This is a weekly column by Sandusky attorney Dan McGookey, devoted to telling true stories of homeowners who have been victimized by a lending system which makes it profitable to foreclose. The names used have been changed for privacy purposes. This is Steve's tale.
After the loss of his job, Steve and his wife Michele fell behind on their mortgage payments in 2007. In an effort to assist them in working out an acceptable solution with their loan servicer, Lights Out, Steve retained the services of a loan modification outfit, Work Out Solutions.
Work Out Solutions promised that, for a mere $2,500, it could successfully negotiate a work-out with Lights Out dramatically lowering Steve and Michele's interest rate, reducing their payments and allowing them to stay in their home. In other words, Work Out Solutions promised that with its expertise and connections it could do what Steve and Michele could not do on their own – get someone from Lights Out to listen and work with them to come to a reasonable solution whereby Steve and Michele and their 16-year-old daughter could continue to live in their home.
To Steve’s regret and dismay, he soon found out that Work Out promised way more than it could deliver, had no more luck negotiating with Lights Out than he had on his own, and that he had essentially wasted the $2,500 he paid it. To make matters worse, Steve and Michele were sued for foreclosure by Dortmunder Bank which claimed it was the proper party to be enforcing the mortgage, even though they had never even heard that Dortmunder had any connection with their loan.
Not knowing where to turn, Steve made the mistake of turning to yet another loan modification outfit, Better Than the Rest (BTTR), which touted that it could do better than the competition in getting matters resolved because it was backed by a team of on-staff lawyers. Trusting its promises, Steve forked over another $2,500 to BTTR, now feeling secure in the belief that he found someone who could actually help him and his family.
However, again to his great dismay, Steve found out that his trust was misplaced. Not only had BTTR failed to negotiate a settlement, its lawyers, who were supposed to be acting on Steve and Michele’s behalf, failed to file the appropriate papers in the foreclosure, leading to a foreclosure order against them. Eventually, Steve and Michele’s home was sold at Sheriff’s sale in 2009 with Dortmunder bank being the successful bidder. Pursuant to those proceedings, Dortmunder also obtained an order from the court directing the county Sheriff to physically remove Steve’s family from their home.
At that point, Steve contacted us at McGookey Law Offices. With 11 days remaining before the Sheriff was to come knocking at Steve and Michele’s door, we filed the appropriate motions to stay the move-out order, and to set aside the foreclosure judgment itself. The court immediately granted the stay and set a hearing on the motion to set aside the foreclosure order. At that hearing, the court found that the order had been wrongfully granted, set it aside, and set the whole case for trial.
At the trial, the court found Dortmunder failed to prove its case, and dismissed the foreclosure altogether. Not at all happy with that result, Dortmunder re-filed the foreclosure, arguing before a new judge that the first judge had essentially made findings which supported its claim even though he dismissed the case. The second judge denied the motion. Then, Dortmunder filed a motion for summary judgment, claiming that there were no facts which warranted a trial. At that point we demanded our right to take the deposition of Dortmunder’s witness, which Dortmunder’s lawyers resisted. On the eve of that deposition, Dortmunder blinked for the first time in the four-year legal battle.
That retreat took the form of a loan modification offer which not only could Steve and Michele afford, but in fact they couldn’t resist. That offer consisted of a reduction of the total amount owed on the loan of over $300,000 to $179,000, along with a reduction in the interest rate from 7.5% to 3.88%. With that offer, Steve and Michele’s battle to save their home is finally over, and they can rest assured that they will continue to live there as long as they want.
The lesson in Steve’s story is twofold: First be extremely cautious in dealing with loan modification outfits which promise help but in fact offer nothing of value. Steve’s trust in those promises not only cost his $5,000, but more importantly, almost the loss of his home. Secondly, when fighting to save your home, perseverance pays. Since the bank is incentivized to foreclosure through a profit motive, a good workable modification of your loan will not come easily, but will come if you take the right steps and persevere.
Check back next week for another tale.
Copyright 2012 Daniel L. McGookey