New state law targets deceptive loan mod practices
Say goodbye to the bureaucratic bank run around when you're trying to save your home from foreclosure.
That's the goal of a new state law aimed at forcing lenders and loan servicers to ditch the document shell games, and deceptive loan modification practices.
In thousands of foreclose cases, investigators say lenders could actually save hundreds of thousands of dollars by modifying the loan and letting the homeowner stay in the house. Instead, many lenders put consumers on dual track, initiating the loan modification process and foreclosure at the same time.
Marysville homeowner Ruby Barrus says she had to take drastic measures to fight back against illegal foreclosure tactics.
"We did what they told us. We did everything that they asked from us," Barrus said of the bank that held her mortgage. But while employees of the bank were directing her through the loan modification process, the bank-owned foreclosure company was taking steps to put her home on the auction block.
"In order to stop the foreclosure, that auction that was happening the following week, we actually had to file a chapter 13 bankruptcy just to give us the automatic stay," Barrus said.
Attorney Rich Zahniser of the Northwest Justice Project says millions of struggling homeowners waste time jumping through hoops only to get nowhere.
"There are literally millions of people in the united states that are struggling to get their loans modified. They should be considered. Many of them qualify. but this bureaucratic squirrel cage people are in - it's really taking it's toll," said Zahniser.
The Foreclosure Fairness Act eliminates the loan modification runaround. Melissa Huelsman is one of the local attorneys who helped expose the practice and get the law passed in Olympia.
"We want to get the actual people with an interest in what's going to happen with this loan, at the table, so they can make a reasonable and rational decision."
That means once you get a notice of default, you have the right to request a face to face meeting with the lender or the company that services your loan.
The meeting must be attended by a neutral third party who sits in to make sure both parties are mediating in good faith.
In order to obtain a mediation, you must bet a referral from an attorney or certified housing counselor who's reviewed your case.
"Now this does not force the lender into any sort of negotiation as far as forcing them into a modification," said Certified Housing Counselor Ashley Adami.
Local housing counselors emphasize the law will not guarantee loan modification- just a timely yes or no after a meeting with your lender. The key is that the lender or servicer representative must be somebody who has the authority to make some decision."
"That is very key," said Adami. "They do have to send to the table somebody who has the authority to make some decisions."
Huelsman says mediation will let homeowners know where they stand much sooner with a definitive yes, or no.
"And even if at end of the day, the answer is no modification is workable for that homeowner, at least they have a definitive final answer. And then they make a decision about what to do to move on because they have a yes or no answer instead of this endless dragging on and the endless uncertainty," Huelsman said.
If you've received a notice of default, but have not received a notice of trustee sale as of July 22, 2011, contact an attorney or certified housing counselor immediately.
Ask them to review your case for a possible loan modification mediation referral.
Foreclosure Fairness Act Takes Effect July 22
That's the goal of a new state law aimed at forcing lenders and loan servicers to ditch the document shell games, and deceptive loan modification practices.
In thousands of foreclose cases, investigators say lenders could actually save hundreds of thousands of dollars by modifying the loan and letting the homeowner stay in the house. Instead, many lenders put consumers on dual track, initiating the loan modification process and foreclosure at the same time.
Marysville homeowner Ruby Barrus says she had to take drastic measures to fight back against illegal foreclosure tactics.
"We did what they told us. We did everything that they asked from us," Barrus said of the bank that held her mortgage. But while employees of the bank were directing her through the loan modification process, the bank-owned foreclosure company was taking steps to put her home on the auction block.
"In order to stop the foreclosure, that auction that was happening the following week, we actually had to file a chapter 13 bankruptcy just to give us the automatic stay," Barrus said.
Attorney Rich Zahniser of the Northwest Justice Project says millions of struggling homeowners waste time jumping through hoops only to get nowhere.
"There are literally millions of people in the united states that are struggling to get their loans modified. They should be considered. Many of them qualify. but this bureaucratic squirrel cage people are in - it's really taking it's toll," said Zahniser.
The Foreclosure Fairness Act eliminates the loan modification runaround. Melissa Huelsman is one of the local attorneys who helped expose the practice and get the law passed in Olympia.
"We want to get the actual people with an interest in what's going to happen with this loan, at the table, so they can make a reasonable and rational decision."
That means once you get a notice of default, you have the right to request a face to face meeting with the lender or the company that services your loan.
The meeting must be attended by a neutral third party who sits in to make sure both parties are mediating in good faith.
In order to obtain a mediation, you must bet a referral from an attorney or certified housing counselor who's reviewed your case.
"Now this does not force the lender into any sort of negotiation as far as forcing them into a modification," said Certified Housing Counselor Ashley Adami.
Local housing counselors emphasize the law will not guarantee loan modification- just a timely yes or no after a meeting with your lender. The key is that the lender or servicer representative must be somebody who has the authority to make some decision."
"That is very key," said Adami. "They do have to send to the table somebody who has the authority to make some decisions."
Huelsman says mediation will let homeowners know where they stand much sooner with a definitive yes, or no.
"And even if at end of the day, the answer is no modification is workable for that homeowner, at least they have a definitive final answer. And then they make a decision about what to do to move on because they have a yes or no answer instead of this endless dragging on and the endless uncertainty," Huelsman said.
If you've received a notice of default, but have not received a notice of trustee sale as of July 22, 2011, contact an attorney or certified housing counselor immediately.
Ask them to review your case for a possible loan modification mediation referral.
Foreclosure Fairness Act Takes Effect July 22
Learn about changes coming to commenting