By Moe Bedard

The foreclosure process varies in every state and it’s imperative that homeowners understand this process. Learn everything you can because this will affect you in every which way and it is something that should not be taken lightly. One thing is for sure, time is NOT on your side. But, an educated consumer is always an informed consumer who can make a “good” decision based on facts. Not fear!

Day 1 – Borrower misses first payment by a day. No penalties assessed at this time

Day 16-30 – A late charge is assessed to the borrower’s payment.
The lender or mortgage servicer will attempt to make contact with the borrower for an explanation.

Source Mortgage News Daily:

Mortgage notes usually carry a grace period, 15 days is typical but some are as short as 10 days. Many people “play the float” that is, delay through most of the grace period before making payment, and no one, including the lender thinks very much about it.

On day 16, however, a late fee is assessed. At this point there are no ramifications beyond that late fee and maybe a “friendly reminder” call from the lender’s customer service department. The late payment probably won’t even show up on the borrower’s credit report. On Day 30 that changes. At that point the borrower is in default and things quickly turn serious and the foreclosure process speeds up.

Day 45-60- The servicer sends “demand” or “breach” letter to the borrower stating the mortgage terms that have been. The borrower is given only 30 days to resolve the delinquent amount.

By day 45 the phone calls from the mortgage collectors will be coming pretty regularly. Most states have rules regarding collection activities and telephone calls including their frequency, content (no threats are permitted), and timing (early morning and late night calls are generally off limits,) but the calls, within legal boundaries, will be unremitting and the tone can vary from “gee, we just want to help” to aggressively demanding.

About 60 to 90 days after the initial missed payment the lender will send a notice of default, usually by Certified Mail, giving the borrower a finite period in which to cure the situation by paying all past due amounts, and by now collection costs are probably being added to the late fees. Once that remedial period passes, the collection department will refer the loan to the lender’s legal department which will, after another period of time, send the documents to a local attorney to begin foreclosure proceedings. By this time serious legal fees are accruing.

Day 90-105-The servicer refers the loan to its loss mitigation department / foreclosure department and retains an attorney or other firm to handle the foreclosure proceedings. Depending on the state where the home is located, the servicer’s representative may record a notice of default at the local courthouse and it will be published in the local newspaper

During this time your lender or servicer may offer you alternative ways to bring your account current:

Loan Workout- A loan workout is when you negotiate with your lender any kind of plan that will benefit both you and the lender when you are delinquent or in default. This is a broad term used in the industry to cover the different options you may have such as a loan modification, repayment plan, short sale, forbearance plan etc.

Loan Modification- This is when the lender modifies your current mortgage in order to work with you and make your mortgage more affordable. In the past this was only used when a borrower was delinquent but now it is being used before someone is delinquent. This will be the hottest term and way to help people avoid foreclosure.

Forbearance- This is used most of the time, when a Notice of Default has been filed. You are allowed to delay or reduce payments for a short period, with the understanding that another option will be used at the close of that time to bring your account to a current status. Your lender, if in agreement, will then temporarily cease legal actions.

Short Sale- This is used when all negotiations for a loan workout have failed and you are upside down on your mortgage meaning you owe more than it’s worth. The lender basically agrees to cooperate in the sale and take a loss. You place the home for sale and any offers are presented to the bank. Unlike a traditional sale when the homeowner decides what offer to take. The bank controls the negotiations and the homeowner has no say in the process. It’s a last ditch effort to save someones credit from a foreclosure filing.

Foreclosure Bail Out Loan – Is a new loan where the defaulted mortgage is paid off. This is usually a hard money mortgage and it is common for interest rates to approach 10-15%. Points can be as high as 5 and terms are usually short. In the 5 year range where a balloon payment will be due for the remaining balance. In order to qualify you must have sufficient equity. Hard money lenders are looking for 65-75% max loan to value and a decent equity cushion. You also have to have ability to repay as in a traditional mortgage.

Day 150-415– A notice of trustee Sale is filed and the home is scheduled to be sold at foreclosure sale or auction. This time range varies due to individual state laws and requirements.

