Banks are turning their backs on millions of Americans whose homes are in foreclosure. At the same time, several large banks are approaching borrowers whose mortgages are not in default and offering to reduce their debts or modify the terms of their mortgages.
JP Morgan Chase and Bank of America, two of the largest financial institutions in the United States, have been contacting borrowers whose mortgages are up to date, offering them special deals. The borrowers being contacted by these banks have pay option adjustable rate mortgages. These banks seek to eliminate as many of these mortgages from their books as possible.
The banks approach individuals whose homes are underwater, but who are current on their mortgage payments. While many borrowers who are in deep financial trouble need help, the banks are ignoring these situations. Instead, they’re making unsolicited contacts and, in theory, rewarding the customers who have done right by them.
Dan B. Fraham, a spokesman for Bank America, recently stated “by proactively contacting pay option ARM customers and discussing other products with better options for long term, affordable payments, we hope to prevent customers from reaching a point where they struggle to make their payments.”
In theory, the banks have decided to make deals regarding mortgage loans that gives borrowers the option of skipping the principal payments and some of the interest payments for a period of several years. Thereafter, the unpaid balance is added to the principal of the loan. The banks are concerned that if these underwater loans go, eventually the homeowners simply abandon them. This is a great deal for these homeowners who’ve kept their loans current. Unfortunately, this ignores approximately 33% of the outstanding mortgages that are either in default or underwater!
Long Island and New York City Foreclosure Defense
The Law Offices of Schlissel DeCorpo handles foreclosure defense for homeowners. We litigate all aspects of foreclosure proceedings including, but not limited to, defective foreclosure lawsuits,defective mortgages, predatory lending issues, bad faith, and other real estate legal issues. We attend foreclosure court conferencesfor the clients we represent. We also assist our clients in the preparation of mortgage modification applications, as well as deal with mortgage modification programs that are unresponsive to our clients’ needs.
In certain situations, foreclosure related bankruptcies can be utilized to stop foreclosures from moving forward. Upon filing either a Chapter 7 or a Chapter 13 bankruptcy, the bankruptcy court issues an automatic stay that stops the foreclosure lawsuit from moving forward. It should be noted that bankruptcy proceedings are brought in the United States Bankruptcy Court, while foreclosure proceedings are brought in New York State Courts.
For our clients who file bankruptcy, we can sometimes eliminate second mortgages. We also can assist our clients in re-establishing their credit after filing bankruptcy. Should you have questions as to what type of bankruptcy would be appropriate for you or whether there is other alternatives related to foreclosure defense, feel free to contact us. At your initial free consultation, we will discuss all of your foreclosure options. We look forward to seeing you again on our foreclosure blog.
Foreclosure rates have been climbing on Long Island for the past few months. The increase in foreclosure rates is related to lenders moving more vigorously to foreclose on homes after stopping for several months to review their practices to make sure they are in compliance with state and local laws. After employees from financial institutions admitted that they had signed foreclosure documents without reading them, New York state courts began requiring lenders and lawyers to scrutinize and check the paperwork they receive from their clients. State court judges have been aggressive in seeing to it that the lenders have all of the appropriate paperwork before they move forward with foreclosure proceedings.
