Practice Pointers: Create a Paper Trail When Applying for a Loan Modification

With foreclosures on the rise in Massachusetts, struggling homeowners will likely continue to apply for loan modifications in record numbers.  Loan modifications are a good option for mortgagors who have steady income and need help in obtaining an affordable mortgage loan payment.  However, despite federal and state laws created to promote loan modifications, the application process for loan modifications is, often times, anything but a breeze.  

Too often, I hear from homeowners who have applied for modifications in good faith, and have been told by their loan servicers repeatedly that their applications have been lost and paperwork is missing.  Errors like these have been the subject of frequent litigation against banks and servicers.  

In these unfortunate situations, a foreclosure defense attorney can help you fight a loan modification.  However, as I have often seen, a homeowner is in a much, much better position in fighting a modification if they have proof that they have been applying for a modification.  In other words, without documentation, it is only a homeowner's word against the bank or loan servicer in claiming the loan modifications were not properly considered, which makes for a MUCH tougher case.

With this in mind, anyone applying for a loan modification should create a paper trail of their application process.  Hopefully this paper trial will never have to be used, but if a homeowner finds themselves having to go to a lawyer, this information will be a huge help in preparing your case.  Applicants for loan modifications should always do the following:

• Make a copy of everything you submit to your bank or loan servicer.  An inexpensive scanner can be a huge help in organizing these files electronically. 
• Use some means of confirming that your bank or servicer received your application.  If you are mailing your application, send it by certified mail, which is proof that the recipient actually got what you sent them.  If you are sending it by fax, get a confirmation that your application was actually received. 
• Keep a log of all of your communications with your bank or servicer.  Note the date, time, who you were speaking with, and the status of your file.

Hopefully, your loan modification application will not end up in court.  But if you do find yourself in litigation, these steps will put you in a much, much stronger position in helping you get the relief you deserve. 

Blog Post Link:  http://maforeclosurelawblog.sherwinlawfirm.com/2014/06/practice-pointers-create-paper-trail.html

Breaking News: Massachusetts Sues Fannie Mae/Freddie Mac Over Non-Compliance with State Foreclosure Law

Massachusetts sued Fannie Mae and Freddie Mac in Superior Court this week for these entity's failure to comply with Massachusetts foreclosure law.  Last year, Massachusetts passed a new anti-foreclosure law that includes a "non-profit buyback provision."  This law prevents an owner of a foreclosed property from refusing to sell the property to a non-profit organization solely because the property will, in turn, be sold back to the previous owner.  This part of the law is intended to support non-profit organization, such as Boston Community Capital, who are helping homeowners save their homes by purchasing these properties from foreclosing entities and selling then back to homeowners at the property's market value.

Fannie Mae/Freddie Mac appear to be fighting this law because they are concerned that such buy-back programs encourage homeowners to default on their loans.  I can understand this argument from a private lender's standpoint, but not from public government-sponsored enterprises such as Fannie Mae/Freddie Mac, who have been supported with taxpayer dollars and government bailouts and have been rightfully blamed for their role in the ongoing foreclosure crisis.  Moreover, with these buy-back programs, Fannie Mae/Freddie Mac are getting fair market value for their foreclosed properties; not a bad deal when you consider the high numbers of vacant, foreclosed properties around the country.  Fannie Mae/Freddie Mac have a long way to go in rebuilding their credibility with the American public, and fighting Massachusetts's common sense law is not going to work in their favor.     

Housing Court 101

Anyone involved in foreclosure defense needs to understand Massachusetts's Housing Court and how this specialized forum works for these types of cases.

Housing Court was originally created as a court for housing matters in the City of Boston.  Later, its jurisdiction was expanded to cover others parts of the state.  Currently, there are five divisions of Housing Court in Massachusetts:

1. Boston Housing Court
2. Northeast Housing Court
3. Southeast Housing Court
4. Worcester Housing Court
5. Western Housing Court

It is important to note that Housing Court does not cover all parts of Massachusetts.  The cities of Malden, Chelsea, and Revere, for example, are not part of a Housing Court's jurisdiction (a list of the towns/cities that Housing Court covers can be found here).  A recent proposal by the Judicial Branch would expand Housing Court to all of Massachusetts; a recommendation I fully support. 

Housing Court handles most types of housing matters.  For foreclosure defense, the typical cases that come before Housing Court are summary process (eviction) cases, where the foreclosing entity (most often the bank) is seeking possession of the home on the basis of a lawful foreclosure, and the homeowner is permitted to defend against the eviction by challenging the validity of the foreclosure.  Housing Court, like District and Superior Court, has jurisdiction over summary process cases.

A important feature of Housing Court is the ability of any party to transfer a case into Housing Court from another court.  This can be done anytime before the day of trial.  Removing a case to Housing Court is a straightforward matter that merely requires a litigant to file a notice of transfer form with the District (or Superior) Court and the Housing Court department the case is being transferred to.

If you are involved in a post-foreclosure summary process case, should you transfer to Housing Court?  My advice: in almost all cases, yes.  Here's why:

1. Housing Court has been responsible for many, many favorable decisions for homeowners in post-foreclosure cases.  Housing Court is seen by many to be a pro-homeowner, pro-tenant court.
2. Housing Court judges are familiar with post-foreclosure summary process cases because they preside over so many of them.  Plus, the odds are really good that the same judge will hear the case from beginning to end, compared to District Court, where the presiding judge may change on a weekly basis. 
3. Housing Court often requires parties to go to mediation.  If you are representing yourself, mediation can be helpful in reaching a settlement (bear in mind, however, that a mediator is not a lawyer and will not provide legal advice.  If you intend to fight your case to the end, you are better off speaking to an attorney).

Overall, the best advantage of Housing Court is knowing who your judge is.  Because the issues in post-foreclosure summary process cases tend not to vary a great deal, there is an excellent chance the judge you will be before has heard the issues in your case before.  That gives you the advantage of knowing how the judge will approach your case, and allows you to proceed accordingly.