I wish it was as simple as stating "yes" or "no". Unfortunately, there have been so many lawsuits across the country between buyers and sellers regarding the "proper" disclosure, that there is now (for the most part) no excuse for Sellers' not knowing the proper standard.

The standard is a reasonable common sense standard. If the buyer can see the defect when they are inspecting your home, then you do not need to "tell them" (disclose) about the defect since it is readily observable. This, however, is not what results in lawsuits by the buyers. It’s the defects that the buyers can’t see,and later find out 6 months after moving into the home, that starts the lawsuit

What does this mean? As the seller, you are required to tell the buyers of defects that exist within your home, but that the buyers cannot see when they walk through your home. Prime examples are leaky roof, termites, or foundational cracks. As a seller if you know you have these problems or similar problems then you are required by law to tell the buyer so the buyer can make an informed decision on whether he/she wishes to still purchase the home.

Well, I know what you are asking now. What if I didn’t know? As mentioned before, this is a common sense standard so you are not required by law to disclose defects that you didn’t know about either. I still know what you are thinking now. As seller, I can probably identify 100 small little defects, i.e, chipped plaster in a small corner of my bedroom, stains along my floors in the kitchen or maybe a kitchen cabinet doesn’t properly close all the way. Remember, this is a common sense standard so only huge defects (material) that are not readily observable need to be disclosed. If the buyers would change their mind and not buy your home over the "defect", chances are the defect is material.

What this all boils down to is that as sellers you should put every known defect in your home on your seller disclosure to avoid any future liability.

So to conclude, just remember, when in doubt disclose in writing and you will be protected.

For more information on this and other real estate matters, contact one of our West Palm Beach lawyers at LaBovick Law Group.

As many as 100,000 foreclosure cases in the state of Florida have been put in a state of flux with the undoing of the David J. Stern law practice. March 31, 2012 was the end of the road for Stern’s involvement in more than 100,000 foreclosure cases in which he is listed as the attorney of record. Some have speculated that many thousands of cases could be dismissed, unless lenders quickly hire another lawyer.

The David J. Stern law firm, founded in 1994, became one of the largest in the state of Florida by 2009. Most of its business was handed out by Fannie Mae and Freddie Mac, in which the Stern Florida Attorneys handled many thousands of foreclosures. By its peak, the South Florida lawyers were handling one out of every five foreclosure suits in the state of Florida.

But for much of his legal career, Stern has always been associated with allegations of unethical conduct. He had trouble in 1999, when he agreed to pay $2.1 million to borrowers who were overcharged for legal expenses and the subsequent cover-up by the firm via fraudulent documents. The straw that broke the camel’s back was in 2010, when allegations of illegal shortcuts, including robo-signing, became the center of attention across the nation. Stern’s firm was associated with these allegations, and as a result, the firm was fired by both Fannie Mae and Freddie Mac.

Stern, in a letter back in the beginning of March, wrote the firm is basically out of business. What is left is a mess in the Florida court system.

Over the last few weeks, progress has been made in cleaning up matters after the collapse of the Stern law firm. The Florida court system is paying more attention to these fraud allegations. But it’s a long road ahead.

Frank Albear, a West Palm Beach foreclosure lawyer for LaBovick Law Group, stated that repairs to the Stern files, where necessary, leave stronger legal claims that could protect future home buyers from having to defend title to their home.

Only time will tell how this legal mess will play out. Do you have an opinion? Leave a comment below and let us know your thoughts .

The housing meltdown has sent shock waves throughout the United States, with foreclosures reaching over 4 million. In an effort to help current homeowners that are on the brink of losing their home, the government initiated a program whereby homeowners can receive a free fraud review of their foreclosure to make sure there are no issues.

It was recently reported by the Palm Beach Post that few homeowners have taken advantage of the free foreclosure fraud review. Specifically, less than 3% of the total eligible for the fraud review have taken advantage.

