Bowin Law Group's Melbourne-Palm Bay Foreclosure Attorney discusses the interplay between foreclosure and the mortgage modification process.
Many homeowners in foreclosure wrongly assume that if their lender is reviewing their request for a mortgage modification, the lender will halt the foreclosure action during the review. Unfortunately, this is a very dangerous assumption. As a Melbourne Florida foreclosure defense attorney, I've seen countless cases where homeowners failed to defend their foreclosure because the bank told them they were working on a mortgage modification and that the loan modification would resolve the foreclosure issue. Sadly, these same owners often lose their home because, despite the bank's assurances to the contrary, the bank plows full steam ahead in the foreclosure despite the homeowners' request for a loan modification. Worse yet, many of these homeowner actually qualified for a mortgage modification, but were never able to get their modification request to the people at the bank with real authority to approve their request. To understand how this happens, it's helpful to have a basic understanding of the banks' typical corporate structure.
The major mortgage lenders are giant, multi-national corporations with literally hundreds of offices and tens of thousands of employees. Each bank has multiple divisions, each having different responsibilities. With regard to a foreclosure action, there are three main divisions: the collections department running the foreclosure action, the loss-mitigation department that reviews mortgage modification requests, and the customer service department that handles calls from the borrowers. These departments rarely communicate with each other during the foreclosure process. The collection department doesn't know about the loan modification request, and the modification department doesn't understand or know the status of the foreclosure process. When the homeowners call the bank, they can only reach the customer service department, which has no communication with either the collection department or the loss-mitigation department. The customer service representative just reads the instructions off a computer screen, with no real information pertinent to the homeowners' particular situation.
Considering that the banks receive millions of mortgage modification requests per year, and considering that the banks have a limited number of employees to review the millions of requests, the banks necessarily have to allocate their resources to maximize their returns. Accordingly, the only loan modification requests that make it to the real decision makes are those request that are complete and up-to-date as of the day the bank receives them. If a "t" is not crossed or an "i" is not dotted, or a document is "outdated", the homeowner's modification request finds its way to the recycle bin. No one with actual authority to approve the modification and stop the foreclosure will ever actually see the modification request.
Likewise, the only time the loss-mitigation department will step in and put the brakes on a foreclosure action is when the loss-mitigation department receives a complete and up-to-date mortgage modification application that meets the bank's strict requirements. Otherwise, the foreclosure just continues going forward, with the homeowners believing someone is actually reviewing the modification request. Since the homeowner isn't defending the foreclosure, usually because of the bank's assurances on a mortgage modification, the court has no choice but to enter a foreclosure judgment and set the home for foreclosure sale.
There are two things a homeowner can do to help avoid this situation. First, if you are in foreclosure, consult with a local foreclosure defense attorney. You may have defenses to the foreclosure action, even if you have stopped making mortgage payments. Second, prepare and submit a complete and up-to-date mortgage modification application as soon as practical.
With regard to the second part, don't just rely on the information you receive from the customer service representative about how to apply for your mortgage modification. They don't know. They are notorious for not giving you a complete list of everything they need to review your modification. They may tell you to complete a few standardized forms and submit some paystubs, but then they will later request additional documents that they did not disclose up front. By the time they receive the newly requested documents, they then tell you the prior documents are "out-of-date" and that you need to resubmit your prior documents. This cycle may repeat itself many times. Because the mortgage modification application is never complete, your request never gets to anyone with authority to approve it.
Introducing the EZMod mortgage modification system:
This never ending cycle can be avoided by learning ahead of time everything your lender needs to review your loan modification request. That's where EZMod provides its greatest value. We have years of experience on thousands of modification applications with virtually every major mortgage lender in the country. We guide you step-by-step through the application process, giving you all the information you need to submit a complete modification request the first time. We also alert you to common mistakes and pitfalls that cause many otherwise qualified applications to be denied. By following the EZMod system, you will prepare the most comprehensive, most up-to-date, and most proven mortgage modification application possible. By submitting a complete mortgage modification request, your application will more likely bypass the recycle bin and make it to the desk of someone with authority to approve your request.