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Foreclosures and Loan Modifications In Limbo As Lenders Dump Their Lawyers

The state of foreclosures nationwide is a mess.  It is ruining lives and the marketplace.  There is little relief in sight from the lenders, state and federal legislators or the courts despite piecemeal efforts to ease the pain and destruction of communities caused by the epidemic.   A recent article in the Wall Street Journal reports that banks are firing law firms which they blame for the “Robo Signing” scandal that has revealed the massive falsification of documents for foreclosure filings.  As a result of the scandal and the firings, foreclosures and loan modification processes have slowed dramatically.

In a small way the confusion and delay are advantageous to those homeowners who are not ready to be removed from their homes.  But in most cases, this simply delays the inevitable if there is no financial relief  for the borrower.  Without money, forbearance or substantial modifications homeowners will eventually lose their homes.

The situation is also dire for those who are awaiting loan modification decisions.    Even when the lenders exhibited confidence in (and possibly colluded with) their legal representation, the modification process with most lenders was already long and appeared fraught with fraud.  Lenders already have made the modification process impossible for borrowers —  they regularly lose paperwork from borrowers requiring them to redo the application for loan modification.   The delays generally extend costs and fees for the borrower seeking modification.  And often, once those few borrowers are accepted into temporary arrangements, the lenders conveniently do not receive payments which automatically puts the borrower in default of the modification agreement.  In other instances, the lenders failed to acknowledge the end of the temporary phase of the modification and did not make the modification permanent after the required timely payments as originally promised.

It is a scam of the worst kind which is worsened in places like Florida where the attempt to dismiss attorneys has cases on hold and lenders unaware of the status of the foreclosures.  Unfortunately, no news is not good news for borrowers in this instance.  This situation demonstrates why it is to the borrower’s advantage to respond to mail, including filed complaints, from the lender.

 

About the Author
Rhinold Ponder is the managing partner at Ponder Tuck Ponder, an aggressive firm which emphasizes litigation in consumer issuers and bankruptcy protection for debtors. Rhinold is also an accomplished artist and speaker on issues of consumer rights. He also operated The DIY Lawyer blog which focuses on redistributing justice and democracy by empowering through information sharing and education.

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