When Rita first came into our office in February 2012, her situation was desperate. After being laid off of work in March, 2009, she soon fell behind on her mortgage payments and was sued for foreclosure in 2010. After a lengthy process she ultimately suffered a foreclosure judgment about three weeks before coming in. With interest, late charges and advances for taxes and insurance, her $245,000 loan balance soared to well over $300,000. Procedurally, to protect Rita’s legal interests, we immediately filed an appeal of the judgment, giving us time and leverage to try to work things out.
Even though on the surface it appeared Rita’s back was up against the wall, we had a huge thing going for us. That is that, based on her income and mortgage expense, Rita qualified for the Home Affordable Modification Program, otherwise known as HAMP. In fact, as we see all too often, Rita actually should have been offered HAMP relief years earlier, but was falsely denied. Of course, the reason for this phenomenon is that the bank (actually a loan servicer) makes more money by foreclosing than it does by qualifying homeowners for HAMP relief. In other words, it is profitable to foreclose.
However, the good news for Rita is that we were able to successfully call her bank out on its transgressions, and get it to right its’ wrong. That came in the form of a fantastic HAMP loan modification, which included lopping $60,000 off the loan balance. Even more significantly, Rita’s interest rate was slashed by more than half, from 7.25% to 3%. In all then, even though she had not made a payment on her mortgage for more than three years, Rita’s monthly payment of principal and interest fell from $2,400 to $1,800. Now that’s what you call snatching victory from the jaws of defeat!
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Next week: Left hand, right hand.
Copyright 2013 Daniel L. McGookey