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 that makes it profitable to foreclose.
Within the past week, a client of ours has been offered an unbelievable loan modification which entails a reduction in the principal loan balance from $140,000 to $79,000, with an interest rate reduction from 7.24% down to 3.66%. The net result is a monthly payment which went from around $1,150 per month, including taxes and insurance, to $669, a reduction by almost one-half. The most surprising thing about this outcome is the lightening speed at which it happened. It was only in April, 2012 that we first filed an Answer to the foreclosure Complaint, and served extensive written discovery on the foreclosing bank, which was meant to gather information about our clients’ loan.
The bank never responded to that request for information. Instead, its attorneys admitted they didn’t have the documents necessary to proceed with the foreclosure, but promised to secure them from the bank. Rather than deliver the documents and information sought, however, the banks chose to offer the fantastic deal it did. All this happened within three short months. This case demonstrates once again a point I have made often in this column. STAND UP TO YOUR BANK! This does not mean being uncooperative. Be cooperative, but also do not believe for one second that your bank has your best interests at heart. I can assure you, chances are, it doesn’t.
Hardest Hit Update: About two years ago, Ohio was named as one of seven or eight states awarded federal funds to provide homeowners mortgage relief under a program known as The Hardest Hit Fund. Unfortunately, as I see so often, well-meaning programs are not worth a pinch of salt unless you are able to fend for yourself. First, the numbers: Ohio was awarded $578 million for homeowners’ mortgage relief. Embarrassingly only $68 million has been distributed in direct assistance to Ohio homeowners. This is less than 12% of the amount awarded. To say it another way, if the almost $600 million was invested at a rate of return of 6% per annum, only the interest on the money given to Ohio has gone to direct homeowners relief. And the really sad part – 18% has gone to pay the costs of administration of the program, or 50% more than has gone to direct homeowner mortgage relief. And the beat goes on….
Note from the author: If you have questions or comments regarding this or any Foreclosure Story article, please visit www.mcgookeylaw.com.
Next week: More about the opportunities and pitfalls for homeowners from the $25 billion settlement between the five largest banks and the government.
Copyright 2012 Daniel L. McGookey