HOW TO DO YOUR OWN LOAN MODIFICATION
Doing a loan modification is a
relatively simple process, one that a person can do on his own
without the need of professional assistance.
Of significance to the issue of a loan modification, however, is the fact that this law requires that your lender (or servicer) conduct a loan modification prior to initiating foreclosure. The law, however, does not require that any kind of loan modification be approved. The law further requires that you have a right to appeal a denial of a loan modification, should you be denied. (You must appeal within 30 days of notification of the denial.) The appeal, however, is to the servicer or beneficiary, i.e., the entity conducting the loan modification.
The loan modification appeal process is analogous to an appeal in a civil or criminal matter. It awaits to be seen, however, whether the same impartiality, fair play, and sage judgment will be exercised in these loan modification appeals as is exercised in the judicial appellate process.
To assist you in formulating what you can objectively afford as a
monthly mortgage payment, the Spielbauer Law Office is making
available a sample the Financial
Statement. This will help you evaluate what you can realistically afford, and how your ability to pay
and otherwise qualify for a loan modification falls under the
requirements of California
and under HAMP. You can then submit this evaluation to your
financial institution, or its servicer, as a part of the loan
modification process, or simply transfer the information onto your
servicer's form if the servicer prefers using its own forms.
Your next step is to write a letter to your
institution advising it that you would like to engage in a loan
modification. The introductory letter should be brief and to the
point. This letter should be sent to the bank and to the servicer of
your loan. You can obtain the addresses from your billing
statements. If you are in foreclosure, you can obtain the addresses
from the Notice of Default as California Civil Code §2924c(b)(1)
requires that the Notice of Default contain the name, mailing
address, and telephone number of the beneficiary (the owner of your
loan). If MERS is listed as the beneficiary of the deed of trust,
you should send the introductory letter to MERS as well.
Keep the letter simple and to the point. Below is some suggested language. You can feel free to copy and paste and modify as appropriate. Keep your communications polite, but be persistent.
[Name of Recipient]
[Address of Recipient]
[City, State and Zip]
Re: [Property Address]
[Name of current beneficiary of the loan]
[Account Identification Number]
[Trustee Sale Number if in foreclosure]
I am writing you this letter to request that [Beneficiary/servicer] engage in a loan modification with me for the above loan. Due to a downturn in my financial situation, it is now difficult if not impossible for me to fulfill the current monthly mortgage obligation as it currently exists. Without a loan modification, I fear that foreclosure is inevitable.
I am specifically writing to request that [Beneficiary/servicer] assess my current financial condition and explore options with me to avoid foreclosure.
I am also writing you to ask that you provide to me a true, correct, and complete copy of the promissory note and any other evidence of indebtedness, with any modifications or endorsements thereto, as discussed in California Civil Code §2943(b)(1).
Please provide to me a true, correct, and complete copy of the
deed of trust with any modifications and assignments thereto, as
discussed in California Civil Code §2943(b)(1).
Please also provide, pursuant to the Truth in Lending Act (15
U.S.C. §1641(f)(2)) the name, address and telephone number of the
secured obligation’s owner or master servicers.
Please also provide, pursuant to the Truth in Lending Act (15 U.S.C. §1641(f)(2)) the name, address and telephone number of the secured obligation’s owner or master servicers.
You may contact me at [State your address].
Additionally, you may contact me by telephone at [telephone number].
Do not become frustrated or be tempted to give
up or assume that no one will help at the Bank or servicer if you do
not get an immediate response. They are working with thousands of
distressed borrowers. That said, also remember that your
persistence will be your salvation. The adage “the squeaky
wheel gets the grease” definitely applies here. Be polite, but also squeaky.
California Civil Code §1500
It is critical that you set aside your monthly mortgage payments even if you disagree with your lender, or its servicer, as to what the payment should be. If your lender, for example, is demanding payments of $4,100 per month on your mortgage, but you believe that the accurate amount of the monthly payments is $1,980, you should set aside monthly mortgage payments in the amount of $1,980. To do this, you must go to a bank of your choice and open a special account into which you deposit each month the mortgage payment in the amount you agree is due. It must be a special bank account, not one in which you co-mingle the mortgage payments with some other money, such as a savings or checking account, or your kids’ college fund account. The only money which goes in to this special account is your monthly mortgage payment in the amount determined by you in an account managed solely by you.
Under no conditions should you give yourself a mortgage payment holiday.
Under no conditions should you use this mortgage money to pay off
other bills or expenses. If you do this, you will provide the
lending institutions their most powerful argument. That argument is
that you are a deadbeat who is looking for a free lunch, i.e.,
someone who has lived rent free for the last number of months and
wants to continue to live rent free, a free-loader who is looking
for a "sugar" bank to support him, and is willing to make up stories
to accomplish this. You will sell your most precious possession,
your integrity and your word, for less than thirty pieces of silver.
The legal system will treat you accordingly. If you have failed to
save these payments for the last several months, begin now. Better
late than never.
Prepare Your Papers and Your Story
You should begin the process of compiling all of the papers surrounding the re-finance or purchase of your property, the one which is in foreclosure. This is particularly important if you believe that you were misled into this loan or that things were not disclosed to you which should have been. If you do not have all of your paperwork, you can contact the title/escrow company and request copies of the documents which they have. There may be a modest copying charge. These companies may not have all of the paperwork concerning your loan, but what they do have will be helpful.
Additionally, it is important that you outline (or even write) a narrative of what occurred with your loan if you believe that you were misled or mis-representations were made to you. This narrative must be comprehensive, containing factual details. The law requires specificity in those cases in which wrongdoing and fraud is alleged. This narrative will be critical in the event that litigation becomes necessary, and certainly will be helpful in pre-litigation conversations.
Courts require that actions alleging fraud be pled specifically. You must (1) state the precise fraudulent representations; (2) how they were false when made (3) clearly identify the speaker; and (4) state when and were the statements were made.
Charges and Fees
You should IMMEDIATELY obtain a breakdown, a detailed itemization, of the amounts the bank is demanding. If you hope to reinstate your defaulted note, you should submit a request for a Beneficiary Statement to your foreclosing lender (the beneficiary) and the trustee. This statement will tell you how much you have to pay in charges and fees in order to reinstate the note. This statement must be requested within 2 months of the recording of the notice of default. Additionally, you should obtain a Payoff Demand Statement. This demand must be submitted to the lender and trustee within 3 months of the recording of the notice of default. It must be submitted prior to the recording of a notice of trustee sale. You will note that these statements are a part of the request discussed above.
These statements will allow you to detect inflated charges, particularly attorney and trustee fees. The bank and trustee are not permitted to charge you as much as they want (they would like you to believe that they can). Their default attorney/trustee fees are limited by law and are based on a formula set forth in California Civil Code §2924c(d).
The fees increase if a notice of trustee sale is recorded.
Discerning the amounts that the bank is charging you is crucial, particularly if you suspect inflated fees or overcharging. Inflated fees = theft = fraud. This information alone can trigger other substantial legal protections to delay or prevent this foreclosure.