Lenders' Little Helpers - Conflict of Interest?

Lenders' Little Helpers - Conflict of Interest?    

AR'ers, this is a column I write for a NJ monthly. The point is ubiquitous. 

Records indicate more than  36,000 foreclosure lawsuits were filed in New Jersey last year, and this year that number is expected to exceed 50,000.

During the first quarter of 2008 the 12,300 foreclosure starts  included "only" about 275 in Atlantic and Cumberland County.   Will you be next?

The challenge for this writer is to reach out  to the handful of The Gazette readers who may face, or soon face the threat and uncertainty of mortgage or tax foreclosure proceedings. 

Are you a homeowner from Millville, Mays Landing, Pleasantville, or Vineland who have missed a few mortgage  payments and cling onto the hope your lender will reach out and restructure your loan? Perhaps you've met with a bankruptcy attorney to learn if you qualify for a Chapter 13 repayment plan.  You may have already responded to one or more of at least a hundred and fifty odd (boilerplate) and suspicious letters sent to you by foreclosure consultants, so-called experts, Realtors, mortgage brokers, real estate investors/speculators, or non profit housing counselors... all offering various forms and degrees of help.... if you are among the 275 unlucky local homeowners who have been notified formal foreclosure proceedings have begun.     

I'd like to be able to assure you things will get better before getting worse.  But I can't.  Nobody can. Results will depend on your own set of circumstances, and how well you prepare for the choices you will make in the days, weeks, and months ahead. The operative word is prepare. To my thinking, to prepare includes gathering essential information. Without essential information, you can't make an informed decision.

You should realize that although the foreclosure problem is widespread,  you alone must be proactive to avoid the loss of your home.  Despite hearing or reading about sweeping proposals for a national bailout,  how "The Fed" has things under control, or how the recently enacted government sponsored programs have helped millions of homeowners avoid mortgage foreclosure, don't believe everything you read, and don't mistakenly assume there will be help for you, or even the help or advice you do receive is in your best, long term legal and financial interest.  

Your lender will only do what is in its best, financial interest. If you happen to derive a benefit from your lender's action, it is incidental to your lender's objective. Lenders' willingness and capacity  to help homeowners (loss mitigation) is available on a first come, first served basis. Those who are offered help in  the form of loan modifications, or cramdowns and refis must submit formal applications, and must meet stringent criteria.      

In the wake of  lenders' slumping stock prices and the need to reduce costs, the mortgage loan servicing industry has laid off many of its valued and experienced loss mitigation personnel,  teamed up with the government, and  instead ‘outsourced' much of the tedious workout function to the non profit community.  In exchange for the promise of funding, many non profit counseling organizations have agreed to  abide by, and recommend only those workout  solutions which are ‘acceptable' to the mortgage loan servicing industry,  solutions which are in the lenders' best financial interest.

Personally, I think many recipients of this corporate sponsored ‘non profit counseling' may not be introduced to some important non foreclosure alternatives which, although powerfully valid, are dismissed and discouraged by the lending industry, and subsequently, by the very loan counselors who have been empowered to help. Of the daily 5,000 or so calls into HopeNow, how many borrowers do you think are encouraged to have an attorney perform a review of the loan's characteristics and then, if indicated, challenge it as being predatory, or challenge the loan's legality due to violations to Regulation Z - Truth-In-Lending-Laws (TILA)?

I'd think not too many since doing so would not be in the lenders' best, financial interest. I'd think participating non profits will stick to the script, and wouldn't be inclined to bite the hand that feeds them... But what many homeowners don't realize and  probably are not told by the corporate sponsored non profit counseling organizations... is that by entering into a workout agreement to avoid foreclosure, the homeowner ill-advisedly and unknowingly may waive certain legal rights... surrendering legal rights needed to fight foreclosure and win.

Before signing any document involving your home, even a seemingly favorable loan workout agreement, have it reviewed by an attorney.

David M. Petrovich, Executive Director for S.P.O.C.H., a non profit 501c3 Corp, has written, Fight Foreclosure!

For a review of non foreclosure options, and a short list of free or low cost legal service providers who are qualified to determine if your loan is predatory, or if your loan is in violation of Federal Law, contact  S.P.O.C.H. @  www.spoch.org.