As more and more homeowners have successfully negotiated loan modifications, they are finding that getting a modification is only the beginning. In a recent article in the Boston Globe, 8 homeowners are filling a lawsuit against Bank of America. In the lawsuit, they allege that Bank of America has violated their loan modification agreements, damaged credit after entering into a loan modification, and initiated foreclosure after agreeing to terms that would stop a foreclosure. According to the article, the problem typically occurs when the loss mitigation department agrees to stop foreclosure and another department does not get updated, thus foreclosing on the property. (continued below)
Among my own clients, I see this same type of incompetence. Banks will agree to trial modifications while the foreclosure trustee is never updated on this process. As a result, our office spends an inordinate amount of time helping Bank of America coordinate their foreclosure calendar. While my clients would certainly be entitled to damages if Bank of America were to foreclose on the home in violation of their agreement, that process can be costly and there is no guarantee a homeowner will recover the cost of litigation. Few, if any, homeowners can afford to challenge banks illegal process considering most are fighting to save homes that are underwater.
If you are in some stage of foreclosure but are interested in saving your home through a loan modification, be sure to follow a few steps.
- Know who the trustee is and become familiar with their process of setting foreclosure dates.
- Call the foreclosure trustee regularly before any sale date
- If you are really committed to keeping your home, consider hiring an attorney so that they can be ready to take any alternative measures if a bank tries to foreclose without adequate notice (i.e. Bankruptcy)
- Contact your bank regularly and especially in the days leading up to a sale date on the home to make sure they have all the documents and information necessary
- Keep records of your phone calls and track all documents you send to the bank
- Don’t hide from the problem...if you know you are going to fall behind on your payment, be proactive and make a choice among your many options. Even if that option is to do nothing, be educated about what you can do.