The Los Angeles City Council agreed May 13 to a pilot program aimed at keeping some San Fernando Valley homes out of foreclosure, the Los Angeles Daily News reported May 14. According to the article, the plan would provide up to $75,000 in loans for individual homeowners as "silent second mortgages," with no payments due until the homeowners sell the homes. The lenders controlling those mortgages must agree to write the principal owed on the mortgages down to current market value. That could reduce the principal owed by as much as $100,000, the article said. In return, they and the city would receive interest equal to the increase in the home's value.
The pilot program is aimed at the Northwest Valley, in Pacoima and surrounding communities. However, the article said, some leaders hope to use it throughout Southern California if it is successful. The trouble is getting lenders to agree, said City Councilman Richard Alarcon -- something he hopes the city's loans will help to do. Yvette Mariajimenez, deputy director of Neighborhood Legal Services, said a study by her organization shows that lenders would save more money by participating than they would by completing foreclosures. The Daily News did not reach mortgage lenders for comment.
As Placentia loan modification lawyers, we hope so. So far, mortgage lenders have been surprisingly reluctant to write down principal or make other drastic changes to mortgages, even when it's in their own best financial interests. Conventional wisdom says banks prefer not to foreclose because it's expensive, and with the housing market glutted with foreclosed properties, they face steep losses when they do foreclose. However, news reports and our own clients have told us over and over that lenders refuse to write down principal or even change interest rates, even when it's clear that the alternative is an expensive foreclosure. If a loan from the government can get lenders to do what clearly is in everyone's best interests, we would be happy to support this program.
Through our mortgage loan modification practice, Howard Law works every day with homeowners in this situation. Many clients come to us after their attempts to negotiate a loan workout on their own have failed, often because the bank has simply ignored their calls. We help these clients by negotiating aggressively with their lenders, using evidence of predatory lending, if necessary, to get their attention. Frequently, just knowing a lawyer is on the job is enough to get the lender's attention. Our Stanton loan modification attorneys have a strong record of success negotiating for lowered interest, changes to adjustable-rate mortgages and more.
If you know you need a loan modification, but your mortgage lender won't listen, the Santa Ana loan modification attorneys at Howard Law can help. To learn more at a free, confidential consultation, please contact us online or call us toll-free at 1-800-872-5925.