I have developed a loan modification and foreclosure defense method for Massachusetts homeowners that: (1) increases their chances of a successful workout agreement; (2) gets their cases prioritized and handled by the mortgage company lawyers, rather than a call-center operator with no authority; and (3) protects my clients' credit.
When I receive a call from a potential client looking for help with a loan modification or stopping a foreclosure, the most important question they ask me is "What are you going to do for me?" They want to know whether they're going to get results. My typical client is someone who has worked hard all their life and doesn't want to waste legal fees on some lawyer who's just going to do the bare minimum. Another question they have is "What makes using a lawyer different than using one of those 'loan modification companies'?" The difference is simple.
There are only two types of people who are allowed to legally represent you: you yourself, and a lawyer licensed in your state. This means that if you want your rights, your family, and your home protected, you either need to represent yourself or get a lawyer. And chances are that it will cost about the same dollar amount whether you use a loan modification company or a licensed attorney.
What does the average loan modification company do? Not much. They ask you to fill out a financial questionnaire, collect documents that show your income and expenses, such as your tax returns, pay stubs, and utility bills. Then they ask you to give them those documents. Then they submit those documents to the mortgage company. That's all they do! They collect your documents and submit them -- something you could easily do yourself -- and charge you thousands of dollars to do it.
No wonder the loan modification industry was recently called a "scam" by one of the most prominent state attorneys general in the country.
The method for Massachusetts loan modifications and foreclosure defense. After spending considerable time researching federal and Massachusetts mortgage and consumer-protection law, I have come up with a six-step process for getting a loan modification. It's legal, it's effective, and it's relatively simple.
1. Send a RESPA "Qualified Written Request" to the mortgage company.
The Real Estate Settlement Procedures Act governs what your mortgage company (called a "loan servicer") must do if you have a dispute with them. But the first thing you need to do is see if there is anything that is legitimately worth disputing. There could be over-escrowing, allowing the loan servicer to hold on to your money without any good reason. There could be disputes over how much you owe for certain fees the servicer is charging you. There are myriad problems. No matter what the problem is, the method for dealing with them is the same: sending a "qualified written request."
A qualified written request is simply "a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower." This means that you have to tell the servicer what they did wrong, and give them enough information to verify that that something was actually done wrong.
After you send the qualified written request, the mortgage company has approximately one month to send an acknowledgement letter to you (simply stating your request was received), and three months to resolve your issue. If they fail to do either of these in a timely manner, you can sue them for money damages.
And, perhaps most importantly, it protects your credit. While the qualified written request is pending, the mortgage company is absolutely prohibited from doing any negative credit reporting about your account. This means that if you stop making your mortgage payment during this time, they can't report it to the credit bureaus. This is immensely important, especially if you are trying to refinance or keep your credit score up.
2. Demand the mortgage-related documents and payoff information from your mortgage company.
Here in Massachusetts, we have a wealth of consumer-protection laws. Take advantage of them. Some of our fellow citizens in other states aren't quite so lucky, no matter what your opinion is of the lawmakers on Beacon Hill. For instance, if you send a demand for the payoff amount (the amount you would have to pay to pay off your entire loan today), the mortgage company is required to inform you of the amount within five business days. Further, if you send a demand to your mortgage servicer for a copy of all documents related to your account and all documents that have your signature on it, you must received a response within five days.
In the real world, most of these mortgage companies don't care enough to send you this important information within the time allowed. That means that, if they don't send you the information in time, you can sue them for statutory damages, as well as for attorney's fees (if you get an attorney).
3. Analyze your mortgage documents for legal claims.
Getting a mortgage is a complicated process, and there's a lot that can be done wrong during it. Even when you get the mortgage, there can be many reasons that the documents you signed at the closing are defective or could give you a claim against the mortgage company or its agents. It is a highly regulated process. For example, did you know that certain Truth in Lending Act violations actually allow you to rescind your mortgage and get back every single dollar in interest that you've paid to the mortgage company? Did you know that if you paid fees at the closing that are unfair and deceptive, you could have a lawsuit against your mortgage broker? Did you know that it's an illegal trade practice if your broker put you into your loan at a high interest rate, telling you that the mortgage is only temporary and that you can refinance in a few years? From the Real Estate Settlement Procedures Act to the Truth in Lending Act, to the Massachusetts Consumer Credit Cost Disclosure Act to the Massachusetts Consumer Protection Act, there are many potential claims that you have against your mortgage company.
But what do all these claims give you? Leverage over the mortgage company. You can hold the threat of these claims over the mortgage company's head and use them to force the company to give you a loan modification.
4. Analyze the mortgage company's responses to 1 and 2.
In addition to the claims in the previous letter, you can also analyze the mortgage company's responses to the demands you sent mentioned in Paragraphs 1 and 2. If there are any issues that were ignored, responses that weren't given, or documents that weren't presented (or weren't presented within the time requirements), you have additional claims. Most times -- at least in my Massachusetts law practice -- the mortgage company doesn't respond in time. This gives you even more leverage on top of the other claims you found described in the previous section.
5. Send a demand letter under the Massachusetts Consumer Protection Act.
This is usually the last step. Let me be clear -- the goal here isn't to go to court, it's to get you a loan modification. But you need to threaten the mortgage company with a lawsuit or else they won't pay attention.
Under the Massachusetts Consumer Protection Act, M.G.L. Chapter 93A, there is a specific process that a consumer must go through in order before he or she can file a lawsuit under that act. The process is that a consumer must send a "demand letter" stating what the mortgage company did wrong, and requesting a dollar amount that will right the wrong. If the company doesn't send a response with a "reasonable" offer of settlement within 30 days, and you then file a lawsuit against them and win, the amount you win will be tripled by the court. This is a form of punitive damages that encourages companies to try to settle consumer disputes before they go to court.
What will probably happen is that you'll receive a call from someone at the mortgage company asking you to hold off on the lawsuit in exchange for a loan modification agreement. You'll get to work with someone higher up in the mortgage company hierarchy; someone with decision making authority who will realize the strengths of your position. At this point, you will of course need to submit information to the mortgage company documenting your income and expenses, and then you'll be done -- hopefully with lower payments and more money in the bank to take care of yourself and your family.
6. File a lawsuit to enforce your rights.
This is the last step, and one that you may not have to take. Your hope, if you are like most people, is that you will simply get a loan modification, resume making payments (although at a lower, more reasonable rate), and get on with your life. This process can be draining, and most people are glad to conclude it.
But if the mortgage company is being difficult, this is a guaranteed way to force them to deal with you, one-on-one. At this point, the best thing you can do to protect yourself is get an attorney. Keep meticulous records during the preceding process and present them to the attorney. The dollar amount of your claims will bring the mortgage company to the table.
Conclusion. By following the above steps, you have a much higher chance of getting the loan modification you're looking for. The mortgage company will be forced to deal with you, and you'll get the benefit of dealing with someone with the authority to give you what you want for your loan modification. Remember, these steps are specific to Massachusetts homeowners. Good luck!
DISCLAIMER: This article is made available by Culik Law P.C. and Attorney Josef Culik for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By reading this article you understand and acknowledge that there is no attorney-client relationship between you and the author. This article should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.
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