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Lenders Continue to Turn Down Mortgage Loan Modifications for Homeowners Not Yet in Default

June 8, 2009

As Santa Ana loan modification lawyers, we were disappointed but not especially surprised to see an article outlining the continuing problems facing responsible mortgage holders who need a loan modification. On June 3, the New York Times suggested that the foreclosure crisis is now spreading to homeowners who had taken out traditional fixed-rate mortgages but lost their jobs, leaving them without a way to pay their mortgages. Like people caught in the first waves of foreclosures, these homeowners are finding that their banks won't even consider a loan modification until they've already missed payments.

The article tells the story of Eileen Ulery, an Arizona homeowner who ran into financial trouble after she lost her job as an executive assistant. She had never missed a payment in the 12 years she owned her two-bedroom condo -- and that was the problem. She contacted her bank to negotiate a loan modification under the Obama Administration's Making Home Affordable plan, but the representative told her she wasn't eligible because she was not in default. Instead, the bank offered her a refinancing deal: If she paid $18,000, she could drop the payment by $79 a month, but she would actually pay a higher interest rate. Ulery told the newspaper that she laughed at the offer, which was a great deal for her bank but not helpful to her.

Judging by the article, it appears to our Redlands loan modification attorneys that banks are simply not learning from the mistakes they made with initial foreclosures. Despite a skyrocketing number of foreclosed homes on a real estate market where prices have plummeted, lenders' policies still seem designed by people who prefer a foreclosure. Loan workouts could save the banks' investments, or at least lose them less money than a foreclosure. And homeowners like Ulery, who bring up their financial problems before foreclosure, are being penalized for their financial responsibility by banks' refusal to even consider a loan modification before foreclosure.

At Howard Law LLP, we step in on behalf of homeowners like Ulery, who have been met with silence or indifference when they requested a loan modification. Our San Diego County loan modification lawyers are able to get banks' attention even where homeowners have not -- because we are lawyers. To banks, that means a lawsuit might be on the way. In fact, we have successfully used evidence of predatory lending in our clients' records to negotiate for favorable loan workouts. Even when there's no such evidence, we have had substantial success changing the structure of loans, their interest rates or other terms that can lower your monthly mortgage payment to an achievable number.

If you're having trouble getting your lender to agree to a loan modification and you know you need help, call Howard Law as soon as you can. For a free, no-obligation consultation, you can reach us toll-free at 1-800-872-5925 or contact us online.