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Foreclosure Analysis Firm Says Major Mortgage Lender Has Increased Auction Notices

April 20, 2010

Our Chino loan modification attorneys have watched the market closely enough to believe that banks are probably slowing down foreclosures intentionally. So we were disappointed but not surprised by an April 13 article in the North County Times suggesting that Bank of America has increased its foreclosure auction notices. ForeclosureRadar told the newspaper that Bank of America's ReconTrust N.A. division sent out hundreds of notices of auction, which is one of the last steps in the foreclosure process, in northern San Diego County and southwest Riverside County. They gave the affected homeowners a date of auction, which in some cases was in as little as three weeks from the notice's arrival.

The notices went to 391 southwest Riverside County homeowners and 230 North County homeowners, the article said. Both of those numbers represent significant increases over the numbers for February; respectively, a 67% jump and a 69% jump. They were an even bigger jump over March of 2009, when the lender sent 31 auction notices to both regions combined. ReconTrust was formerly the foreclosure division of Countrywide Financial, the mortgage lender that became the poster child for subprime lending, suggesting that the homeowners may be struggling with subprime loans. Bank of America said the rise in auction notices comes because more borrowers are out of government-imposed foreclosure moratoria and have run out of options like the federal Home Affordable Modification Program. But analysts noted that these loans could have been foreclosed on months ago, and that Bank of America may be trying to take advantage of a strengthened California housing market and the conventional spring and summer buying season.

Our Oceanside loan modification lawyers agree. We recall reading last year that some banks claimed there was no "shadow inventory" of unsold foreclosed homes, but this article tells a different story. Bank of America told one agent in the article to get ready for a large influx in May, suggesting that the bank has control over when properties come to market. It makes sense that lenders would want to control when they sell foreclosed properties, because a flood of them would cause real estate prices to plummet and reduce the bank's chance of recouping its investment. But delaying is not necessarily great for the market, and depending on how it was done, it may also be bad for the foreclosed borrower. If banks' delaying tactics extend to drawing out the foreclosure by offering false home for a loan modification, they may have essentially used borrowers as unpaid custodians of the properties, in exchange for nothing more than false hope.

Howard Law PC has been involved in helping troubled homeowners modify their loans from the beginning of the housing crisis. Many of our clients come to us after spending months trying to win a modification on their own, enduring bureaucratic delays like requests to fill out paperwork again and again. Even in cases where the clients are so frustrated that they consider walking away, our Lake Elsinore loan modification attorneys have had good luck winning changes to the loans. We attribute part of this success to the fact that we are attorneys who understand our clients' legal rights -- and the lenders know that. Rather than run the risk of an expensive lawsuit, some will follow through on their obligations. In cases where the facts support it, we may actually file a lawsuit for predatory lending or gross negligence by the lender.

If you're struggling to hold on to your home and your lender is clearly not interested in helping, you should call Howard Law. We offer free, confidential case evaluations, so you risk nothing by speaking to us. To set up a meeting, call us toll-free at 1-800-872-5925 or send us a message online.