Maryland Foreclosure Lawyer Blog

President Obama introduced HAMP (Home Affordable Modification Program) and MHA (Making Home Affordable) over a year ago in order to help struggling homeowners stay in their homes. Seventy-nine billion dollars was allocated for this project. During the past year few homes have been saved through HAMP modifications, not because homeowners didn't qualify, but because servicers were not adhering to the contracts they signed with Treasury. A "servicer" is a company that is hired by the lender to collect the money each month and pay the expenses associated with the property.

Under that HAMP/MHA program any servicer that wanted to participate in the program had to sign a contract with Treasury stated that it would follow guidelines established by Treasury in order to help the homeowner. However, few servicers have followed the guidelines established by the Treasury.

One of the key provisions of HAMP/MHA was requirement that servicers not initiate any new foreclosures nor proceed to sale in an already filed foreclosure pending a modification review. I want the reader to think about the irony of the situation.

You pay taxes. You purchased a home with an "exotic" mortgage that was touted as the new way to purchase a home because you could buy more home for less money. The banks, brokers, and all sorts of lenders opened their doors wide and invited you to sign on the dotted line for a financial commitment that was doomed to failure. However, the banks, brokers, and lenders didn't explain this to you nor do they care whether you failed or succeeded in paying the mortgage. After all, they all sold their mortgages to Wall Street for significant profit.

Many of these banks, brokers, and lenders have long since vanished. Those that remained had to be bailed out through TARP (Troubled Asset Relief Fund) money and later helped by the stimulus package. However, instead of using the stimulus money to rewrite loans and help you stay in your home, the financial institutions use the money for other purposes and proceeded to aggressively foreclose on properties. I started this explanation by saying that you pay taxes. I did this for a reason. You, through your taxes, are giving money to these financial institutions to foreclose on your property.

What can be done to prevent a sale of your home pending the modification process? You can ask the court to stay any schedule sale of your property pending the modification review. Some courts are sympathetic to this while other courts will allow the sale to go through. File exceptions to the sale. If you want a unique approach, sue the servicer for breach of the contract it signed with Treasury.

But I'm getting ahead of myself. Those topics are for future articles. For now, just understand that it is improper for the servicer to proceed with a foreclosure while your HAMP application is being considered.

Fourteen months ago President Obama announced the Home Affordable Modification Program (HAMP). Also known as Making Home Affordable (MHA), HAMP promised servicers with smiling faces welcoming you with open arms and expertly helping you modify your mortgage loan without the need for lawyers or any type of help other than that provided free from the government.

Yes, Dorothy wasn't in Kansas anymore, but the Tin Man was finally going to get rid of his greed and actually get a heart. However, the foreclosure mills kept churning out new foreclosure cases, people kept losing their homes, and HAMP struggled to get off the ground. Since that time the government has issued approximately thirteen Supplemental Directives designed to clarify the program, but more over force the servicers and lenders into compliance with the program.

The truth is that HAMP is an excellent program and, if followed, can have a huge impact on the current housing crisis. More Americans will be finding this out as the foreclosure crisis creeps into middle/upper income America.

This series of posts are designed to arm the Maryland homeowner with basic knowledge about HAMP and address issues that commonly arise during the modification process, or in many instances, the lack thereof. Where possible, I will use to teaching tools that I found to be very effective; humor and specific example.

So sit back and fasten your seatbelts, you're about to start on a journey that travels through time and space, you're answering the mortgage modification world.

The Making Home Affordable program announced by President Obama now includes provisions for modifying second mortgages.

The key provision for second mortgages is that they must match any loan modification made to the first mortgage. For example, if the first mortgage was modified to a 40 year loan then the second mortgage would be modified to a 40 year loan. If 10% of the principal of the first mortgage was deferred to the end of the loan then the same would hold true for the second mortgage.

The bottom line is this - you can modify your second loan down to as low as 1% for five years for interest only second mortgages and 2% for five years on conventional second mortgages.

In a presumed effort to protect homeowners against foreclosure rescue schemes, the administration has warned:

There is never a fee to get assistance or information about Making Home Affordable from your lender or a HUD-approved housing counselor.

Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay - walk away!

The problem is that you, the borrower may have a valid claim against the lender. The HUD approved housing counselor cannot and will not advise you of your rights.

Walking away from a potential lawsuit (the foreclosure) without being informed of your rights may shield a lender from liability resulting from wrongs that the lender committed. Additionally, your will not know if you have a valid defense to a foreclosure or even an action against the lender to recover damages.

I have not found any government sponsored program that will examine the loan package and give you an opinion of whether you have a claim against the lender. Not one!

In fact, most government help agencies screen your package before it is submitted to the lender. While this may sound like a good approach, the opposite may be true if it has the effect of rejecting marginal applications. That is the difference between help and advocacy.
A lawyer will advise you of your rights, liabilities, defenses and claims. An attorney will advocate on your behalf in order to achieve a beneficial result.

Yes, you will have to pay an attorney, such as myself, for doing my job, and you will have to pay me up front because I recognize the reality of your financial position. But most attorneys, me included, will provide you with a free basic legal opinion.

Remember, most people who are reading this have already tried to reason with their lender and loan servicer without any result, or for that matter, any respect. What makes you think that times have changed? If you think that it is the Making Home Affordable (MHA) program then I believe that you are mistaken. MHA has no regulatory agency overseeing the lender's acceptance or rejection of your application. So far, the best overseer is the court.

You read the last sentence correctly. The very thing that you may have feared the most, a foreclosure action, may be your salvation. Once a lender sees that its actions may form the basis for a defense to the foreclosure, or better yet, an affirmative claim against it for a damage award, the lender may think twice about rejecting a reasonable loan modification.