As San Bernardino County foreclosure defense attorneys, we have a lot of firsthand experience with the bad reasons why many homeowners aren't able to get a loan modification. So we were very interested to see a recent blog post by the activist group Public Citizen about the reasons banks gave the federal government for denying loan modifications. The numbers come from a report issued by the Treasury Department on the last day of January, giving loan-level data on net present value of individual loans as well as information on loan modification acceptance or rejection and reasons why. According to the Feb. 2 Public Citizen blog post, many of the reasons for rejections can be boiled down to paperwork.
The post says that of 2.5 million homeowners taking part in the Home Affordable Modification Program, 1.2 million were rejected -- that's 48 percent, or almost half. Of those who were rejected, only six percent failed the net present value test, which measures whether the modification makes economic sense for the lender. More than three times as many, 21 percent, were reported as not having their paperwork in order. Other common reasons for denials could also have been attributed to paperwork problems, the blogger said, including homeowner not considered payment stressed (20 percent), ineligible mortgage (18 percent) and homeowner not in danger of default (11 percent). Some withdrawn requests, 8 percent, could also be attributed to paperwork issues.
The numbers were similar for those approved for trial modifications but then denied permanent workouts. Of those borrowers, a full 75 percent were rejected for reasons other than failure to make payments. More than half were rejected for having incomes too high for a modification, incomplete paperwork or withdrawn paperwork. In many cases, Public Citizen wrote, these are issues that the lender should have decided before granting a trial modification.
Our Chino Hills foreclosure defense lawyers agree. We've practiced in this area of the law throughout the housing crisis, so we have extensive experience with the headaches clients go through just to be considered for a loan mod. Client have reported for more than a year that lenders repeatedly lose their paperwork; ask for new paperwork; or find arbitrary-seeming reasons why the paperwork isn't complete. We don't believe this is a real problem in businesses as profitable as major mortgage lenders; rather, we believe it's a stalling tactic intended to force homeowners into foreclosure while charging as much as possible along the way. Since the federal government has declined to include any enforcement measures in HAMP, as Public Citizen noted, it's up to individual homeowners and their attorneys to hold lenders accountable for their actions.
Anaheim-based Howard Law PC does just that on behalf of clients throughout California. We see borrowers all the time who have been denied a permanent loan modification for seemingly arbitrary or nonsensical reasons, even after making all of their trial payments on time. Our Escondido foreclosure defense attorneys fight for those clients' rights by aggressively negotiating with lenders -- letting them know that you understand your legal rights -- and filing predatory lending lawsuits when that fails. HAMP may not hold lenders accountable, but we can do it through the courts, for violations of HAMP rules, your loan modification agreement, California law and other egregious violations of your rights. Our goal is always to stop unfair foreclosures and make sure clients can stay in their homes at a sustainable monthly payment.
If you've spent more months than you care to admit struggling to get a lender to take your loan modification request seriously, you should call Howard Law instead for a free consultation on your case. To set up a meeting, send us an email or call toll-free at 1-800-872-5925.