In states with judicial foreclosures / where foreclosures are done via the court system, can sometimes extend this period to a year or more.

Nonjudicial foreclosure states can foreclose in as little as two months

A foreclosure is a legal event and there are benchmarks that must be met. Once the case is turned over to attorneys, the impending foreclosure must be advertised, usually in both the local papers and in the largest and closest metropolitan daily. The entire process can take a very long time from initial default to the actual public auction of the property. If a member of the military is an owner of the property, there are additional safeguards required by federal and in some cases state laws From the beginning of the process, however, the meter is running. The longer the foreclosure takes, the greater the debt that accrues and the larger the liability the homeowner has, something that will become critical down the road.

The law in most states gives the homeowner every opportunity to stop the process leading to foreclosure, right up to the minute that the auctioneer’s gavel comes down and sometimes even beyond. In some states there is a period after the foreclosure during which the homeowner can redeem the property (right of redemption.).

Redemption Rights: The rights of redemption, as specified in Internal Revenue Code Section 6337, are quoted as follows:

Sec. 6337. Redemption of Property. (a) Before Sale. – Any person whose property has been levied upon shall have the right to pay the amount due, together with the expenses of the proceeding, if any, to the Secretary at any time prior to the sale thereof, and upon such payment the Secretary shall restore such property to him, and all further proceedings in connection with the levy on such property shall cease from the time of such payment.

(b) Redemption of Real Estate After Sale.

(1) Period. – The owners of any real property sold as provided in Section 6335, their heirs, executors, or administrators, or any person having any interest therein, or a lien thereon, or any person in their behalf, shall be permitted to redeem the property sold, or any particular tract of such property at any time within 180 days after the sale thereof. (2) Price. – Such property or tract of property shall be permitted to be redeemed upon payment to the purchaser, or in case he cannot be found in the county in which the property to be redeemed is situated, then to the Secretary, for the use of the purchaser, his heirs, or assigns, the amount paid by such purchaser and interest thereon at the rate of 20 percent per annum

The best way for homeowners to to stop the foreclosure process without racking up extensive legal bills and ruining their credit histories is to start working on a solution with their lender or servicer before their problems get out of hand. The last thing you want to do is what many people choose to do when facing foreclosure, “Stick your head in the sand!”
 

LoanSafe.org is a support community that is built around the premise of paying it forward. These homeowners were able to stop foreclosure with the assistance of this great website and the community. We hope to have more success stories in the future and please consider joining our fight to save our homes from foreclosure.

Success Letter of the Year – See a real Countrywide loan modification letter from the office of Angelo Mozilo

All testimonials are 100% voluntary and not solicited in any way, shape or form.

Bob – Homeowner from San Diego - I have finally got my loan fixed for 5 years @ 5.99%. Fully amortized loan..principal and interest. After almost 6 months of doing battle with Countrywide I am done. I have to make two more payments (Jan. and Feb.) at 7.45% but then in March 08 it goes back down to 5.99% saving me $610.00 a month! Great news!! I do not even have to sign any paperwork. They said it is a done deal and I will probably receive a letter in the mail today.Here is a link to my original thread: http://www.loansafe.org/forum/showthread.php?t=162

Hopefully 5 years will buy me enough time to pay down my second mortgage and put me in a good position to refi. I want to thank Moe, Brian and all the forum members for all your help and encouragement. I never would have been able to keep my home if it wasn’t for the knowledge I gained from www.loansafe.org.

Thank you all so much!! 

Do not give up!! Keep up the fight!! If anyone needs any help or advice in dealing with CW from someone who has been through it, just drop me an email at bob@slaytonmechanical.com and I will do whatever I can to help.Paying it back and forward is the way to go!

JacMac – Homeowner From New York – I want to wholeheartedly recommend this forum to those who just popped up here or may have been lurking and are scared, unsure — perhaps you’ve just realized you’ve been taken for a roller coaster ride, and the price of the trip is more than they said, more than you can afford — the point is, the forum is a wonderful place, and it is SAFE!

