Saturday, October 26, 2013

Do Trial Loan Modification Payments Reaffirm Original Mortgage Debt that was Discharged via Bankruptcy?

Question: I need to know if paying one or more 'trial payments' toward a potential mortgage loan modification will 'reaffirm' the original mortgage note which was discharged in a Chapter 7 bankruptcy several years ago. I do not want to reaffirm that debt and worry that a 'trial payment' might do that. The only reason to make the trial payments is to postpone the inevitable foreclosure sale.

Response: Making trial payments doesn't reaffirm the debt. Unless you selected that you are indeed reaffirming the debt in your Chapter 7 petition, all you are doing is making payments towards your loan so the bank wouldn't commence a foreclosure action or proceed with the foreclosure sale. Loan modification stays foreclosure actions. If the loan is modified, the case is settled and property will not be sold (unless you stop making payments again once the loan is modified). Also, trial loan modification after 3 months has to convert into a permanent loan modification. Once the permanent loan modification is executed, you no longer have to worry about the foreclosure sale taking place.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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Rejection of Loan Modification and Foreclosure due to Incorrect Calculation of Income by Bank

Question: When I was attempting to get a loan modification, the bank incorrectly counted my income, in order to correct their mistake, they requested that I reject the current offer and reapply. I followed their instructions. I reapplied and for 6 months they kept on saying that they were reviewing my new loan modification application and I would be getting an offer or denial in the mail. I was following up with them every month if not more often than that. They kept on saying it was under review each time I called and that I should be patient and wait for the response in the mail. Within a week or two of these follow up calls, I received a foreclosure notice on my door. When I asked the bank what was going on, they "escalated" my account to be reviewed based on their erroneous information to some department that I could never talk to. Nevertheless, my home was foreclosed on with an option to do a deed-in-lieu of foreclosure, short sale, etc. I believe this has adversely affected my credit score and job opportunities as almost every employer looks at my credit and sees this negative information on my background. What chances do I have in seeking damages for this unethical practice? As a side note, this was not a subprime loan, it was a full doc.

Response: Unfortunately, seeking a loan modification is a not a waiver of foreclosure. When you stop making payments, the bank can indeed start a foreclosure action and proceed with foreclosure unless your file is specifically placed on loss mitigation hold (which would stay foreclosure action). It is surprising though that the bank was able to foreclose so quickly because foreclosures these days last substantially longer than in the past. Also, banks are usually more inclined to try to settle the matter with you via loan modification rather than foreclosing so it's a bit surprising that they foreclosed. Also, if you are told after 6 months that the file is still in review, something is wrong. The banks are allowed 30 days to complete review once a complete package is received. You have to be very aggressive in following up at least once a week because documents become stale after 60-90 days and then you can't be reviewed with old documents. I doubt that you have grounds for a lawsuit against this bank.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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