Sub-Prime Lenders Loosening Up?
By Kurt O'Keefe, Attorney at Law on Dec 3, 2007 in Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Consumer Protection, Foreclosure Issues, Michigan, Mortgages, Predatory Lending
In recent weeks, I have seen two cases of mortgage companies actually reducing balances and changing ARMs to a fixed rate.
One was a month after the foreclosure sale at which the mortgage company got the house back, subject to Michigan’s six month redemption period.
Like the no holds barred lending spree that got us where we are, their actions make no sense. Why spend the $2,000 or so it costs to go through the foreclosure process, then, send a letter offering to change the terms of the mortgage, from ARM to fixed rate, and knocking thousands of dollars off the balance?
Made my client happy, she was going to walk away from the house. It could not be sold for more than she owed on it.
No telling why the mortgage company changed its mind. Their offer made sense, they would just have spent, and lost, more money taking possession of the house and re-selling it.
But that was true before they started the foreclosure. Why not save the $2,000 and make the offer first?
In the second case, my client argued with Litton for months, about not crediting payments, improper late fees, and got nothing but higher blood pressure.
Days before the foreclosure sale, we filed a Chapter 13 that stopped the sale.
Within days of filing the Chapter 13, we get a special delivery letter from Litton attorneys in Georgia, with a one page form to fill out, stating, if my client qualifies, they will re-write the loan, lowering the balance and changing the ARM to a fixed rate.
Why this did not come up until, again, $2,000 or so was spent out of pocket for the foreclosure process, in the numerous discussions my client had with Litton, no one knows.
The moral of the story?
You cannot count on your mortgage company being reasonable, but it might happen, even after you file a Chapter 13 case.
If you liked that post, then try these...
What Are the Rights and Responsibilites of Chapter 13 Debtors and Their Attorneys After the Case is Filed? by Peter Orville, Attorney at Law
"Standard" Chapter 13 Meeting of Creditor Questions by Brett Weiss, Maryland Bankruptcy Attorney
What Do I Do With Tax Refunds During My Chapter 13? by Rachel Lynn Foley - Kansas City, MO Bankruptcy
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