It was reported that representatives have sent out over 4.3 million notices to those that qualify for the review, with only 121,725 people responding thus far. The initial deadline of April 30, 2012 has been pushed back to July 31, 2012, due to the low response.
Some of the main concerns with the program include:

1. A homeowner must have been in some process of foreclosure in 2009 and 2010 to be eligible. But it's only for a two-year period and a lot of the subprime loans went into foreclosure before that.
2. Concerns about whether homeowners would have to sign away rights to future claims if they accept an award for financial harm found during the foreclosure review.

One of the main reasons there has been such a low response is that many homeowners treat the mailing as another piece of junk mail. Homeowners receive several mailers regarding foreclosure assistance and it is believed by many that this correspondence blends in with the rest. Others believe homeowners think it is a scam.

I tell my clients to apply for the review, but only a handful have alerted me to the letters.

They get a lot of advertisements and there are so many scams out there that they might think it's just a scam. It's a bit of a hazy program.

Have you received a free foreclosure review mailer? Have you gone through the process? Leave a comment below discussing you experience.

A very small bank that boasted on not accepting Troubled Asset Relief Program (TARP) funds, and proclaiming how healthy they were financially, was absolutely dead set on not giving our client a break and gave us a spectacular mortgage modification!

The bank was not willing to budge whatsoever. It was a bleak scene, picking apart where the clients spent money, their priorities in life, what they did to protect themselves from their hardship they endured, etc. In the first half hour, it was determined that the bank was going to ultimately seize the property through foreclosure.

This is what sets the LaBovick Consumer and Financial Services division apart from other financial law firms. Our dedicated team is both knowledgeable and fierce when it comes to our client's well being on this very delicate, emotionally-charged issue.

We knew exactly what direction the bank was heading in this case, and it was nowhere good...

Negotiating at mediation takes a bit of pizzazz. Typically, banks are not willing to come to terms even though the program was set up by a team of judges to be the end of the modification nightmare. The ratio of mediation conferences that do not settle at an impasse are slim to none (This means that a decision of modification terms has not come to pass.).

Ironically, the very first statement made by the bank is that they "have the ability to make a decision right then and there.” This has been historically proven as untrue!

Is the mediation program working? It certainly is for many! With our mortgage modification team and cunning expertise, we managed to sink our teeth into the bank and save our client hundreds of dollars a month – not to mention we brought this foreclosure to a halt.

It was an arduous task and took a long time to accomplish. At the end, we left victorious with terms in hand and an "atta boy" from the mediator, who commented on how strong our team was.

This is a step in the right direction for all homeowners in this tough economy.

HBO has been airing a made for HBO movie entitled “Too Big to Fail”. The film has an A list cast and was written by Andrew Sorkin. The story line revolves around the failure of Lehman Brothers and the bailout of AIG.

The film details the history and ultimate failure of “default swaps” and the carving up and repackaging of mortgage bundles. The government stepped in. The Treasury Department and the Chief of the Fed orchestrated a deal with the major banks to accept TARP funding to perpetuate increased consumer credit. However, the government had no way to ensure the banks would use the funds in the way they were intended.

Sadly, the banks did not use the funds as envisioned and instead ramped up their legal coffers to begin a huge onslaught of foreclosures. Now, several years later, we are all feeling the impact of this ill fated idea. The courts are clogged, unethical law firms are employing robo-signers to perpetuate bad documents and fraudulent Florida Foreclosure filings.

Continue reading "HBO Series - Too Big To Fail - TARP'S Role in the Foreclosure Crisis" »

How the mighty have fallen. One of the few remaining Foreclosure Mill law firms, Ben-Ezra & Katz, announced the layoff of nearly 150 foreclosure staff members. This was their second major staff cut this year, in February they cut over 200 employees after losing their gravy train Fannie Mae business.

