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Mortgage modification denied; Foreclosure proceedings started

Discussion in 'Foreclosure, Repossession, Auctions, Short Sales' started by adt2, Oct 16, 2012.

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  1. adt2

    adt2 Law Topic Starter New Member

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    I need a little advice. My mother has been going through some financial trouble, and has recently applied for mortgage modification three separate times through her mortgage company. Each time, the mortgage company denied her application. Their stated reason was always that she was in no danger of default.

    The first time she applied, she was current on her mortgage. But, she knew that she was going to fall behind soon.

    The second time she applied, she was 53 days past due. Again, they denied her application, telling her that she was in no danger of default.

    The third time she applied, she was more than 90 days past due. To date, she has not gotten a response on the third application. But the mortgage company will no longer return her telephone calls or emails.

    Now, she has received notice from the mortgage company that they have begun foreclosure proceedings. She rushed to put her house up for sale, hoping to salvage some of her equity before the bank takes it away from her. She has still not been able to get any further information from the mortgage company. Her realtor, through repeated phone calls, has managed to get a tentative court date in the first part of December.

    My question is, does any of this seem sketchy to anybody else? I don't understand how the mortgage company on one hand can say that you're in no danger of default, while on the other hand, right across the hall, they're suing you for foreclosure.

    I would appreciate any input you can offer. While this is not my problem yet, if my mother loses her home, it's going to be my problem real fast.
     
  2. army judge

    army judge Super Moderator

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    The moral here is don't get late.

    A mortgage is a contract.

    All mortgage contracts require you to pay on time and in full monthly.

    You fail to do that, you jeopardize your mortgage.

    A lender is not required to offer a modification.

    A lender can bring foreclosure action when you breach the contract.

    You can defend the action, that is your right.

    You will usually be foreclosed against.

    I suggest you get ready, OP, its about to become YOUR problem in early December.

    Sorry, mom has no where to go with this.

    She might be able to delay it, but she can't stop it.
     
  3. adt2

    adt2 Law Topic Starter New Member

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    I guess my question was more along the lines of "shady business practices" by the lender. I understand the mortgage is a contract, and legally speaking, you're bound by the terms of said contract. I'm not asking if there's a way for my mother to keep her house despite being several months late on payments.

    I was under the impression that the modification programs enacted by the government several years ago compelled lenders to take steps to prevent foreclosure under certain circumstances. This particular lender (Citi mortgage I think) appears to be stalling on the one hand while proceeding with foreclosure on the other, which seems to be against the spirit of the modification programs.

    I suppose my new tack needs to be to delay things as much as possible to give her time to sell the house and recover her equity (about $50k). Any thoughts on that process?
     
  4. army judge

    army judge Super Moderator

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    Once a buyer learns she's in or headed to foreclosure, most legitimate buyers and lenders won't even look at her home.

    A cash buyer might be interested. There aren't many of those around these days. Most homebuyers want new homes, not used ones, too.

    What you describe aren't shady business practices. Lender don't have to do loan modifications. But, borrowers have to pay their notes.


    Sent from my iPad3 using Tapatalk HD
     
  5. adt2

    adt2 Law Topic Starter New Member

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    Not sure why it would matter to a potential buyer. House is not foreclosed-on yet. And I'm no lender, but I can't imagine why that would make a difference to them, either. My wife and I are looking at a piece of land that's been foreclosed on; it's steal at the asking price, and so far the fact that it's a foreclosure hasn't even entered the conversation. I don't have time to look up new housing starts vs. used housing sales, but I'm guessing the "most homebuyers want new homes" line was a throw-away. I've bought half a dozen homes in my lifetime, and only one of them was new. My parents have bought another 12-15 between them, and only one of them was new. I think I'm calling BS on that argument.

