If you are one of the millions of Americans having trouble modifying a securitized mortgage, you may be interested in this article from the Feb. 23 issue of BusinessWeek magazine. Entitled "What's Holding Back Mortgage Modification?", it takes a look at one aspect of the foreclosure crisis you may have missed -- unless you own a mortgage that's been bundled into a security and sold as an investment. These securitized mortgages are difficult for homeowners to modify after the fact, which is one of the factors driving the foreclosure crisis: Borrowers who run into financial trouble frequently can't renegotiate the terms of securitized mortgage loans.
The conventional wisdom says this is because mortgage servicers, who administer home loans, can't do much to change the terms of loans without breaking their contracts or provoking lawsuits from investors who have a stake in those loans. This article suggests otherwise. Experts quoted in the article say mortgage servicers have plenty of leeway to take action, but have dragged their feet because they earn more from a foreclosure than they would from a loan modification, which requires extra staff and resources. The fear of litigation is real, the article said, but the contract problems may be exaggerated to mask that fear.
Market pressure and the federal government may soon be ending that, BusinessWeek reported. Congress is considering a law shielding mortgage services from investor lawsuits -- and as we've blogged here before, it is seriously considering "cramdown" legislation that would motivate lenders to work out loan modifications before homeowners are forced to file for bankruptcy. This is good news for the homeowners at the end of the chain, who are the ones suffering most from lenders' and servicers' refusal to negotiate loan modifications. There are no guarantees, but a law that gives lenders an incentive to take loan modifications seriously could keep thousands of homes in Southern California alone out of foreclosure -- and their homeowners out of bankuptcy.
Howard Law represents homeowners who need legal help negotiating with lenders and mortgage servicers for a loan modification. Our Anaheim loan modification attorneys help clients convert balloon or adjustable-rate mortgages to conventional loans; negotiate for a change in interest rate or other payment terms; and, if necessary, challenge unfair or predatory lending practices. We also help clients who are considering a California bankruptcy as a way to solve serious debt problems. If you need legal help to save your home and you'd like to learn more, we offer free, confidential consultations to potential clients. To speak to our experienced Buena Park loan modification lawyers, you can call us toll-free at 1-800-872-5925 or contact us online as soon as possible.