Les first came to see us in April, 2012. Although he was current on his $125,000 mortgage, his monthly payment of $1,052 was forcing him to work an excessive amount of overtime. And at 60-years of age with mounting health issues, it is fair to say that Les’ situation was a ticking time bomb. Three months after his initial visit Les came back to see us. He informed us that he made the painful but necessary decision to stop making his unaffordable mortgage payments.
From the outset, it was quite clear that, based upon his income, Les qualified for mortgage relief under the federal law known as HAMP. However, not surprisingly, his Bank (actually his loan servicer) made no effort whatsoever to offer him that relief. No doubt that was the case because his Bank, like all loan servicers, actually made more money servicing his loan should he stop making payment. Les’ Bank, like all loan servicers, is paid a percentage of the unpaid loan balance, rather than a percentage of the amount it collects. Thus, as Les wasn’t making his mortgage payment, his unpaid loan balance increased, as did his Bank’s servicing fees.
The good news for Les is that foreclosure was avoided altogether. We were able to accomplish a great loan modification and keep the matter out of litigation by aggressively pointing out to Les’ Bank its violation of Les’ legal rights and turn its drive to foreclose into a drive to comply with the law. The end result for Les was truly amazing and will no doubt keep him in his home for good. Consider the numbers:
Old Loan Terms New Loan Terms
Interest, Taxes and
Insurance: $ 1,052.00 $ 529.00 (50% reduction)
Interest Only: $ 916.00 $ 393.00 (51% reduction)
Interest Rate: 9.95% ARM 3.875% (52% reduction)
By putting his foot down, Les was able to force his Bank to live up to its legal obligation and give him a great loan modification. Should you be putting your foot down?
Note from the author: If you have questions or comments- regarding this or any Foreclosure Story article, please visit www.mcgookeylaw.com or visit us on Facebook.
Kate Eyster and Lauren McGookey contributed to this article.
Copyright 2013 Daniel L. McGookey