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Californians Increasingly Sue to Enforce Loan Modification Deals With Lenders

March 5, 2010

Our Ontario loan modification attorneys wrote last week about several Sacramento-area lawsuits alleging that lenders are deliberately trying to push borrowers into foreclosures. This is not a common allegation, but a March 2 article from the San Jose Mercury-News shows that lawsuits in general are an increasingly common tactic in California for homeowners desperate to keep their homes. The article said federal lawsuits over the Truth in Lending Act or wrongful foreclosure have skyrocketed in the past five years, from just 29 in 2005 to 1,395 last year. Many more may be filed in state courts. Lawsuits typically allege that the bank reneged on a loan modification deal, or made an original loan that it never should have made.

Both are claims made by Sonia Leverman, one of the plaintiffs in the article. The Sunnyvale homeowner was given English-only documents to sign for her adjustable-rate mortgage even though she doesn't speak English well. She says she was shocked when the rate shot up by nearly $2,000 a month, shortly after her husband lost his job and her sons' work hours were cut back. The family later completed a three-month trial loan modification, only to be denied a permanent loan modification because, the lender said, their third payment was late. They have a Western Union receipt showing it was on time. Finally, they hired a loan modification attorney who sued the loan servicer for breach of contract. Now, they're on track for a permanent modification, although they're still underwater.

The family's lawyer said the servicer refused to negotiate until he got involved. This is typical in our experience as Bellflower loan modification lawyers. Lenders and loan servicers believe they can make more money by foreclosing than by helping modify a loan that they don't think the borrower can pay off. Rather than say so, they find excuses to derail permanent loan modifications, allowing them to look like they're trying to help. Meanwhile, borrowers who are genuinely trying to meet their financial obligations get a "runaround." That's true even in cases like Leverman's, in which there was strong evidence of wrongdoing and thus a clear risk that the family would take legal action. In addition to the dispute over the on-time payment, providing English-only documents to Leverman may have been a violation of California's Foreign Language Contract Act.

Howard Law PC can and does file lawsuits on behalf of clients who are at risk of losing their homes to an unfair or illegal foreclosure. This is not the right tactic for everyone, in part because no lawsuit may be filed if there's no violation of the law. However, in cases of predatory lending, breach of contract or clear negligence, a lawsuit can stop a foreclosure sale, delay a foreclosure until the case is resolved and in some cases, change the loan for the better. Our Santa Ana loan modification attorneys can get loans canceled entirely in cases where we show a breach of the Truth in Lending Act or another predatory lending law. In other cases, we may be able to enforce a loan modification agreement the lender or servicer is ignoring.

If you're struggling to hold on to your home and your lender is not helping, call Howard Law instead. To tell us your story and learn more about your rights at a free consultation, you can call us toll-free at 1-800-872-5925 or contact us through our site.