The year 2017 marked the end of the Home Affordable Modification Program (“HAMP”) which achieved a number of workouts for struggling homeowners in the wake of the financial crisis of 2009. However, servicers and lenders are still to this day offering certain internal modifications though not always based on the former HAMP guidelines.
As for the history of HAMP since 2009, lenders, servicers and investors were well-advised, and indeed encouraged by the government and then the Courts, to execute loan modifications with their distressed borrowers wanting to keep their homes. The first effort is to do this through “HAMP” or the Home Affordable Modification Program the guidelines.
While this relatively recent program is supposed to resolve the defaulted mortgage for the consumer, statistics show that success in modifications remains dismally low.
It is the opinion of the New York City foreclosure fraud lawyers at the Kupillas, Unger & Benjamin, LLP that since 2009 and the codification of law requiring lenders and others to go through mortgage settlement attempts, success in that process remains elusive. It is clear however, that on average, consumer borrowers have a much better chance of modifying their loan in the Court process as opposed to dealing directly with the lender or servicer.
In that process, consumer borrowers must be prepared to show the current holder of the mortgage the reasons to modify the loan i.e. among other things, recent change in financial or employment circumstances, the advent of physical limitations, reduction in the value of the property, or fraud or deceptive practices at the inception of the mortgage. While there is no guarantee that the holder of the mortgage will agree to modify a mortgage, current market and governmental pressures weigh far heavier in favor of consumers than prior to 2009.
Our New York City foreclosure fraud attorneys continue to investigate cases for deceptive and illegal practices involving mortgage modification and foreclosure rescue scams.
Foreclosure filings against homeowners by investors, servicers and lenders reached a historic high following the credit meltdown of the years following 2008. Loan modification and foreclosure rescue individuals and companies can find homeowners in distress in the public court record as well as direct and indirect solicitation. These companies claim they can assist consumers with obtaining a mortgage modification from the servicer, investor or lender that will modify an existing mortgage to reduce the monthly payment. Other companies offer to arrange a “lease-back” or “repurchase” of your home, claiming they will pay your mortgage and rent the home back to the consumer. In those cases, the company or individual convinces the consumer to sign the deed over and give title to the wrongdoer.
Loan modification scammers charge up-front or advance fees and promise that they will negotiate with the servicers, lenders or investors to lower their mortgage interest rates, lock in fixed rates, get late fees and past due payments forgiven, and even reduce principal balance. Many of these companies lure consumers through false and misleading tactics, falsely claiming to have high success rates, and falsely claiming to have a special relationship with the homeowner’s lender. In numerous cases, the companies are of little or no help to obtain any benefit to the consumer, well after payment of thousands of dollars for such services. And the foreclosure fraud lawyers at our New York City firm have seen that these individuals are non-lawyers with no authority or ability to represent the consumer in Court, and only loose authority to represent them directly with the lender or servicer.
In the “Deed-Buyer” context, an investor comes along as “White Knight” offering to “solve” the borrowers’ delinquency issues with the Bank. Behind the scenes however, the consumer remains liable for the loan, their credit reputation is impinged, and it is the Scammer who collects the rent while not paying the mortgage. This illicit practice is rampant when the property is underwater or the consumer is otherwise not able to carry the property.