In it's heydays, the foreclosure mill law firm, had nearly 600 staff members processing about 18,000 foreclosures. Please understand that we are not celebrating in their loss, but it seems to be poetic justice for the homeowners that lost their home to foreclosure due to this firm and others such as the David Stern firm. Allegedly, they are accused of fraudulently handling foreclosure files and falsifying documents. If this turns out to be true, how could they possibly think that their misdeeds would not be uncovered?

Cutting staff seems to be the least of their worries. The firm is being investigated by the Florida Attorney General and is embattled in litigation with several banks for the mishandling of several foreclosure cases. They are not getting a free ride in court and are being held accountable for their actions in foreclosure cases.

Continue reading "Foreclosure Mill Law Firm Ben Ezra & Katz closes foreclosure business" »

The five biggest US mortgage servicers are considering a cash for keys program that would pay delinquent borrowers money to leave their home. Is this a new play to lure people from their owns and steal the property with a carrot? Last week, the number tossed around was $21,000 to delinquent homeowners. Regulators and Banks are trying to agree on a solution.

The FDIC chaired the meeting last week and stated that the cash for keys program would involve the biggest servicers, such as Bank of America. This incentive would try to lure homeowners away from their home with small amounts of cash, instead of stealing it with fake documents signed by robo-signers.

Our Florida Foreclosure Defense Lawyers, have seen a lot of creative tactics presented by the banks to clear up the Florida foreclosure crisis. This new plan is one of the all time most creative that plays into the banks favor most of time.

Continue reading "Foreclosures: Cash For Keys Program and the Banks" »

The majority of consumers have at least heard that the Obama administration is taking steps to make significant changes with the structure of both Fannie Mae and Freddie Mac, but few individuals truly understand how the new proposals will impact borrowers. Although a number of different strategies have been initiated, there are several that bear mentioning due to the fact that they specifically will cost prospective buyers more money or even the chance to own a home.

Minimum Down Payment Requirements
Many homeowners appreciate the ability to purchase a home without making a substantial down payment, and it is no secret that many prospective buyers do not have adequate savings to afford a 10-20% lump sum. However, the proposals are suggesting that a 10% down payment would be the minimum amount allowable in order to qualify for any federal support on the mortgage. While it may be possible for a consumer to easily afford their monthly payment, few can provide such a significant amount of money upfront.

Reduction in Federally Supported Mortgages
If the amount of Fannie Mae, Freddie Mac, and FHA loans are reduced as per the proposals, borrowers are going to have to depend more upon their local banks and credit unions. The unfortunate truth is that this means the lenders are going to have a much higher level of risk. Smaller institutions are going to be much less likely to offer fixed term mortgages for a lengthy period of time, and only highly qualified buyers will be approved for a loan. Higher risk also means that the lender must experience more of a reward for lending the money, so expect interest charges and other costs associated with home loans to increase substantially. The federally supported mortgages will also be unable to provide assistance with larger loan amounts, so many homeowners will be forced to deal with jumbo loan requirements that are likely to include large fees and down payments.

Continue reading "Fannie Mae and Freddie Mac Mortgage Proposals Could Cost Borrowers" »

The Federal Trade Commission is cracking down on scam artists that blatantly prey upon distressed homeowners facing foreclosure or in need of a loan modification. Recently, the FTC charged a national group of companies based in Palm Beach County, with marketing illegal loan modification services. The FTC seeks restitution for loan modification victims and wants the firms to end to their illegal practices.

According to published reports,U.S. Mortgage Funding Inc., Debt Remedy Partners Inc., LowerMyDebts.com LLC, David Mahler, Jamen Lachs and John Incandela Jr., also known as Jonathan Incandela Jr., allegedly violated the FTC Act and the FTC's Telemarketing Sales Rule and falsely claimed they had a 100% success rate in obtaining loan modifications that would drastically reduce mortgage payments for distressed homeowners.

It is important for distressed homeowners seeking assistance in mortgage modifications or debt relief to be wary of fraudulent scam artists that represent themselves as legitimate firms. Since Jan. 1, 2010, individuals or businesses offering services to negotiate a loan or mortgage modification must be licensed through the Florida Office of Financial Regulation. Also, new disclosures are required such as large-type print on contracts and a three-day rescission period.