If anyone understands just how difficult it is to obtain a loan modification, they will tell you that getting one is almost like winning the lottery. The odds are severely stacked against you and your chances getting one are close to nil. In fact, you are lucky to even apply for one.

I am fortunate enough to run an online community where I assist people with information about the loan modification process and foreclosure prevention. It’s a place where homeowners can come, share their stories and ask questions without being criticized. Many members have been fighting their lenders tooth and nail for 3 and 4 months. 

Sometimes it takes call after call and then your placed on hold for hours at a time, only to be disconnected and you have to start all over again. They tell you to fax in a hardship letter along with your financials, income and expense sheet, bank statements. You fax it, they lose it. You fax it again, they lose it again. You mail it in. Don’t matter because they lost it again. 

Weeks go by with no returned calls and  a month later you are no further along then when you started. Many people get frustrated and just give up. Many people don’t even make it a month. 1,2 or 3 calls and their done. Foreclosure statistic #1,234,764.

Some people keep calling and keep faxing. They don’t give up and they keep fighting to stop foreclosure because they are determined to save their homes and they are not going to stop until the sheriff comes to kick them out.

Meet Bob, Andrea and Paul. 

Bob

I have finally got my loan fixed for 5 years @ 5.99%. Fully amortized loan..principal and interest. After almost 6 months of doing battle with Countrywide I am done. I have to make two more payments (Jan. and Feb.) at 7.45% but then in March 08 it goes back down to 5.99% saving me $610.00 a month! Great news!! I do not even have to sign any paperwork. They said it is a done deal and I will probably receive a letter in the mail today.

Here is a link to my original thread: http://www.loansafe.org/forum/showthread.php?t=162

Hopefully 5 years will buy me enough time to pay down my second mortgage and put me in a good position to refi. I want to thank Moe, Brian and all the forum members for all your help and encouragement. I never would have been able to keep my home if it wasn’t for the knowledge I gained from www.loansafe.org. Thank you all so much!!

Do not give up!! Keep up the fight!!

If anyone needs any help or advice in dealing with CW from someone who has been through it, just drop me an email at (removed) and I will do whatever I can to help.

Paying it back and forward is the way to go!

Paul 

If you go back an read some of posts I have been worried about my mortgage for a while now. I had originally called in August and asked about it but was told since im not late they couldn’t do anything. Then in October when I called again I was told that I could apply.

After months and who knows how many hours on the phone (I luckily had the time to make all the phone calls or I would have probably used Brians Loan Mod service otherwise) I was finally approved for a 5 yr freeze on mortgage. This site along with the Help of Brian reviewing my docs helped me tremendously. I even had to go as far as threaten to rescind my loan and send respa letters with the violations Brian had found.

I really am very grateful of Moe for this site and Brian for his wisdom and guidance. I feel very stress free right now. I will be staying on this board to help others who were in my predicament too.

 THANKS AGAIN MOE AND BRIAN!!!!

Andrea 

After a long exhausting 4 month battle with Countrywide, I am getting a modification! My interest rate was fixed at 6% for 5 years! I’ll be receving paperwork tomorrow. Please see my story in the modifcation section under “My 16 week workout with Countrywide”. It will drop my payment from $2542.77 to $1818.XX a savings of close to $600.00!! I’ll get to keep my home!

How I did it? I went to the top BUT only after dealing with the Home Retention Team for 4 months and making over 35 phone calls. Within 1 day of sending out emails to everyone under the sun I got a phone call from the office of the president and the modification was a done deal.

My advice: don’t give up, call daily and when you can’t get things done go to the top.

Please email me if you would like to talk more. Thanks to everyone here! Especially MOE and SWIZZ.

Andrea

See more real life success stories by clicking the Loan Safe logo below.

Kelly Hansen

WELLS FARGO, dba,
AMERICAS SERVICING COMPANY

TURNING THE AMERICAN DREAM INTO A NATIONWIDE NIGHTMARE

My lovely home of seventeen years is up for a Sheriff’s sale on October 3, 2007. My home. I pray Disaster Relief is made available immediately for families in crisis. For a record number of home owners, the American dream is currently a nightmare.

