August 11, 2021

A phenomena has recently emerged in mortgage loan situations across the United States involving homeowners’ attempts at loan modification and other forms of loss mitigation where servicers are engaging in what appears to be intentional misconduct, such as first advising homeowners that their applications are complete but thereafter advising, on some occasions the next day, that their application is “incomplete” without advising what information or documentation is missing and notwithstanding that correspondence from the servicer states that it will notify a homeowner of what information or documentation is missing.

In other situations, denials are being issued on the alleged ground of “exceeding the number of times you can request modification” where there has been no prior request to the specific servicer and where the prior application was made over 10 years ago, and notwithstanding the fact that the modification request was made due to a change in financial circumstances and where the servicer’s guidelines provide that applications for modification may be made due to a change in financial circumstances.

In one case, the servicer changed its position no less than 4 times in as many months, first advising the homeowner that the application was complete, then stating that it was incomplete, then reversing itself again to state that it was complete, and on and on.

In another case, the homeowners applied for a loan modification over 15 years ago and there was never a decision on the application. The servicer’s principal, a “trustee” of a securitization Trust, then filed a second foreclosure action which has taken the position that the recent loan modification application cannot stand as there was a prior application.

In yet another case, the servicer was provided with a complete loan modification application no less than five (5) times. The servicer never advised that the application was incomplete, and the homeowner never received any letter from the servicer as to the application. An alleged “denial letter” was first produced over a month after the homeowner filed a Motion in the foreclosure case asserting that applicable Code of Federal Regulations precluded the advancement of the foreclosure once the completed loan modification application was submitted, with the letter being dated less than one week after the homeowner submitted his complete application to the servicer. The letter claimed that the application was denied because there was a prior application and thus the homeowner had “exceeded the maximum number of opportunities” to seek loan modification even though (a) no prior loan modification had been submitted to that servicer, and (b) the prior application was submitted to a different entity over 13 years ago.

It thus appears that it is time to sue these servicers for their misconduct including violating the very provisions of their own documents upon which homeowners rely in applying for a loan modification in the first place; failing to provide information which their own documents say they will provide; and to stop the nonsense which appears to be interposed for no other reason than to permit foreclosures to proceed. Significant here is that there is evidence that servicers are paid a fee for helping a foreclosure to proceed (by denying a request for loan modification), thus indicating that servicers may be part of a corrupt enterprise.

Jeff Barnes, Esq.,