Are Foreclosure Prevention Counselors Letting Lenders Off The Hook?

A recent article on CNNMoney.com gives an informative description of:

• [t]he complicated and time-consuming foreclosure prevention process. Working together are mortgage servicers - the companies that manage the loans - and the borrowers, with foreclosure prevention counselors often acting as go-betweens.

For more, see The trick to getting a mortgage fixed (Foreclosure prevention is a messy business -- more art than science. Here, an inside look at why some people get a loan workout and others don't).

Editorial Note:

Unfortunately, what is not included in the article (and implicitly points to a weakness in the negotiating process for the financially strapped homeowner - the lack of participation of competent legal counsel on his/her behalf) is the need to remind lenders of the legal problems they face in connection with the enforcement of the loan agreement if a loan modification satifactory to the homeowner can't be worked out in the event:

• they don't have physical possession of the actual promissory note (see Fight Foreclosure: Make ‘Em Produce The Note!; and see Paper Chase (You're in luck. Your mortgage lender has flipped, sliced and diced your loan--and now no one knows who holds it)),

• in the case of a mortgage obtained in a home refinancing (as opposed to a home purchase), the loan documents contain violations of the Federal Truth In Lending Act (see Homeowners Misled By Mortgages Finding Ways Out; and see Finding a legal escape clause (Attorney rescues homeowners from loans they can't afford)),

• the loan violated any applicable state predatory lending and/or consumer protection laws (see Fighting Back Against Foreclosure - New York Judge Denies Foreclosure Based on Alleged Predatory Lending),

• in attempting to collect on the loan, the Federal Fair Debt Collection Practices Act (or any applicable state debt collection statutes) has been violated (see Un-Fairbanks - How West Haven sisters fell victim to a national mortgage scam, and how it could happen again).

Loan counselors who are not attorneys are obviously not in a position to practice law. Consequently, (unless working in conjunction with an attorney experienced in negotiation and familiar with the relevant legal issues ) they are unable to raise these issues during the loan workout negotiation process and will likely result in homeowners unwittingly overlooking the leverage they possibly (some may say probably) have in reaching the best possible deal they can with their mortgage lender.

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For other posts that reference the failure of some mortgage lenders and their attorneys to file the required loan documents when starting foreclosures, Go Here, Go Here, and Go Here.

For other posts on homeowners using Federal & state consumer protection statutes to try and undo bad mortgage loans, Go Here and Go Here.