    As I said, I understand the lender doesn't HAVE to do a modification, and that the borrower does HAVE to follow the contractual obligations. We are agreed there. But when the reason given by the lender for not modifying the note is "no danger of default" and the lender is simultaneously pursuing the borrower for default...well then something doesn't quite add up. That's the part that I find shady. If they'd said, "We are choosing not to modify your mortgage at this time," and stopped there, then this would be a different conversation.
     
  6. army judge

    army judge Super Moderator

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    I wasn't arguing.
    I was giving you my thoughts.
    You are free to ignore what I say.

    People do buy foreclosed upon properties.
    They don't buy properties in foreclosure.
    I've never bought a used home.
    I've bought many in my lifetime, and own several today.
    I do understand I'm not the "everyman", and neither are you.

    If you believe your mother has been abused or mislead by the lender, hire her a lawyer and fight it.

    What I've given you is free legal information.

    We've discussed things generally, and we do NOT have a lawyer-client relationship.

    That said, had you walked into my office seeking me to represent your mom, I'd have chatted with you.
    Then I'd have politely declined, telling you she had no case.
    I don't represent clients that have little or no chance of prevailing.
     
  7. adt2

    adt2 Law Topic Starter New Member

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    Again, understood. I'm bummed she apparently doesn't have a case against the lender, but I don't have time to sit around and bemoan the fact. What I need to do now is figure out the best way to handle the situation.
     
  8. disagreeable

    disagreeable Well-Known Member

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    This reminds me of a scam a coworker attempted. He wanted to take advantage of the mortgage programs also. When they informed him he did not qualify, he intentionally became delinquent on his mortgage also. He learned the same way, you don't intentionally put yourself into default and expect to receive help.
     
  9. adt2

    adt2 Law Topic Starter New Member

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    Not a similar situation. My mother's home-based business (sewing / embroidery / alterations) slowed down considerably, at the same time as the mortgage company "adjusted" her payment due to changing taxes and escrow etc. Payment went from about $800/month to about $1500/month. Her Social Security check is about $900/month.

    So, she could either spend ALL of her income making PART of the new mortgage payment...or not. Stuff happens. Again - not trying to find a way to force the mortgage company to alter their contract with her, just wondering if their actions seemed sketchy to anyone else and also how to delay the process for a bit.
     
  10. army judge

    army judge Super Moderator

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    Nothing odd about changing mortgage payments because taxes and other costs increase.

    That is why a portion of mortgage payments are held in escrow, and not applied to principal or mortgage.

    The lender provides an accounting as to how payments are applied and the mortgage amount is derived.

    Nothing odd or unusual in this, except it does seem a tad high.

    I suspect local governments are getting in on citizen ripoffs, too.

    Mom can contact her local government bodies, as they are ones benefiting.
     
  11. adt2

    adt2 Law Topic Starter New Member

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    So the latest is that Citi claims to have postponed the sale date. Apparently the last round of loan modification went through Fannie Mae instead of directly through Citi, and they have just now received the paperwork from Fannie Mae. Mom has yet to receive anything in writing confirming the postponed sale date.

    I was asking her what happens if they do foreclose on the house, and the sale price at foreclosure ends up being more than what she owes on the note? Does she get to keep the difference, since her obligation to Citi will have been satisfied? She told me that she had heard that not only would she not get to keep any difference, but that Citi usually sent their own representative to purchase the house, and that they typically offered a lower price than what was owed on the note and then billed the foreclosed upon person for the remainder. Now THAT seems sketchy.
     
  12. disagreeable

    disagreeable Well-Known Member

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    In OH at a sheriffs sale, the opening bid is usually 2/3rds of appraisal. The lender will usually buy the property, if they feel they can turn a profit. I suggest you go to your counties website/office and determine what their procedure is. Another thought is you possibly assisting in a fixed rate refinance, if the mod falls through.
     
  13. Joejoytrevino

    Joejoytrevino New Member

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    Who is her mortgage company? I have Wells Fargo and they are doing the same to me right now and I do not know what to do, now they increased my payment!
     

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