In the recent complaint against the Florida based loan modification companies, they allegedly claimed to have loan approvals and affiliations with mortgage lenders> They also claimed that a homeowner would receive a full refund, if they failed to receive a loan modification.

Our Florida Consumer Debt Relief Attorneys, work with distressed homeowners every day, seeking legal help for mortgage loan modifications, foreclosure defense or bankruptcy. Many have spoken to or even hired fraudulent companies that prey upon distressed homeowners seeking immediate help. Before choosing a mortgage modification or debt relief firm, check the company's track record and history to make sure there are no complaints or charges pending against them.

The FTC and many state Attorney General's are prosecuting fraud on loan modification scam artists. If you feel that you have been exposed to mortgage or loan modification fraud, contact the Florida Attorney General's Office, at (866) 9-NO-SCAM (866-966-7226) or www.myfloridalegal.com

Click on the following link to read more on FTC sues Florida loan firm - Tampa Tribune/ Hernando Today

After serving our country, soldiers and veterans come home to find that lending institutions are fraudulently foreclosing on their homes. Recently, it has come to light that a Morgan Stanley subsidiary, Saxon Mortgage Services Unit, may have fraudulently foreclosed upon nearly two dozen military families from 2006 - 2008. The Department of Justice Department is investigating the allegations.

Several mortgage and lending companies are being investigated by the Department of Justice. including, Saxon Mortgage Services, a Morgan Stanley unit. The Service members Civil Relief Act is a federal law that governs actions creditors can take against service members on active duty. It expressly prohibits lender from foreclosing on active-duty service members without a court hearing.

At the forefront of these new revelations is the case of the fraudulent foreclosure sale of the home belonging to Sgt. James B. Hurley , a Michigan National Guard member. St. James Hurley came home from serving in the Iraq war and found that his home had been foreclosed upon.

Continue reading "Military Service Member foreclosures under attack by DOJ" »

The Obama administration has been working hard to reduce the number of foreclosures and help consumers remain in their homes. The Banks and their Analysts are bristling about the prospect of mandatory requirements for lenders to offer a mortgage modification to every borrower. They do not want to take into account contributing factors, which include bank servicing errors and lax underwriting which placed many individuals in homes that they could not afford. Two other major contributing factors beyond anyone's control are the economy and unemployment.

The banking community opposes the idea of a unified settlement requiring banks to pay over $20 million in civil fines for mortgage-servicing errors or fund the same amount in modifications, with a focus on principal reductions.

Restructuring a loan with a mortgage modification provides the borrowers a chance to get back on track and a chance to stay in their home. Writing down a loan balance is only going to help a consumer if the outcome makes the monthly payment affordable. Lenders complain about this concept and cite that they must eat excessive costs to make modifications work.

The banks complain that more consumers will take advantage of the opportunity to reduce their loan amount with a mortgage modification. Most homeowners that seek mortgage modification relief do so, because of a hardship. The parameters are very clear in the mortgage modification lending process. It is not easy or prudent to prove a hardship just because the person is delinquent in paying the mortgage. A successful mortgage modification that leads to a balance reduction will have the facts and documentation to prove the homeowners request is legitimate. The banks know and understand this, yet they fight against the mortgage-loan plan with the arguments that this could encourage more homeowners to seek mortgage relief and extend the housing crisis.

Continue reading "The proposed Mortgage-Loan Plan is not favored by the Banking Community" »

If you do not know about the foreclosure crisis in South Florida, you must have been living under a rock, or living in the wilderness without any communication to the outside world. Several National Banks and Florida Law Firms have been in the news for committing fraud upon the courts and homeowners by filing false affidavits to establish assignments of the loans.

In the mortgage world, assignments are not uncommon. Mortgages are bought and sold on a daily basis. However, for a final holder of the mortgage, note and security agreement to prevail in a foreclosure action, it must produce accurate and truthful evidence of the assignment of those documents to the current holder. That has now been the rub in a voluminous amount of cases currently in the court houses across the state and the nation.

