Loan Modification Lawsuit

More and more these days, mortgage companies are being served with loan modification lawsuits that claim they are misusing the loan modification process. People are sick and tired of being told one thing and then when the time comes for the payoff, the banks backing out. These loan modification lawsuits have literally exploded in recent years and most are directly related to the Home Affordable Modification Program, otherwise known as HAMP. This is the program that was designed by the Obama administration to help home owners avoid foreclosure. Many people have been helped out of foreclosure by HAMP, but a large number of people have been mistreated as well. Some would even say they have been scammed. So how are the mortgage companies abusing HAMP and it's intentions, and why are people filing lawsuits? There are a number of ways and some of these are rather sickening.

The banks lose documentation and then blame the home owner

One of the things that the banks demand is for the home buyer to jump through numerous hoops and documentation loopholes. When the customer actually provides said documentation, it can be lost or otherwise ignored. Then the bank blames the customer and claims to have never gotten it. This has led to a number of loan modification lawsuits. This has happened far too many times.

The customer makes their “trial payments” and then are denied extensions anyway

This is very common in loan modification lawsuits. The customer is required to make three trial payments presumably to show that they can make the payments on a modified loan. Then, when the customer has done all of this they are told that they “do not meet income requirements” or other such nonsense. They then deny the extension and foreclose when the customer can not make the original payments. This has happened quite a bit, and one prominent example was against JP Morgan by three borrowers in New York. The story can be found here.

The bank or mortgage company had a predatory loan in the first place

Some people bring about a loan modification lawsuit after realizing through the process that the loan was predatory or wrong in the first place. This can be revealed by forensic audit of their loan, and is also a strong reason to bring action if you are facing foreclosure or other unfair situations due to a predatory loan.

While this is far from a comprehensive list of reasons why loan modification lawsuits are brought, it does represent the most common. These situations are often brought about when a person is facing a serious financial situation. Because of this financial status, a great many loan modification lawsuits never even get filed because of a lack of funds. When lawsuits are filed, they are often filed by non-profit groups that step in and help out the home buyer. The home buyer is usually in no position to get a lawyer, though many lawyers may take on a case that is clearly in favor of the home buyer for no upfront costs.