Wells Fargo dba American Servicing Company (ASC) hopes to take my home. The balance on my loan is very small, less than half of the home’s appraised value. My mortgage payments are low, I can afford them, and I have always made them on time. My mind spins as I try to understand how something like this can happen. But the truth is nothing is for certain.

Last February, I received a letter from ASC. Effective immediately, my mortgage payment increased 200%! I called Customer Service and was told my payment increased due to a negative balance in my escrow account. I told them they didn’t escrow on the account, had never escrowed on the account, and I confirmed with them my monthly mortgage payment would not change. They told me I would receive a letter confirming the details we had discussed within 7 to 10 days.

I was to learn letters with good news never came. Somehow the letters threatening foreclosure were relentless. At first I tried to talk with the same employee who had promised me he had “noted everything in the record” and “he had discussed my account in detail with his supervisor to make sure all the problems on my loan had been fixed.” agent who just promised you all was taken care of arrived confirming assured me over and over and over, that yes, definitely this time, they had truly made the corrections I thought had already been made. And they definitely would be reinstating my loan, the one I thought had already been reinstated. I was always told I would receive a letter confirming all was well with my loan. But the promised confirmation letters never came. And I always ended up calling Customer Service again,

November, ASC suddenly, without reason, began to escrow on my loan. They had never escrowed before. I didn’t receive any notification or indication that they planned to begin to escrow. But their error, and they do readily admit it was their error, was not But ASC paid two additional property tax property tax two more times, and paid the annual premium for home owners insurance. I always paid them monthly. .

On August 14, I was told, again, my loan had been reinstated. While waiting again for another confirmation letter that never comes, I call them again. I I didn’t contact anyone else for help because I didn’t think I needed to. ASC was always so sorry after they didn’t follow through on one of their promises. Then they reassured me all was well. I was very stupid.

But ASC made an error, and that’s OK. But their error, and their inability to quickly correct their error, I might lose my home. My home!

Presidential candidate Hillary Clinton is pushing for a 90 day ban on foreclosures and a 5 year “freeze” on adjsutable rate mortgages.  Clinton sent the following letter to Treasury Secretary Henry Paulson calling for needed steps to end the foreclosure crisis.

December 3, 2007

The Honorable Henry M. Paulson, Jr.
Secretary
United States Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220

Dear Mr. Secretary:

I am encouraged by news accounts that Treasury officials are negotiating an agreement with the mortgage industry to curb the foreclosure crisis. Reports of this agreement indicate that it will allow homeowners to apply to quickly refinance their mortgages or temporarily stop their adjustable rate mortgages from resetting at higher levels.

It is critical that we address this crisis. The Administration and the mortgage industry must reach an agreement that matches the scale of the problem. If you produce an inadequate agreement, or fail outright, the cost to our economy will be incalculable. A satisfactory agreement must do at least the following: impose a moratorium on foreclosures, freeze mortgage rates before they escalate, and require that the mortgage industry report its progress on loan modifications:

Read more of Clinton’s letter here. Below are some more details of her proposal to Paulosn.

