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Despite Federal Guarantee, Former IndyMac Bank Still Reportedly Among Least Helpful Banks Offering Loan Modifications

August 24, 2009

Housing advocates say the bank formerly known as IndyMac is one of the worst mortgage lenders for borrowers seeking loan modifications, CNNMoney reported Aug. 18. OneWest Bank, as it is now known, was formed from the remains of the failed IndyMac, which was taken over by the FDIC in July of 2008 and later sold to investors. Federal regulators offered the new owners a more advantageous deal than other banks enjoy: Continue the FDIC's efforts to modify loans and the agency would cover all of the losses in OneWest's mortgage portfolio. Despite that deal, however, borrowers and the counselors who work with them say OneWest is unresponsive, disorganized and even rude -- more so than lenders without a federal backup.

As our Riverside loan modification attorneys have written here many times, loan modifications are difficult to get at every lender, requiring perseverance and a high tolerance for bureaucracy. The housing counselors in the CNNMoney article acknowledged that fact, but said OneWest is still among the worst lenders. A representative from the Northwest Side Housing Center in Chicago said OneWest repeatedly sends automated offers of loan modifications to borrowers, only to deny them each time the borrower sends in paperwork. A spokeswoman for another organization said her group has to call multiple times to pressure OneWest into action on homeowners' loan modification requests.

And homeowner Sharon Clark of South Carolina said she was offered a loan modification in April, denied in June -- then asked for more information and denied again. After CNNMoney contacted the bank to ask about her loan, she said they offered her a different loan workout, but sent her the exact same paperwork yet again. She plans to complete it, she said, but her hopes are not high.

Our Escondido loan modification lawyers have read several articles recently complaining about similar behavior from lenders who took "bailout" money. We believe that banks should honor their promises and display basic competence regardless of whether they took federal funds -- but in OneWest's case, the funding is explicitly tied to loan modification efforts. The FDIC said it believes OneWest is complying, but if these descriptions are typical, it is clearly not displaying good faith in its dealings with borrowers. Given that IndyMac was one of the largest issuers of risky Alt-A loans, in which borrowers were not asked to document their incomes, we do not believe these half measures are good enough to keep qualified borrowers in their homes and stop the damage to the real estate market.

Howard Law LLP aggressively represents homeowners seeking a loan modification due to changes in their loans or their own circumstances. As Santa Ana loan modification attorneys, we work every day with Southern California homeowners who have been given the runaround by their lenders, unfairly and incorrectly denied or advised to ruin their credit just for a chance at being listened to. We can get lenders' attention very quickly by filing litigation demanding that lenders honor their legal and business obligations before they foreclose, or, when appropriate, seeking to invalidate a loan made through illegal predatory lending practices. In every case, we work for sustainable loan modifications -- changes that lower our clients' interest rates for good and keep them in their homes.

Howard Law offers free, confidential case evaluations to all potential clients. To set one up and learn more about your legal rights, please contact us online or call us toll-free at 1-800-872-5925.