Don't Let the Bank Sell or Foreclose on Your Home

I’ve been getting calls lately from people who say that even though they are in the process of applying for a loan modification from their lender, the bank is foreclosing on their house. If you have applied for a loan modification or are considering applying for a loan modification, you need the information I am about to give you. You have the most powerful ally in the world on your side and I'm not just talking about me.

If you are applying for a loan modification and the bank is trying to take your home, you’ve probably dealt with a number of issues: lost documents and delayed responses, "robo-signed" affidavits (which are illegal, by the way). I’ve even heard of a story in Florida about a house that was seized and sold in foreclosure even though the homeowner had no mortgage at all.

The first thing you need to know is your lender is not your friend and the bank does not want to help you. You may not know this, but a lot of banks are making more money by foreclosing on a house than by helping homeowners stay in their home.

A mortgage servicing company makes money by charging fees based on the principal amount of the loan; reducing the principal reduces the servicer's income. Foreclosure guarantees reimbursement of a servicer's fees and costs; modification can make reimbursement harder. And when a loan is in default and heading toward foreclosure, a servicer can collect late fees and other charges. This means the investors who now own your home through the bank are making more money by not helping you. But there are options. You don’t have to let them foreclose on your home.

Lawsuits are being filed across the U.S. by homeowners like you and me who have been wronged by the banks. If you are in the process of a loan modification, the bank cannot foreclose on you or sell your home.

The government has even stepped in to say to banks and lenders that they cannot keep doing this to us. The US Housing and Urban Development Secretary, Shaun Donovan, said that the heart of the government's anti-foreclosure efforts are ensuring that banks work in good faith from the start to help borrowers.

Just last year Donovan said the Obama administration's top priority is “making sure that steps are being taken early in the process to keep people in their homes rather than only focusing on the steps that come late in the process, in which it's much less likely somebody will be able to stay in their homes.”

That means the government is on your side. The Home Affordable Modification Program (HAMP) was created to help homeowners keep their houses. It was designed to help 7 million people and not even 1 million have been approved for it. The government is looking to help more people.

You can still get that loan modification and get a payment you can afford. Not only that, you can take your lender to court. If you have received a foreclosure notice or the bank is trying to take and sell your home, know that the US government is on your side, not theirs.