Why Are Mortgage Modifications Still Not Working?

28 Oct Why Are Mortgage Modifications Still Not Working?

Thechoice to modify a home mortgage is a decision that should not be takenvery lightly.Mortgage modification seems to be the buzz word of the day. The Federal Governmenthas passed three pieces of legislation this year encouraging distressed homeowners to contact their mortgage companies and seek modification options.

The only problem is that when a homeowner contacts the company who they thought owned the mortgage, it turns out that the mortgage was securitized. Securitization is the process where an asset, like a mortgage, is pooled and packaged into a security and sold to investors. Simply put, your mortgage is owned by an investor, not the company that you pay your monthly payment to.

As if purchasing a home and obtaining a mortgage wasn’t difficult and stressful enough. Once you begin the process you realize that there are many players in a mortgage transaction. You may have dealt witha loan originator, broker, attorney, document custodians, mortgage servicers and trusts. As if this wasn’t frustrating enough, now you find out that the servicer doesn’t own or hold the promissory note and mortgage on your home. So, who is the real party that you can call to modify your home loan.

Normally, in the mortgage modification process, you would start with the company that you make your payments to. This company could be a mortgage servicer or a mortgage company holding and servicing its own loans. I would ask them immediately if they own and hold the note and mortgage. If the company is a servicer, request that everything they tell you be put into writing. If they will not put their words into writing, I would highly suggest that you put their words into writing and send them back to them via U.S. Mail or ask their permission to record the phone conversation so you don’t mistake their advice. Why would you want to do this?

Because the mortgage servicer makes more money when you default. The mortgage servicer does not have your best interests at heart. I wish I had adime for every person who told me: “My mortgage company said that I had to be three (3) months behind before they would work with me.”

What is the authority for that statement? When did it become good advice to go into more debt so the mortgagecompany could help you. Were they going to waive the late fees and costs associated with going intomore debt? Were they giving a guarantee thatthey wouldhelp as soon as you were three (3) months behind. No, I didn’t think so.

But guess whatdid happen, you now owe the mortgage servicerthree late fees and whatever else they could tack onto your loan. Your creditrating is falling faster thanJohn McCain’s popularity and now no bank will look at you for a refinance, so you have to pay the mortgage servicers their fees and costs or risk losingyourhome.

With friends like these, who needs enemies. So, in the process of trying to modify your mortgage, ask the person on the other end of the phone what authority he or she is acting under. They may say that there is a pooling and servicing agreement that binds the servicer, but I doubt they will tell you that because it is the truth. You want to see that document because it details the rights between the investors in the trust and the servicer. Of course, the servicer never wants you to see this document because it does not say that you must fall three (3) months behind on your mortgage before anyone will help.

I will continue with more about pooling and servicing agreements.

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Carmen Dellutri is a proud member of the Florida Bar, and he is a Board Certified Consumer Bankruptcy Attorney, Certified by the American Board of Certification. He practices in the areas of Consumer Bankruptcy and Plaintiff's Personal Injury. He is the principal attorney at The Dellutri Law Group, P.A. The firm supports many charitable and civic causes by donating time and much needed capital to our community. Mr. Dellutri and the other attorneys in the firm routinely speak to students of all ages about various legal and societal issues.
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