Many lenders and unscrupulous law firms have employed “Robo-signers” to defraud homeowners. These people spend hours on end every day executing these assignment affidavits without having actual knowledge of the contents of the documents they are signing and therefore are committing perjury. This led several lenders to halt the foreclosure process and courts to halt the sale of distressed properties. Unfortunately, the moratorium has been lifted in many states and the banks have resumed foreclosures.

This crisis has opened the door for aggrieved borrowers to attack these fraudulent foreclosures and force the banks into a modification of their loans. Our Palm Beach Gardens law firm along with several other firms across the state has been aggressively defending mortgage foreclosures. Our firm has helped hundreds of families keep their home. Our professional staff has many years of experience in the lending industry. They assist homeowners in mortgage modifications even through the foreclosure process. Our staff of attorneys are well versed in defending foreclosure actions and work closely with our mortgage modification personnel to achieve the best possible result for our clients.

If you are currently under water on your home loan or facing foreclosure, do not give up. You have rights. At LaBovick Law Group we are experienced, aggressive and will use our legal expertise and resources to help protect your most precious asset – your home.

Don’t let the banks take advantage of you during these rough economic times. Stand Up and Fight.

Florida Foreclosure Defense Attorney Scott Haft was interviewed in the Palm Beach Post regarding South Florida man gets his property back after judge reverses Chase foreclosure.

Mr. Haft discussed how his South Florida client had his foreclosure reversed today ay based on a motion arguing the bank was wrong to take the property back at auction while at the same time negotiating a loan modification on the home. Attorney Haft filed a motion to vacate the foreclosure judgment based on fraud, misrepresentation and misconduct by JP Morgan Chase, which had promised a trial loan modification

The Palm Beach Post article discusses how Miami-Dade Judge Marc Schumacher granted the motion. It was agreed to by Chase's attorneys, which is also unusual. A summary judgment is a quickie foreclosure hearing, usually granted when the facts of the case are irrefutable.

Click on the following link to read the article South Florida man gets his property back after judge reverses Chase foreclosure

Today I was in Miami-Dade County for a hearing on a homeowner’s Motion to Vacate Summary Judgment based on Fraud, Misconduct and Misrepresentation during the course of the foreclosure case. In English, this means that my client lost his home when the Chase Bank misrepresented the facts and took his home without due process.

Since February 2010, JP Morgan Chase promised to provide a mortgage modification to my client. They promised to stop the foreclosure proceedings and allow him to stay in the home. My client acted in good faith the entire time, trying to save his home from Foreclosure using the trial modification system as we set up in every modification case. Then, without ever telling my client they were moving forward, Chase went ahead and behind his back got a Summary Judgment. This gave Chase the right to sell my client’s home at Judicial Auction.

When my client was sent a copy of the Summary Judgment, he called the Bank to ask why they were not giving him the promised trial mortgage modification. The Bank assured my client they were giving him a modification and would suspend the sale so that the Trial Modification could go through. That is not what happened. What Chase actually did was sell the house at a judicial sale behind my client’s back. When my client informed us of the way Chase had treated him we felt this was an atrocity. We immediately filed a Motion to Vacate the Summary Judgment based on Fraud, Misconduct and Misrepresentation. Today we had the hearing on my motion. The Judge Ordered the Summary Judgment be vacated (overturned). My client gets to keep his house!

I can’t imagine how many times this has occurred. I believe only one person in twelve gets an attorney. The rest are at the mercy of unscrupulous banks and their attorneys. Homeowners should hire an attorney to represent them in a mortgage modification or foreclosure defense matter. Why do the banks get a Federal bailout and get to use taxpayer’s dollars to foreclose on citizen tax payer’s homes. Homeowners need to Fight Back!

