The Law Planet Blog

A recent Palm Beach Post article on the drop in foreclosure filings in Palm Beach County indicates that 1,529 bank takeovers occurred in April, a 47 percent decrease from April 2009, according to numbers released by the Palm Beach County Clerk and Comptroller. Between January and April 2010, the number of Palm Beach County initial foreclosure notices totaled 7,764, a 30 percent tumble compared to the first four months of 2009.

Mr. Paul Baltrun, director of the firm’s Loss Mitigation division, gave Palm Beach Post Real Estate writer Kim Miller commentary on the drop in foreclosures. In the article, Mr. Baltrun stated that one of the possible reasons for the decline in the foreclosure rate is loan modifications. Mr. Baltrun and his team are seeing more people in Florida and across the nation being hands-on in trying to get a loan modification. In addition, the banks are becoming more willing to give homeowners modifications – especially in situations where a modification will enable a homeowner to avoid foreclosure.

"People are being more proactive and seeking workout solutions before their file goes into foreclosure," Baltrun said. Loan modifications made through the federal Making Home Affordable Program provide incentives to banks that reduce mortgage payments through interest rate cuts, principal amount reductions, and prolonging the loan’s life.

Click on the As filings fall, courts finally make dent in foreclosure cases link to read the Palm Beach Post article.

In response to the housing crisis gripping the nation, the Obama administration implemented the Home Affordable Modification Program (HAMP) to stem the growing number of foreclosures in the United States. HAMP is a part of the government’s comprehensive Making Home Affordable initiative to help homeowners who are struggling to make their mortgage payments, or homeowners who are facing foreclosure.

In a recent article on the topic, Reuters indicated that over 230,000 of the approximately 1.4 million HAMP mortgage modifications had been made permanent by the end of March. According to U.S. Treasury spokesperson Meg Reilly, "More than 1.1 million borrowers were receiving a median savings of $500 each month.” The Obama administration hopes to help between 3 to 4 million homeowners receive permanent modifications through HAMP by 2012.

The primary objective of HAMP is to help borrowers avoid foreclosure by modifying troubled loans in order to achieve a more affordable payment. Under the terms of HAMP, however, homeowners must meet certain conditions in order to be eligible for a modification.

To be eligible for a HAMP modification, the following conditions must apply:

•    Your are the owner-occupant of a one- to four-unit home;
•    You have an unpaid principle balance equal to or less than:
      •   1 Unit: $729,750             •   3 Units: $1,129,250
      •   2 Units: $934,200           •   4 Units: $1,403,400;
•    You are having difficulty making your mortgage payments;
•    You got your current mortgage before January 1, 2009; and
•    You have a mortgage payment (including taxes, insurance, fees, etc.) that is more than 31% of your current gross (pre-tax) monthly income.

It is important to note, however, that a homeowner does NOT need to be behind on his or her mortgage payments to participate in the Home Affordable Modification Program. If you are a responsible borrower who is struggling to remain current on your payments, or if you are at risk of default due to a financial hardship or recent payment hike, you may be eligible for a HAMP modification. Please use the resources below to learn more about HAMP and the mortgage modification process.

Home Affordable Modification Program – U.S. Government

US mortgage modification program helps 230,000 permanently – Reuters

Home Affordable Modification Program Guidelines – U.S. Department of the Treasury

As millions of American homeowners continue to deal with a struggling economy and a poor housing market, more and more of these individuals and families now have to contend with another problem: a breakdown in communication between banks that service mortgages. Not only does this miscommunication bring frustration, it can also lead to mistaken or even premature foreclosure in spite of a pending mortgage modification application.

This communication breakdown can occur between banks or servicers that are participating in the Obama Administration’s Making Home Affordable Program, despite provisions that prohibit servicers from auctioning a person’s or family’s home while a mortgage modification is pending. The article indicates that the lapses in communication that can lead to premature or mistaken foreclosure continue to occur because they go unpunished for the most part. USA Today indicates that the U.S. Treasury Department is reportedly aware of such problems and is “moving to fix them.”

In a ProPublica news report on the topic, the breakdown in communication between servicers generally occurs due to their organizational structure. The ProPublica article points out that one division normally deals with modifications while a separate unit contends with foreclosures, presumably leading to both internal and external communication problems.

"Basically, you have the right hand at the mortgage company not knowing what the left hand is doing," said Mark Pearce, North Carolina's deputy commissioner of banks. Communication glitches and mistakes are "systemic, more than anecdotal" among mortgage servicers, he said.

Although miscommunication between mortgage servicers does occur, having the assistance of an experienced team of mortgage modification professionals that will aggressively ensure that the servicers communicate properly can help prevent such tragedies from coming to light.

If you are a homeowner in need of assistance with a foreclosure, contact an experienced foreclosure attorney to discuss your situation.

Homes can be lost by mistake when banks miscommunicate – USA Today

Disorganization at Banks Causing Mistaken Foreclosures – ProPublica

Link to the Obama Administration’s Making Home Affordable Program