An Internet Resource for Management of Legal Matters
The ILC subgroup "Foreclosure Defense" is dedicated to sharing information, case histories, developments in the news, and providing hands-on assistance to borrowers from honest, dedicated professionals.
Current wisdom is that "loan modification" must be viewed warily. For one thing, it rarely works. They're often just an attempt to perpetrate another fraud on homeowners. The bank telling you they own the loan and offering a modification is very likely not telling the whole truth. Their real goal may be to get you to sign up for a new loan so they can correct the paperwork which they hopelessly confused during their processing of the earlier loan.
For other explanations why lenders prefer foreclosure over modification, see the attached article summarizing built in profits from the FDIC pursuant to agreements they enter with banks that have assumed loans given by failed institutions. Also, see my blog post describing how foreclosure enables banks to quiet title, thus achieving the objective they have in making loan modifications.
Loan modification services, whether provided by attorneys, realtors or anyone else, have become subject in California to SB 94 effective October 11, 2009. Fees can no longer be paid in advance. Even though many feel it is unconstitutional to deprive borrowers of the freedom to contract with vendors, especially attorneys, thereby effectively denying them the right to counsel, nobody wants to run afoul of these new laws. The sanctions are severe, not just monetary but criminal as well.
The lending process that evolved after 2001 has raised challenging unresolved issues with respect to ownership of vast numbers of residential loans made since that time. The money that lenders transferred to borrowers typically came from Wall Street investors. It didn't originate with the bank. They're just "Pretender Lenders". Shortly (or immediately) after loans were made, the paperwork was transferred back to Wall Street where it was "securitzed", i.e. made over into mortgage secured bonds that individuals, pension funds and labor unions (or hapless foreign governments) would buy. Moreover, the big banks and Government Supported Enterprises, eg Fannie Mae, created the Mortgage Electronic Registration System (MERS) that has commonly insinuated itself into loans as the permanent beneficiary, no matter how often loan servicing responsibilities are passed around.
In this forum, we aim to keep abreast of developments that have created an entirely new legal landscape and must be understood to enable proper handling of foreclosure defense matters.