ANYONE WHO HAS HAD THEIR HOME SOLD AT A JUDICIAL AUCTION WITHIN THE LAST YEAR SHOULD TALK TO AN ATTORNEY IMMEDIATELY! DON’T LET THE BANK HAVE YOUR FAMILY HOME!

In two letters recently released by, Attorney General Richard Cordray criticized a number of banks and loan-servicing companies, including Wells Fargo & Co.; Ally Financial Inc.'s GMAC Mortgage; Bank of America Corp.; and J.P. Morgan Chase & Co. Mr. Cordray accused the banks of trying to paper over fraud committed in foreclosures with temporary fixes that don't address underlying problems in the banks' practices.

In light of the fiasco an option for banks would be to allow borrowers to modify loans and make settlements. This would be a win-win for everyone instead of forging ahead with paperwork that could be bogus or flawed. This is a huge issue for the courts in light of a 50-state probe, which includes top law-enforcement officers from all 50 states in response to allegations of robo-signing and massive errors.

It is a but suspect for Bank of America to remain silent on the subject, given that that in 2008 they agreed to an $8.4 billion loan modification program after its Countrywide Financial unit was probed for predatory lending practices. Thus took place only two years ago.

Wells Fargo on the other hand is resubmitting submitting affidavits for 55,000 pending foreclosures,since some of the paperwork might be flawed. One Wells Fargo employee admitted to signing hundreds of foreclosure documents a day without checking for accuracy. When questioned in a Florida deposition, she exclaimed that it was not part of her job description to check for accuracy. This should make homeowners and the bank feel really confident about the validity of the documents signed.

Click on the following link to read more from the WSJ on Big Banks Told Not to 'Fix' a Fraud .

According to the Government Accountability Office, nearly 400,000 households have avoided foreclosure with government programs, as of July 2010. Approximately $248 million of the $50 billion in TARP funds was used to help millions of homeowners with mortgage payment reductions.

In the month of June, the number of permanent modifications increased nearly 15%, bring the monthly total to over 50,000. The Making Home Affordable Program (HAMP) is assisting homeowners and providing hope. The trial modification programs are also beginning to work in the homeowner’s favor. Lenders offered nearly 45% of canceled trial modification participants an alternative modification. Less than 2% of the homeowners in trial modifications went to foreclosure sale.

When seeking loan modification assistance, homeowners need documentation such as pay stubs – last 30 days, Bank Statements – 6 months, Hardship Letter, 2 years of Tax Returns, and proof of residency. Lenders often make it difficult for homeowners in this process, therefore, the use of a loss mitigation professional can be helpful in finding an appropriate workout solution, such loan modification, deed in lieu, or extension of time. Homeowners should seek the assistance of qualified professionals to protect against being a victim of fraud.

The recent numbers from Realty Trac, a research firm based in Irvine, California, show that 75 percent of the top metro areas around the country increased foreclosure activity in the first half of 2010. Florida, California, Nevada, and Arizona accounted for all of the top 20 metro foreclosure areas with a population of 200,000 or more. The state of Florida ranked number one in the country with having the most top 20 metro areas on the list. South Florida accounted for nearly 6 percent of the foreclosures filed nationally with 94,466 foreclosures filed in the first half of the year. South Florida eclipsed larger markets such as Los Angeles, Chicago and New York, and outpaced foreclosure hotbeds Phoenix, Las Vegas and Detroit.

The Obama Administration approved state plans for use of $1.5 Billion in “Hardest Hit Fund” foreclosure prevention funding. Florida, California, Arizona, Nevada and Michigan were the first states to receive the first round funding under programs to support local initiatives to assist struggling homeowners in a mortgage crisis. The state of Florida will receive $418 million in funds to offer mortgage payment assistance to the unemployed and under-employed. The state will also offer principal reduction or second lien extinguishment, if necessary to achieve a mortgage modification for the homeowner.

