Many government-sponsored programs to help distressed homeowners, which are here now, have gone, or are on the way, get set up in conjunction with the lending institutions. These programs are often stated to be designed for direct accessibility. In other words – NO ATTORNEY NEEDED. While it is very “noble” of the financial institutions to be offering this assistance, recall the fable of the Gingerbread Man.
I have an actual case in point. My client was struggling to pay her mortgage. Like many today she was squeezed, not because of any wrong decision she made, but because of an unexpected change in her life’s circumstances. She did the right thing, picked up the phone, and called her mortgage lender to inquire as to whether there was an assistance program to help her. So far — no harm, no foul. She didn’t need an attorney to make that call for her.
My client learned that she might qualify for the Home Affordable Modification Program (HAMP) and a package was mailed to her. A completed application was quickly returned following which my client received a congratulatory letter stating that she was accepted into the temporary program and could start making lower monthly payments. Thereafter, month after month, for more than a year, she made the new lower monthly payments. Imagine her shock when she received a pre-foreclosure letter. She called and wrote the lender that there must be some mistake, but to no avail. With little delay the bank then filed a foreclosure action even though she was up to date in her agreed payments. Finally, she sought my assistance.
It became apparent to me that my client was supposed to return a second set of documents. She understood the second set to be a different offer. She considered the second offer less beneficial, especially because it required a “balloon payment” and that scared her. A “balloon payment” is usually when the mortgage comes due for the full amount after just a few years. In fact, the paperwork was to finalize the HAMP program. The “balloon payment” term was misused by the lender. The lender was trying to explain that the difference in payments would be carried to the very end of the mortgage. Monthly payments under the “final arrangement” would have been less than those of the “temporary agreement.” Not one word in any of the paperwork suggests that the homeowner seek the advice of an attorney, despite the confusing language. No one from the bank called to suggest she retain counsel. No warning was given that the “temporary agreement” would end if she didn’t agree to the “permanent arrangement.” It made no difference to the bank that for the last year she paid them more than she would have paid them had she signed the final HAMP papers.
So, I had to go to court and fight the lender that made the “noble” offer to assist. Who needs that kind of assistance? Had my client sought my advice in review of all correspondence received from the lender, she would have signed onto the lower monthly payment offered by the “permanent arrangement.” Happily, following mediation, we obtained a successful resolution but at additional expense to the homeowner.
Do you ever scamper to avoid threats that pursue you? If so, be careful not to jump on the back of a fox to cross any rivers. You might get eaten! Please, call me before that happens or at least before you are completely devoured.
Author - Rex Russo
Over 35 years experience with Appeals, Real Estate Litigation, and Bankruptcy Actions and Adversary Defense.