| I have developed a loan modification and foreclosure | | | | Getting a mortgage is a complicated process, and |
| defense method for Massachusetts homeowners that: | | | | there's a lot that can be done wrong during it. Even |
| (1) increases their chances of a successful workout | | | | when you get the mortgage, there can be many |
| agreement; (2) gets their cases prioritized and handled | | | | reasons that the documents you signed at the closing |
| by the mortgage company lawyers, rather than a | | | | are defective or could give you a claim against the |
| call-center operator with no authority; and (3) protects | | | | mortgage company or its agents. It is a highly regulated |
| my clients' credit. | | | | process. For example, did you know that certain Truth |
| When I receive a call from a potential client looking for | | | | in Lending Act violations actually allow you to rescind |
| help with a loan modification or stopping a foreclosure, | | | | your mortgage and get back every single dollar in |
| the most important question they ask me is "What are | | | | interest that you've paid to the mortgage company? |
| you going to do for me?" They want to know whether | | | | Did you know that if you paid fees at the closing that |
| they're going to get results. My typical client is | | | | are unfair and deceptive, you could have a lawsuit |
| someone who has worked hard all their life and | | | | against your mortgage broker? Did you know that it's |
| doesn't want to waste legal fees on some lawyer | | | | an illegal trade practice if your broker put you into your |
| who's just going to do the bare minimum. Another | | | | loan at a high interest rate, telling you that the |
| question they have is "What makes using a lawyer | | | | mortgage is only temporary and that you can |
| different than using one of those 'loan modification | | | | refinance in a few years? From the Real Estate |
| companies'?" The difference is simple. There are only | | | | Settlement Procedures Act to the Truth in Lending |
| two types of people who are allowed to legally | | | | Act, to the Massachusetts Consumer Credit Cost |
| represent you: you yourself, and a lawyer licensed in | | | | Disclosure Act to the Massachusetts Consumer |
| your state. This means that if you want your rights, | | | | Protection Act, there are many potential claims that |
| your family, and your home protected, you either need | | | | you have against your mortgage company. |
| to represent yourself or get a lawyer. And chances | | | | But what do all these claims give you? Leverage over |
| are that it will cost about the same dollar amount | | | | the mortgage company. You can hold the threat of |
| whether you use a loan modification company or a | | | | these claims over the mortgage company's head and |
| licensed attorney. | | | | use them to force the company to give you a loan |
| What does the average loan modification company | | | | modification. |
| do? Not much. They ask you to fill out a financial | | | | 4. Analyze the mortgage company's responses to 1 |
| questionnaire, collect documents that show your | | | | and 2. |
| income and expenses, such as your tax returns, pay | | | | In addition to the claims in the previous letter, you can |
| stubs, and utility bills. Then they ask you to give them | | | | also analyze the mortgage company's responses to |
| those documents. Then they submit those documents | | | | the demands you sent mentioned in Paragraphs 1 and |
| to the mortgage company. That's all they do! They | | | | 2. If there are any issues that were ignored, responses |
| collect your documents and submit them -- something | | | | that weren't given, or documents that weren't |
| you could easily do yourself -- and charge you | | | | presented (or weren't presented within the time |
| thousands of dollars to do it. No wonder the loan | | | | requirements), you have additional claims. Most times -- |
| modification industry was recently called a "scam" by | | | | at least in my Massachusetts law practice -- the |
| one of the most prominent state attorneys general in | | | | mortgage company doesn't respond in time. This gives |
| the country. | | | | you even more leverage on top of the other claims |
| The method for Massachusetts loan modifications and | | | | you found described in the previous section. |
| foreclosure defense. After spending considerable time | | | | 5. Send a demand letter under the Massachusetts |
| researching federal and Massachusetts mortgage and | | | | Consumer Protection Act. |
| consumer-protection law, I have come up with a | | | | This is usually the last step. Let me be clear -- the goal |
| six-step process for getting a loan modification. It's | | | | here isn't to go to court, it's to get you a loan |
| legal, it's effective, and it's relatively simple. | | | | modification. But you need to threaten the mortgage |
| 1. Send a RESPA "Qualified Written Request" to the | | | | company with a lawsuit or else they won't pay |
| mortgage company. | | | | attention. |
| The Real Estate Settlement Procedures Act governs | | | | Under the Massachusetts Consumer Protection Act, |
| what your mortgage company (called a "loan | | | | M.G.L. Chapter 93A, there is a specific process that a |
| servicer") must do if you have a dispute with them. But | | | | consumer must go through in order before he or she |
| the first thing you need to do is see if there is anything | | | | can file a lawsuit under that act. The process is that a |
| that is legitimately worth disputing. There could be | | | | consumer must send a "demand letter" stating what |
