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Treasury Department Report Shows Mortgage Lenders Have Modified Only Nine Percent of Eligible Loans

August 6, 2009

Only a fraction of eligible homeowners have been able to modify their loans under the federal foreclosure prevention plan, the Los Angeles Times reported August 5. A report by the Treasury Department shows that just 9% of an estimated 4 million homeowners have succeeded in modifying their loans through the program. The report came a week after Obama Administration officials met with major mortgage lenders to express displeasure about this very problem, along with bureaucratic delays and outright refusals that have prompted many homeowners to hire San Bernardino loan modification lawyers for help. After that meeting, lenders pledged to bring the overall number of loans modified through the program up to 500,000 by November 1.

The individual banks that hold the most U.S. mortgages had records even worse than the overall industry's. According to the Times, Wells Fargo & Co. had modified just 6% of the eligible loans it holds and Bank of America Corp. had modified just 4%. However, other major players, including GMAC and JP Morgan Chase, had loan modification percentages closer to 20%. Banks contended that they have modified more loans outside the federal program, and that the government was slow with details, forcing them to delay getting their programs started. Nonetheless, critics said the government needs to force, rather than merely incentivize, lenders to perform more modifications. Some suggested allowing bankruptcy judges to reduce principal of homeowners in Chapter 13 bankruptcy -- a practice known as "cramdowns."

Our Fontana loan modification attorneys agree. More and more anecdotal evidence, including stories from our clients and numerous articles linked from this blog, suggests that banks and loan servicers are not trying very hard to modify loans. Over and over, we've heard stories of borrowers forced to re-send paperwork several times; hung up on or endlessly transferred; incorrectly denied; or offered meaningless loan workouts that actually increase their payments. Lenders may be legitimately overwhelmed by the number of calls they receive from distressed homeowners, but by now, they should have systems and extra staff in place to handle it professionally. As Moreno Valley loan modification lawyers, we suspect the problem actually has something to do with the fact that modifying loans means losing profit, or at least appearing to lose profit.

Howard Law LLP aggressively represents California homeowners who need help negotiating a sustainable loan modification to save their homes. Unlike the many loan modification companies that have appeared over the last nine months, we are an established law firm with a clean and publicly available ethics record. We believe that our status as attorneys allows us to cut through bureaucracy and excuses and get the bank's attention, because when attorneys call, banks understand that a lawsuit may follow. In fact, we scrutinize each case carefully for evidence of predatory lending that we can use in our negotiations to get clients the best modification possible. Our goal is always to get our clients a loan modification that keeps them in their homes for the long term, lowering the monthly payment to a realistic number.

If you're facing foreclosure or default in Southern California and your efforts to modify your loan on your own aren't working, Howard Law can help. For a free, confidential case evaluation, please contact us through our Web site or call 1-800-872-5925 toll-free.