• Impose a foreclosure moratorium of at least 90 days on subprime, owner-occupied homes. The moratorium will stop foreclosures until lenders and servicers have an opportunity to implement the freeze in mortgage rates. Servicers have complained that they do not have the systems in place to quickly contact the large numbers of at-risk borrowers. Servicers can certainly expect that during the moratorium at-risk borrowers will contact them. The moratorium will also give state and city organizations as well as community groups the necessary time to provide financial counseling to at-risk homeowners. The moratorium only applies to owner-occupied houses, and therefore excludes real estate speculators.
• Freeze the monthly rate on subprime adjustable rate mortgages, with the freeze lasting at least 5 years or until the mortgages have been converted into affordable, fixed-rate loans. After the moratorium, there should be a long freeze in rates on adjustable rate mortgages. The overwhelming majority of subprime mortgages have adjustable rates. The long rate-freeze will give the housing market time to stabilize. It will give families an opportunity to rebuild equity in their homes. It also gives the mortgage industry time, and incentive, to convert mortgages that were designed to fail into loans that are actually affordable. The rate freeze and loan modification must be extended not only to borrowers who are current but to some who have fallen behind. After all, it is indisputable that brokers and mortgage companies lured families into mortgages which were designed to end in foreclosure. This was only possible because regulators were asleep at the switch. A rate freeze is critical. An average of $30 billion in loans will reset monthly next year. One study indicates that the average reset increases monthly payments by 40%. It is no surprise that rate resets are the major driver of the foreclosure crisis. The rate freeze and loan modification would only apply to owner-occupied houses.
• Require the mortgage industry to provide status reports on the number of mortgages it has modified. Resolution of the foreclosure crisis will require that large numbers of unworkable mortgages be converted to more stable loans. To date, however, despite pressure from Congress and the press, lenders and servicers have modified only about 1% of subprime mortgages. This obviously has to change. We cannot take the industry at its words that it will follow through on an agreement to convert loans expeditiously. Accordingly, the agreement must impose on lenders and servicers an obligation to regularly report their modifications.

 

Submitted By Juan – in response to a post on LoanWorkout.org in regards to “the pending loan modification campaign” spearheaded by US Secretary Treasurer Henry Paulson.

If all these homes were on fire, with flames and smoke, reaching into the air, across the country, — you would see more of an immediate reaction to the immense disaster that is underway in the US economy.

A helicopter shot would show miles upon miles upon miles of burning homes across California, Colorado, Florida and other states with citizens screaming for help and assistance in the streets below as communities are destroyed.

At the same time, news comments would issue that nameless, faceless, “investors” were the true victims of such a disaster and that they are having endless conversations among themselves, and the Feds, as to whether or not this is a moral issue of making a blanket decision to stop the “fires” from erupting any further down the line.

As everyone as commented above, — it is an example of endless talk. A loan modification is a simple 1 page form that states the new rates, or the same rate, and the payment amount. A homeowner would then do everything possible to stay in the home with the same payment . They will do it — every single article and conversations leaves out the conviction of the homeowner to stay int the home if they can.

The lender, on the other hand, hold the kerosene and the light.

For some reason — everyone has forgotten the immense power of homeweownership when you know you can own it. If I cant anymore — and the flames are burning off the roof — then I’m walking away from it. If not — then I’m staying put and working to keep the home. That is a compelling force that outweighs the “moral ” discussions the lenders and the FEDS are having among themselves. They have left our the homeowner in the equation. In fact, I think they have painted the image that the hard working family is the villain in this financial mess.

I see flames and smoke across the state of California and nobody – I MEAN NO ONE — is looking to put the fire out before a portion of the state is destroyed. And 49 others states.

Did anyone see the San Diego fires?? Yes — that is exactly what is happening every day across the country. Yes. it is.

Contributed By Lucinda From Our Homeowners Forum at LoanSafe.org 

Hi there,

Thank you to everyone who’s contributed to this wonderful site!

If anyone has experience with Litton and their loan modification system, please chime in. Long story short, due to illness and several other abnormal expenses this year we became a good three months behind on our mortgage, in fact a bit more because I kept paying the monthly amount but I wasn’t quite able to make the past due payment. Add the costs of the lawyers and the fees and we’re about $4,000 behind.

Litton offered us a loan modification, and we gratefully accepted.

The problem was that my husband was just coming off of a short-term disability, and we had to wait three weeks after Litton wanted the initial payment for the loan mod acceptance to send it in. We let Litton and Titanium, who they’re apparently working with, know about the delay and they were cranky but said to just send the money in as soon as we had it. We did send it to them, and we attempted to pay the first month’s new payment right on time, but while they kept the initial payment they returned our mortgage payment. I called to ask why and they told me that the modification is still being processed so my house is still in foreclosure, but we’ll be notified ASAP about it. Meanwhile my home is up for Sheriff’s sale on 2/1/08.

