Homeowner Beats Bank of America In Small Claims Court

On January 4, 2011, the Huffington Post's Arthur Delany reported a homeowner who was successful in bringing Bank of America into California's Small Claim Court and being awarded $7,595 after the Bank denied him a loan modification.


Dave Graham, the homeowner told the Huff Post, "It was a good victory for me and I think for homeowners around the country."  This author agrees.

What is supposed to be a three month trial, the bank dragged on for 18 months - an all too common occurrence; at which point the Bank informed the homeowner that he did not qualify for a loan modification and the Bank demanded immediate payment of approximately $7,000 (the difference between the normal mortgage payment and the modified trial payments), or the Bank would foreclose on the property.


Graham was successful in bringing his case into the Small Claims Court.  The Bank states that they will appeal - something they can do in California.  Let's see what happens....

New Short Sale Guidelines

The federal government recently announced the short sale program guidelines for the Home Affordable Foreclosure Alternatives (HAFA) program which will go into effect on Monday, April 5, 2010. 

Bank of America Home Loans is implementing HAFA, the program designed to help those customers who were not eligible for the Home Affordable Modification Program (HAMP) or any other modification.  For more detailed information on the HAFA program, go to the National Association of Realtors site.

The HAFE program provides incentives for short sales and what are known as a deed-in-lieu of foreclosure on a loan eligible for modification under the HAMP program.

A list of servicers participating in the HAMP program - including HAFA - can be found at the Making Home Affordable website.  

CHASES' website regarding short sales can be accessed for further information. 

Only 5% of loan modifications go through!

As an attorney working to help homeowners, reports of these stats make me scream!  I thank the Wall Street Journal for their reporting which appeared in today's paper.  I respectfully copy here the story authored by
Ruth Simon (at ruth.simon@wsj.com).

Foreclosure Rescue Still Bogged Down

By RUTH SIMON

Fewer than 5% of borrowers participating in the Obama administration's foreclosure-prevention program, about 31,000 in all, have received permanent loan modifications, the Treasury Department said Thursday.

The new numbers were the latest sign of trouble in the $75 billion foreclosure-rescue plan launched in February. The program provides financial incentives for mortgage companies and investors to reduce loan payments to affordable levels for struggling borrowers. But it has proved difficult to move borrowers from a trial phase to permanent mortgage fixes.

"We agree that servicer performance in converting trial modifications to permanent ones has been unsatisfactory," a Treasury Department spokeswoman said. The department last week said it was stepping up pressure on mortgage companies to complete more loan modifications.

Waiting for a Permanent Fix

See more data on loan modifications, and sort by servicer, the number of loans eligible and the number modified.

More

• See the administration's "Making Home Affordable Program" report

Through November, more than 728,000 borrowers had begun making trial payments under the plan, up from 651,000 in October, with modifications saving borrowers an average of more than $550 a month, the Treasury Department said.

Bank of America Corp. had 156,864 borrowers in the trial program and 98 other borrowers had received permanent fixes. Citigroup Inc. had completed 271 permanent modifications and had 100,124 active trial modifications.

A Bank of America spokesman said the company had "the highest number of...active trial modifications" and expected to gain momentum in converting borrowers to permanent fixes in December.

A spokesman for Citigroup's mortgage unit said the bank was beginning to see "greater success" thanks to "recent improvements in documentation requirements and increased borrower awareness."

The program calls for borrowers to make three trial payments to qualify for a permanent modification. They must also provide a hardship affidavit and other documents.

The administration has been successful in getting borrowers into trial modifications, said Thomas Lawler, an independent housing economist. But its results on permanent modifications has been "discouraging," he said. Officials "clearly didn't think enough about what would happen on the back end," he said.

The administration had set a goal of 500,000 trial modifications by November 1. Many mortgage-servicing companies began the trial process based on verbal information provided by borrowers. But getting borrowers to turn in required documents has been challenging. Many borrowers, meanwhile, complain they are asked repeatedly for forms they have already filed.

Some companies have required borrowers to provide most or all of the needed paperwork before they begin the trial process. Two such firms, Ocwen Financial Corp. and GMAC Mortgage Inc., account for more than 11,000 permanent modifications -- more than 36% of the total.

"Deciding to get the documentation up front has been key," a GMAC spokeswoman said. Despite financial pressures, GMAC has boosted staffing in loss mitigation by 35%, she said.

J.P. Morgan Chase & Co. has 136,686 active trial modifications and 4,302 permanent modifications. In testimony before Congress this week, Chase said that 29% of borrowers who entered the program between April and September didn't make the required payments; 20% hadn't provided all of the required documents. "Our focus has been on getting the documents we need from customers," a Chase spokesman said.

At Wells Fargo & Co., 96,137 borrowers were in the trial plan and 3,537 had received permanent fixes. About 14,000 additional borrowers had provided all required documents and most should receive permanent modifications in the next month or so, said Cara Heiden, co-president of Wells Fargo Home Mortgage.
More than half of Wells Fargo customers in the program hadn't yet made all their trial payments because they hadn't been participating long enough, she said.

Write to Ruth Simon at ruth.simon@wsj.com