Dear Juris Doctor;

My husband and I had short-term financial difficulties in 2009. After several missed mortgage payments I asked my lender to work out a payment schedule so that I could catch up on my payments. The telephone clerk said there was no such program and that I should apply for a loan modification. I applied and received a modification agreement in June of 2009. I mailed the agreement to my mortgage company within a few days of receiving it and I have been paying the modified amount for a year and a half. Now my mortgage company tells me it has no record of my modification and it will foreclose against me. Will the foreclosure freeze help me?

Amber in Palm Beach Gardens

Answer

Posted : November 6, 2010

Dear Amber;

On a daily basis I am contacted by homeowners facing foreclosure who are frustrated with the mortgage modification and short sale processes. Less than one-third of the families facing foreclosure have been offered mortgage modifications despite hopeful predictions when the federal programs were announced. The lenders have blamed the homeowners for their lack of responsiveness. I have been assisting clients with mortgage modifications for two years and it is the lenders who have created the delay for the most part. Initially they were understaffed and the staff was not properly informed of the procedures. Countless homeowners have been told that the lender did not receive faxed or mailed documents from them. Documents have been “lost” by lenders too frequently. Months go by and the lenders tell the homeowners that their documents are stale and they must re-submit bank statements, pay stubs and update financial statements. Trial modifications have been in limbo for many months while the lenders consider permanent modifications.

I believe that the self-imposed freeze and scrutiny by lenders of their foreclosure documents and the investigations by the Attorneys General in all 50 states will result in more mortgage modifications and short sales while the foreclosures are halted. Lenders receive financial assistance by Fannie Mae and other federal programs when they foreclose. Therefore the incentive to modify has been lacking. Finally the lenders will be motivated to modify loans or approve short sales while the freeze is in effect.

Sincerely, J.D.