In the world of securitized mortgage loan defense, I’ve found from past experience that I will never be able to say that I’ve seen it all. That is because something new and surprising always seems to be lurking around every corner. Sometimes these surprises are negative, as when I see homeowners victimized by their bank in some new, cruel way. Other times, however the surprises are highly positive as when, out of the blue, the bank inexplicably (never having to do with morals or ethics) offers an incredible deal to the homeowner allowing him to stay safe in his home for good. Such is the story of Ross.
When Ross first approached us in the Spring of 2011, he had just been sued for foreclosure by his bank. At that time, he owed over $160,000 on his mortgage, had an interest rate of almost 9% and monthly payments of principal and interest of $933. As a commissioned salesman, Ross’ income had plummeted in recent years, meaning that the odds seemed long indeed of him being able to afford and retain his home. Ironically, in retrospect, due to his lack of income, at several times during the lengthy legal proceeding, we even tried to negotiate a fair “walk-away” plan with the bank which essentially would give it the home, and allow Ross a head start in re-establishing his life elsewhere.
Our efforts to achieve a reasonable settlement were to no avail. The bank seemed to reject us at every turn. Then, in the darkest hour for Ross, the bank suddenly came through with one of the most amazing loan modification proposals we have ever seen. The proposal involved slicing the unpaid principal balance by 60% -- from $160,000 to $65,000. Combine that fact with an interest rate reduction from 8.9% to 3.39%, and the end result was that Ross’ payments of principal and interest dropped like a rock from $933 per month to $336. Now it suddenly changed from a situation where Ross could not afford to stay in his home to one where he could not afford not to stay in his home.
What the reason was that Ross’ bank did a complete about-face in its stubborn negotiating position, we’ll never know for sure. However, there were many facts supporting the belief that Ross was victimized by his bank’s fraud several times over both before and during the foreclosure process. It just may be that the bank felt that it could not take the chance of having its fraud fully exposed, possibly putting the collectability of thousands of loans in the pool or trust in which Ross’ loan was bundled at risk. In any event, Ross case exemplifies the value of “stick-to-it-iveness” in securitized loan defense.
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Next week: Hitting the right buttons – the Story of Earl.
Copyright 2012 Daniel L. McGookey