| over-escrowing, allowing the loan servicer to hold on to | | | | the mortgage company did wrong, and requesting a |
| your money without any good reason. There could be | | | | dollar amount that will right the wrong. If the company |
| disputes over how much you owe for certain fees the | | | | doesn't send a response with a "reasonable" offer of |
| servicer is charging you. There are myriad problems. | | | | settlement within 30 days, and you then file a lawsuit |
| No matter what the problem is, the method for dealing | | | | against them and win, the amount you win will be |
| with them is the same: sending a "qualified written | | | | tripled by the court. This is a form of punitive damages |
| request." | | | | that encourages companies to try to settle consumer |
| A qualified written request is simply "a statement of | | | | disputes before they go to court. |
| the reasons for the belief of the borrower, to the | | | | What will probably happen is that you'll receive a call |
| extent applicable, that the account is in error or | | | | from someone at the mortgage company asking you |
| provides sufficient detail to the servicer regarding other | | | | to hold off on the lawsuit in exchange for a loan |
| information sought by the borrower." This means that | | | | modification agreement. You'll get to work with |
| you have to tell the servicer what they did wrong, and | | | | someone higher up in the mortgage company |
| give them enough information to verify that that | | | | hierarchy; someone with decision making authority who |
| something was actually done wrong. | | | | will realize the strengths of your position. At this point, |
| After you send the qualified written request, the | | | | you will of course need to submit information to the |
| mortgage company has approximately one month to | | | | mortgage company documenting your income and |
| send an acknowledgement letter to you (simply stating | | | | expenses, and then you'll be done -- hopefully with |
| your request was received), and three months to | | | | lower payments and more money in the bank to take |
| resolve your issue. If they fail to do either of these in a | | | | care of yourself and your family. |
| timely manner, you can sue them for money damages. | | | | 6. File a lawsuit to enforce your rights. |
| And, perhaps most importantly, it protects your credit. | | | | This is the last step, and one that you may not have to |
| While the qualified written request is pending, the | | | | take. Your hope, if you are like most people, is that you |
| mortgage company is absolutely prohibited from doing | | | | will simply get a loan modification, resume making |
| any negative credit reporting about your account. This | | | | payments (although at a lower, more reasonable rate), |
| means that if you stop making your mortgage | | | | and get on with your life. This process can be draining, |
| payment during this time, they can't report it to the | | | | and most people are glad to conclude it. |
| credit bureaus. This is immensely important, especially if | | | | But if the mortgage company is being difficult, this is a |
| you are trying to refinance or keep your credit score | | | | guaranteed way to force them to deal with you, |
| up. | | | | one-on-one. At this point, the best thing you can do to |
| 2. Demand the mortgage-related documents and | | | | protect yourself is get an attorney. Keep meticulous |
| payoff information from your mortgage company. | | | | records during the preceding process and present |
| Here in Massachusetts, we have a wealth of | | | | them to the attorney. The dollar amount of your claims |
| consumer-protection laws. Take advantage of them. | | | | will bring the mortgage company to the table. |
| Some of our fellow citizens in other states aren't quite | | | | Conclusion. By following the above steps, you have a |
| so lucky, no matter what your opinion is of the | | | | much higher chance of getting the loan modification |
| lawmakers on Beacon Hill. For instance, if you send a | | | | you're looking for. The mortgage company will be |
| demand for the payoff amount (the amount you would | | | | forced to deal with you, and you'll get the benefit of |
| have to pay to pay off your entire loan today), the | | | | dealing with someone with the authority to give you |
| mortgage company is required to inform you of the | | | | what you want for your loan modification. Remember, |
| amount within five business days. Further, if you send a | | | | these steps are specific to Massachusetts |
| demand to your mortgage servicer for a copy of all | | | | homeowners. Good luck! |
| documents related to your account and all documents | | | | DISCLAIMER: This article is made available by Culik |
| that have your signature on it, you must received a | | | | Law P.C. and Attorney Josef Culik for educational |
| response within five days. | | | | purposes only as well as to give you general |
| In the real world, most of these mortgage companies | | | | information and a general understanding of the law, not |
| don't care enough to send you this important | | | | to provide specific legal advice. By reading this article |
| information within the time allowed. That means that, if | | | | you understand and acknowledge that there is no |
| they don't send you the information in time, you can | | | | attorney-client relationship between you and the author. |
| sue them for statutory damages, as well as for | | | | This article should not be used as a substitute for |
| attorney's fees (if you get an attorney). | | | | competent legal advice from a licensed professional |
| 3. Analyze your mortgage documents for legal claims. | | | | attorney in your state. |