OBAMAS HAMP ALLOWS LENDERS TO FORECLOSE WITHOUT GIVING NOTICE
More news is coming out about the president’s Home Affordable Modification Program, and none of it is good. Previous bad news has included the low number of borrowers who have received loan modifications compared to the large number of applications in the system, and the delays that lenders have been making in approving plans.
The latest development, as reported by McClatchy in this story, shows even more negative results for the government’s program. As the article states, “many struggling homeowners are holding up their end of the bargain but still find themselves rejected, and some are even having their homes sold out from under them without notice.” This sounds like the standard operating procedure for most banks.
Borrowers who have applied for help and been given trial modifications by their lender should not consider themselves saved from foreclosure. On the contrary, the trial period is just like the trial period for an adjustable rate mortgage. While homeowners hope that they will be able to keep making the payments, the bank uses the introductory time to collect as much money as possible and then take the home back. It is fraudulent inducement of debt, the tactic used by banks for decades.
It should be amazing that, with the low approval rates of the mortgage modification program, anyone who makes it through the trial period can be put back into foreclosure. “To date, more than 759,000 trial loan modifications have been started, but just 31,382 have been converted to permanent new loans. That’s averages out to 4 percent.” If a significant number out of those four percent are still losing their homes, what does this say about the banks’ underwriting standards?
Even more disturbing is that people are having their homes sold out from under them with no notice — and this is by design in the plan! “In the fine print of the form homeowners fill out to apply for Obama’s program, which lowers monthly payments for three months while the lender decides whether to provide permanent relief, borrowers must waive important notification rights.” One of the problems with the foreclosure crisis has always been the human element — people fall behind due to hard times, news stories cover the hardship, the family is evicted.
Obama’s plan, by having borrowers waive notice requirements if the bank wishes to continue foreclosure, gets around the human interest stories by “rewarding” homeowners with trial modifications and then letting banks auction off the houses without notifying the owners. Banks can reject borrowers without notification and then set the property up for a sheriff sale.
Putting a property up for auction after a client has successfully completed a trial modification is little other than (more) fraud committed on borrowers by the banks. The lenders advertise the modification as a plan where owners can make three payments on time and then have their mortgage lowered and payments reduced and escape foreclosure. The reality, however, is turning out much differently.
Lenders are able to collect the three payments and then reject the borrowers for a permanent modification, even if the payments were made on time and in full. The bank can reject the homeowners with no notice, start the foreclosure process up at the point where it was left off before the trial modification, and have the property sold at auction without notice.
Is this the type of result that President Obama and his financial advisers wanted when they implemented the Home Affordable Modification Program earlier this year? Or was this loophole written by the banks, for the bank, for the purpose of offering too-good-to-be-true modification to borrowers in order to fraudulently induce them into making three extra payments before losing their homes for good?
Posted By George Beckus Esq
The Golik Law Firm
904-448-5335
