Our Orange County, California foreclosure lawyers are coming into contact with clients on a daily basis that have been on a HA MP trial loan modification plan with lenders such as Chase for up to 12 months or more without being extended the permanent modification.
Alternatively, we see the client denied after making several months payments on the trial plan. One client made 12 trial plan payments on time and was still denied despite the fact that the client’s financial situation is the same or very similar to what it was when the client was approved for the trial plan.
So in this sense, the lenders are representing to the State that are following HA MP guidelines when in fact they are just paying lip service with respect to many of the borrowers we see.
LOAN MODIFICATION EXCUSE #1:
The “Net Present Value” excuse– The trend now is for lenders to approve a borrower for a trial loan mod plan, and then deny the client a permanent modification because they “failed the Net Present Value test”. However, since nothing has changed with many of the client’s financial situations, we cannot believe the bank would not offer a permanent loan modification when they qualified them for a trial plan.
When we requested the values being used for the NP V test we found that the lender was using incorrect data that did not reflect our client’s true financial profile. In my estimation, the NP V test should always come back in favor of not foreclosing because a loan modification will almost always result in more money to the lender because the borrower still owes much more than the fair market value, even under a good HA MP modification.
Q: Can you get me a loan modification?
The “homeowner missed a payment” excuse – In addition to the Net Present Value problem, the lenders will often say that the client is being denied for a permanent modification because our client had missed a trial plan payment. This also is not true and we showed the bank proof by faxing bank statements showing the payments were timely made and checks were cashed by bank.
Then the lender told us that the borrower wouldn’t get a permanent loan modification because the client did not submit all the requested paperwork. This also is a fabrication because we have faxed them everything they requested and we did this more than once.
We often find the banks lose the faxes we send and they don’t get uploaded into the bank’s system. For all of these reasons, this client will be filing a lawsuit against Chase for unfair and deceptive business practices. Our loan modification lawsuits often force the lender to deal with our clients and take a closer look at offering a permanent loan modification.
The “declined for excessive forbearance” excuse – In addition to the above, we also find that banks are improperly denying homeowners for a permanent modification because they fail to defer up to 30% of the unpaid principal balance.
Under HA MP, the services are directed to take certain steps that result in a modification payment that is 31% of the borrower’s gross monthly income. One of the steps they are to take is to defer up to 30% of the unpaid principal balance, which results in a lower monthly payment.
Under HA MP, one of our clients needed to defer $50,000 which was only one third of the 30% deferment. Instead of deferring $30,000, the bank told us the borrower didn’t qualify. The lender could have deferred up to $150,000 but instead told our borrowers they didn’t qualify. This client will also be filing a lawsuit for unfair and deceptive business practices.