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Wrongful Bank Foreclosure
- Bank Bail-Out II, the Sequel: How the Banks Got a Mulligan in the Wrongful Foreclosure Crisis
- Massachusetts Attorney General’s Foreclosure Lawsuit Applauded by Private Consumer Attorneys
- 4 Million Borrowers May be Eligible for Review of Foreclosures
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- Posted on 2/8/2012Robo-signing Foreclosure Scandal Leads to Criminal Charges for Lorraine O. Brown and DocX
- Posted on 10/18/2011Attorney General Martha Coakley May Sue for Foreclosure Abuses
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- Posted on 8/23/2011Bank of America admits error in foreclosure case
- Posted on 8/23/2011springfield approves anti-foreclosure laws
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- Thank you Mr. Phillips. If we hadn't found you the [Bank] would have foreclosed on our property and I can't imagine the misery that they would have caused. S.N. - Arizona
Will Banks Stop Foreclosing During Loan Mod Process?
We recently wrote a blog about Treasury Supplemental Directive 10-02 and its emphasis on stopping servicers and lenders from foreclosing during the federal loan modification process. Weeks ago we reported that servicers and lenders were continuing with foreclosure after borrowers had made loan modification requests and reported one instance where Bank of America foreclosed and caused damage to a home even though the borrower was current on loan modification payments.The foreclosure problem stems from the flawed or non-existent communication policies of the servicers and lenders. Servicers and lenders have repeatedly failed to inform foreclosing attorneys and outside contractors, such as the "trash-out" companies, that a borrower has applied for a loan modification through the federal program. Once the foreclosure process starts, the lenders and servicers fail to stop it.
Supplemental Directive 10-02 tries to address this communication problem. The Directive states:
"Servicers must develop and implement written policies and procedures to provide notification to their foreclosure attorney/trustee regarding a borrower’s HAMP status, including whether the borrower is potentially eligible for HAMP (and is subject to the Borrower Solicitation requirements of this Supplemental Directive), and whether the borrower is being evaluated for, or is currently in, a HAMP trial period plan. Servicers must ensure that their foreclosure attorney/trustee adheres to all of the requirements of this Supplemental Directive with respect to referral to foreclosure, stay of foreclosure actions and suspension of foreclosure sales."
This Supplemental Directive seems to be going down the right track. However, servicers and lenders will have to implement new communication policies in order to comply with this directive. Lenders and servicers have not yet been able to adapt to the federal loan modification requirements. We are hopeful that lenders and servicers will act fast to save borrowers' homes from foreclosure but we are doubtful given the their track record.
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