We don’t know what to do. The loan modification is perfect for us and we thought we were all set, but we’re terrified that they’ll take our home while still processing the modification!! If anyone has any advice please let me know, thank you so much,

Lucinda

Looks like the Inland Empire may recieve much needed assistance and homewers may be able to avoid foreclosure with a new plan by our governor. 

Gov. Schwarzenegger came to Riverside on Thursday to alert homeowners living in one of the nation’s most mortgage-troubled regions about options that may save their homes from foreclosure.

Schwarzenegger announced a $1.2 million public-awareness campaign a week after saying he had reached an agreement with four large mortgage-servicing companies to freeze interest rates on adjustable-rate mortgages for homeowners who live in their property, are current on their payments and cannot afford to pay higher interest rates.

The governor said Thursday that he is working to add more loan-servicing companies to the agreement, which now includes Countrywide Financial Corp., Litton Loan Servicing, GMAC Mortgage and HomeEq Servicing.

Read the Rest of the Story by the Leslie Berkman of the Press Enteprise here.

Homeowner Story By Jac Mac at LoanSafe.org 

I am hoping that I’ll have better results with Countrywide than I’ve read so I’d like some support and help along the way. I’ve been reading a lot on Moe’s site and he’s offered so much valuable information, I can never thank him enough.

I almost feel smart again.

My story can be found here Worse than a Pimp (Thanks Moe) and it sure did cause a frenzy of nasty replies from what I am guessing are pissed off LOs.

I am a single parent of two children, fifteen months apart, ages 12 and 13 — the 12 year old happens to be autistic.

I refi’d with CW (biggest mistake of my life) into a — let me take a deep breath, 1 mt. 11th District COFI Option Arm, which the broker offered at an initial interest rate of 1.5%.

We went over what the payments would look like and she told me that the deferred interest would never go past $2,000 a year, as long as I paid the minimum and then the full payment alternatively every other month.

Even though I did that, in ten months, the principal had increased a whopping $12,000.

They also got a YSP of $14,000 which wasn’t disclosed on the HUD — it says 3,500 POC ( I just figured out that means Paid outside of closing).

There’s a prepenalty for six months so I can’t refinance w/o being hit with a $27,000 fee.

Now I’m wondering what was the $10,000 origination fee they got as well. Is that in addition to the $14,000?

It seems pretty clear she sold me into a higher rate, option ARM loan to get her fee.

Now I’m losing equity like crazy and I can’t make the principal payments.

I also posted this in response to a thread but would like to put it here so I can update the story as things happen.

after reading about the nightmare everyone else was going through with calling, I’ve decided rather than play phone tag to have my loan modification done in person, at Countrywide’s Financial Center. I am scheduled to go there on Friday and speak to the Loss Mitigation Department so that they can get my financial information.

I popped in there on Monday and spoke with the manager of the center. She was very nice and called the VP of Home Retention right there in front of me, took down my email address to send him a message and told me if I didn’t hear from him by that afternoon I should call her — she gave me her cellphone number.

So, of course, I didn’t hear from him. Tried to call her, but couldn’t get her. Left a message but didn’t hear back. So I called first thing in the morning, and caught her on her cell. She was pleasant, said she’d call me when she got to the office and give me Mr. Durham’s direct number. Supposedly he’s very proactive in Loan Modifications.

When I didn’t hear from her by noon (about four hours later), I took a walk — fifteen minutes, and I was at her office.

She smiled, but I don’t think it reached her eyes. I want her to know if she doesn’t call me back I WILL be at her office and can be there in minutes.

She called the Loss Mitigation Department for me right then and there in her office and had me speak to another woman, Paula Edwards, and she has committed to fax all the documents that need to be sent for me. She’s also offered to look over my loan documents for me. The manager of the office seems sincere but I am jaded.

