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South Carolina Supreme Court Suspends Foreclosure Sales of Homes Eligible for Federal Loan Modification Plan

May 6, 2009

The highest court in South Carolina temporarily suspended thousands of sales of foreclosed home May 5, the Associated Press reported. The state's Supreme Court granted an injunction stopping sales of homes guaranteed by Fannie Mae, Freddie Mac or any lender that has signed on to the Obama Administration's anti-foreclosure plan, Making Home Affordable. The goal is to give homeowners eligible for the program time to take advantage of the loan modification aspect of the plan, a lawyer for Fannie Mae wrote in court papers. The AP said the injunction could affect as many as 5,000 homes in the state.

The injunction was necessary because South Carolina law allows judges to cancel foreclosures and start them over if they take too long. The law is meant to encourage a speedy process, the AP reported, but Fannie Mae argued that it encouraged lenders to speed through foreclosures so they didn't lose money. This was too speedy to give the mortgage company time to help, it argued. Fannie Mae had originally requested the suspension only for its own mortgages, but Chief Justice Jean Toel expanded it to include loans guaranteed by Freddie Mac, as well as any other lender participating in Making Home Affordable.

As Orange mortgage loan modification lawyers, we think this is great news. The relevant part of the Making Home Affordable plan allows loan modifications for homeowners who are struggling to make their mortgage payments. It requires lenders to reduce qualifying homeowners' interest rates so that their monthly payments are no more than 31% of their gross incomes, then freezes that payment for five years and puts a cap on the interest rate for the rest of the loan's repayment period. This won't help everyone -- people who have lost their jobs or have very low incomes relative to their mortgages probably won't qualify. But for those who do qualify, the court's decision may literally have saved their homes.

The Westminster loan modification attorneys at Howard Law LLP represent homeowners who are struggling just to speak to someone at their banks about a loan modification. Over and over, our clients tell us that they tried to negotiate their own workout with the lender, only to be ignored or transferred from person to person endlessly. When they do get help, many clients end up with sham loan modifications that don't substantially change their monthly mortgage payments, nearly guaranteeing that they'll end up back in default. Our Buena Park loan modification lawyers use legal knowledge and negotiating skills to cut through that bureaucracy -- using evidence of predatory lending, where appropriate -- to get decision-makers' attention and negotiate meaningful changes to our clients' loans.

If you believe you can save your home with a significant change to your mortgage or its terms, 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.