By the time most clients in need of a loan modification contact me, they are already in an active foreclosure case. While each case has its specific facts, there are a few common threads that I have noticed throughout my representation.
First, most homeowners are either being advised to stop paying their mortgages in order to be considered for any kind of loan mitigation or they are being told that only after a foreclosure process has begun, will they be eligible for any such programs.
Second, many lenders had reason to know that the subject property of the finance transaction appraised far too high.
Thirdly, lenders encouraged a condition whereby mortgage brokers and/or loan officers pushed adjustable rate mortgages and/or balloon payment arrangements which they should have known would result in this result.
These defenses are very difficult to properly place in court. In fact, many courts will see this as a delay tactic and may even sanction the homeowners and/or their counsel. The lawyer who is bringing this claim must not be of faint heart; these defenses are valid and must be aggressively prosecuted in court.
Lenders must be forced to account to the homeowners for their share in the injustice which often characterizes foreclosure proceedings.