Ms. Edwards told me that they called in the morning and spoke to a Mister, a bilingual man — I cut her off and told them there WAS NO MISTER and I made it clear to her that I have zero interest in playing phone tag with anyone. I gave her my cell phone number and told her to call me at that number, but told her I’d be doing all of the paper work in office at the center.

Hopefully this will turn out to be a smart decision. I’m keeping my fingers crossed for myself and for all of us struggling to end this nightmare.

Anyone have any suggestions as to exactly what financial information I should bring with me to the meeting on Friday. I am a self employed freelancer who’s suffered a slow period in my market. I own a S Corporation, so I don’t have my 1099s for 2007 yet — only what’s been deposited in my business accounts can be shown by way of bank statements.

I also have two tenants, so I can show the income from the rental units but other than that, I have no pay stubs or anything like that. My mortgage payment has adjusted to 8.0 percent which puts me at a $5,300 full principal payment per month. The minimum is just $2,000 and if I only pay that, you know what that means — negative amortization. If I keep pulling money out of my savings to meet the payments I’ll have nothing left real soon.

I need a fixed mortgage and quickly!

By Moe

How would you like to be charged $20,000 when in fact you owe $2,000? Doesn’t sound like too great of a billing and accounting system. In fact it sounds down right fraudulent and predatory.

Welcome to the new unfortunate fleecing of the homeowner that is infiltrating our court systems and robbing unsuspecting borrowers that are oblivious to these “questionable” fees as they face foreclosure and are caught in a system that seems to be failing to protect consumers.

They call it questionable fees, I like to call it predatory servicing. I’ll inform you how you can combat this a little bit further down in this post.

CNN reported yesterday that;

Countrywide Financial, the nation’s leading mortgage lender, is facing a federal probe into its foreclosure practices, according to a published report.

The New York Times reported Wednesday that the U.S. Trustee, the federal agency monitoring the bankruptcy courts, subpoenaed its records to determine if two foreclosures in southern Florida represented abuses of the bankruptcy system by the lender.

The agency, a part of the Justice Department, announced an effort to move against mortgage servicing companies that file false and inaccurate claims in foreclosure cases.

I have heard many stories of borrowers that were charged fees that had no explanation and could not be supported via the documentation that their lender or servicer was providing. Most of these homeowners just caved in to the demands and agreed to pay these “questionable” fees.

More often then not, it was out of desperation to stop foreclosure and save their home from the big bad wolf.

Borrowers need to understand that they can “demand” a “life of loan history” via a “qualified written request” . This is a law under Section 6 the Real Estate Settlement and Procedures Act (RESPA). By law, the lender or servicer is required to acknowledge the request within 20 business days and must try and resolve the issue within 60 business days.

Qualified written request

For purposes of this subsection, a qualified written request
shall be a written correspondence, other than notice on a
payment coupon or other payment medium supplied by the servicer,
that–
(i) includes, or otherwise enables the servicer to
identify, the name and account of the borrower; and
(ii) includes 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.

More from the CNN article.

The paper says that in the two cases being examined borrowers who had filed for bankruptcy court protections objected to Countrywide’s claims of what was owed on their home loans. One couple contended that their mortgage payments were current, while Countrywide (Charts, Fortune 500) claimed $2,400 in overdue mortgage payments in that case.

The paper reports that the U.S. Trustee took an interest in both matters after Countrywide did not respond to the borrowers’ objections and judges in the cases ordered the lenders’ claims for various fees stricken from the claims.

A Countrywide spokesman told the paper it does not comment on pending litigation, but added that it had intended to appear at the hearings and was investigating why its outside counsel did not do so.

Countrywide has filed objections to the U.S. Trustee’s probe and subpoenas in both cases, the paper reported, saying that they were overly broad and exceeded the office’s powers. But the bankruptcy judge hearing one of the cases has allowed the regulator’s investigation to go forward.

I am sure that we will see many more of these cases hit our court systems as the mortgage and housing fiasco continues to unwind before our very eyes.

Maybe you have been charged questionable fees, hopefully now you have the knowledge on how to use the law to challenge these bogus charges via “qualified written request” and fight back against your lender.