Homeowner complaints spur changes to national foreclosure settlement
Amid continued complaints that banks are not still not making things any
easier for struggling homeowners, the rules surrounding the $25 billion
national foreclosure settlement are being modified.
When it was initially created, the multi-billion dollar settlement was
supposed address the needs and concerns of the various homeowners who
were allegedly victimized by lenders during the foreclosure process. However,
the settlement also called on the nation's five largest mortgage servicers
- Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally/GMAC
- to comply with updated mortgage servicing standards in order to ensure
that the previously employed wrongful
foreclosure practices were eradicated.
Sadly, however, the
Chicago Tribune recently quoted Illinois Attorney General Lisa Madigan as stating that
these standards "were supposed to eliminate headaches for borrowers,
but homeowners continue to report problems." In fact, complaints
are still rolling into state attorney general offices throughout the country
claiming that lenders are not adhering to many of the updated 304 mortgage
servicing standards, which prompted many of the recent changes.
For instance, one of the recently announced changes to the mortgaging standards
includes a new procedure in which lenders will now give homeowners 60
days to submit the additional documentation needed to obtain loan modifications
in order to stave off foreclosure - which is an increase from 30-day period
that homeowners previously had. In addition, two of the lenders, Bank
of America and Wells Fargo, have agreed to adopt additional policies that
will hopefully make the entire process simpler and more streamlined for
Unfortunately, the need for the recent changes merely illustrates how foreclosure
problems persist for beleaguered homeowners despite the national settlement
- meaning homeowners may need to explore various other avenues of relief
if facing an imminent foreclosure.
Bankruptcy may be an option to avoid foreclosure
If other forms of foreclosure relief - such as loan modifications - has
proven unsuccessful, homeowners may want to think about using a
Chapter 7 bankruptcy in combination with their traditional foreclosure defense. By filing for
bankruptcy, a homeowner can stop all collections actions, including foreclosures,
and challenge lenders in court. Importantly, a homeowner's credit
is likely improving while this process takes place, so that even if the
homeowner loses to a lender in court, he or she may be eligible for financing
for a new home that he or she can afford.
Strategic planning such as this is why it is important to contact an experienced
consumer rights attorney if you are facing foreclosure and believe bankruptcy
may be helpful. Given that potential remedies vary depending on the circumstances,
a skilled attorney can review the facts of your foreclosure and help develop
the best foreclosure defense possible.