Late last year, the Florida Supreme Court ordered courts to implement residential mortgage foreclosure mediation programs to help deal with the state’s foreclosure crisis and help homeowners stay in their homes while also keeping caseloads at bay. As of July 12, 2010, Palm Beach County homeowners facing new foreclosure actions on their homestead residences are referred to mediation. The Palm beach County Residential Foreclosure Mediation Program is a free optional program for borrowers; however, lenders are responsible for costs of mediation. A mediation is a great tool for borrowers to negotiate with the lender face to face. A Foreclosure Defense Attorney representing the homeowner is a wise investment, since lenders do not always play fair at the negotiations table.

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.

As the United States slowly recovers from the mortgage crisis and ensuing economic downturn, the fact remains that thousands of homeowners all across America are still facing the threat of foreclosure. Given the current state of the economy, the possibility of missing just one mortgage payment can sometimes be the tipping point that pushes a homeowner closer to the brink of foreclosure. Despite a seemingly dismal outlook, mortgage modification and foreclosure defense are just two of the tools available to help struggling homeowners protect themselves against foreclosure.

A foreclosure occurs when a lender sues a borrower for not making payments toward the property. The lender’s goal in filing this lawsuit is to recover, through the sale of the property, the money it lent to the borrower. Once a lender files a foreclosure lawsuit, an official will deliver a summons to the homeowner’s residence notifying them of the suit. However, a foreclosure not only has the potential to wreak havoc on a homeowner, it can also lead to community degradation and other negative societal impacts.

According to the Joint Center for Housing Studies, each foreclosed home can reduce nearby property values by 1 percent or more. Additionally, foreclosures can also lead to:

•    The foreclosed home and property falling into disrepair
•    A decrease in buyer perception of the area
•    Unpaid HOA fees, normally leading to an increase in the existing members’ payments
•    A refusal by prospective homeowners to live in a neighborhood that includes foreclosed and neglected properties

While these examples are ominous, it is important to note that a successful mortgage modification can help prevent such negative impacts in addition to possibly allowing a homeowner to keep his or her home. Click on the links below for more information.

Lenders’ Cost of Foreclosure Policy Paper – Mortgage Bankers Association

Foreclosure Sales Affect Home Values - Nearby Homes Feel Effect – About.com

Link to Joint Center for Housing Studies – Harvard University

As the nation slowly recovers from one of the worst recessions in recent history, millions of homeowners throughout the United States continue to struggle with their monthly mortgage payments. Many hardworking and responsible homeowners who have fallen victim to the unhealthy economy in addition to the mortgage crisis are facing the threat of foreclosure as well. Although the situation may seem dire, a successful mortgage modification can yield a bevy of positive results, including the possibility of avoiding foreclosure in addition to helping a homeowner keep his or her home equity.

The U.S. Department of Housing and Urban Development (HUD) defines a loan modification as a permanent change in one or more of the terms of a mortgagor’s (homeowner’s) loan, which allows the loan to be reinstated. This process normally results in a payment the mortgagor can afford. A lower monthly payment (sometimes half of the original amount) is just one potential advantage of a successful mortgage modification. Some of the other benefits include:

•    An Interest Rate Reduction – Possibly as low as 2%
•    Brining a Delinquent Loan Current
•    Credit Rating Protection
•    A shift to a Fixed-Term Mortgage from an Adjustable-Rate Mortgage

A successful mortgage modification not only has the potential to benefit a homeowner, it can also benefit their lender as well, making it a win/win situation for both parties. A lender generally loses money – sometimes a large amount of money – on a foreclosure, meaning that the lender will generally work to avoid such a situation when possible. A lender stands to benefit more from a homeowner who is making payments, even at a modified or lower level, than from a foreclosure. Therefore, a successful mortgage modification can lead to a homeowner keeping his or her home in addition to the lender continuing to receive payment.

Follow the links below for more information about mortgage modification.

Answers to Questions About New Mortgage Modification Program – NY Times

U.S. Department of Housing and Urban Development (HUD)

Home Affordable Modification Program – Part of the U.S. Government’s Making Home Affordable Program

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