documents to ensure compliance with the modification requirements, while documenting each transaction and stepping in as issues arise.  There are distinct advantages in retaining a competent foreclosure defense attorney to facilitate your loan modification.

In one case, a foreclosure lawsuit had already been filed. We went to two mediations with the bank. At the first one, the bank didn’t bother to show up. At the second, they claimed the documents were incomplete. We had meticulously documented the 10 or 15 times we sent the documents. The bank told us before mediation that the documents were in order. Later, the bank agreed to abate (put on pause) the lawsuit while we tried working things out. The bank later reneged on this promise. We failed a motion for sanctions and attorney’s fees for mediating in bad faith and wasting our client’s time and money. The judge agreed. Our client was awarded attorney’s and costs, and the bank was sanctioned. Although this is atypical, it is happening more often. Now, the bank has again promised to give our client a fair shake, and will have to pay for another mediation. Nothing is guaranteed, but we now have better leverage to negotiate a favorable settlement.

Don’t waste your opportunity. If you are contemplating loan modification, engage a competent foreclosure defense attorney in your area.

Attorney Aaron Thalwitzer practices civil litigation, real estate law, and intellectual property law in Melbourne, Brevard County, Florida.