Proposed Chages in Loan Modification

There is an interesting article published in today’s NY Times about probable changes in the bank’s foreclosure and loan modification process.
According to NY Times, the following proposals are on the table. This proposal is advanced by state attorneys generals who had presented these proposals to the nation’s biggest five banks with these demands. The net result would be that government would have sweeping authority over the mortgage modification process.

What are the proposed changes?

1. Banks would be prohibited from starting foreclosure proceedings while a borrower was actively trying to lower the interest rate or ease other terms of the home loan, a process known as a mortgage modification.

2. Any borrower who successfully made three payments in a trial modification would be given a permanent modification.

3. When a modification was denied, it would be automatically reviewed by an ombudsman or independent review panel.

According to NY Times, this blueprint is still just a draft, and weeks, if not months, of tough negotiations with the banks remain. Several big banks, including Citigroup, Bank of America and JPMorgan Chase, declined to comment.

The government’s current program to help troubled home borrowers, known as HAMP, continues to face fierce criticism. Both


  1. We hired an attorney for a modification and same thing with most people. The bank didn’t want to work because our payments were current. However, now over a year later, while our attorney was ‘working with the bank’. The bank put our home up for auction, sold it and we are receiving notices of 3 and 5 days to vacate the premises. Do I have any recourse at this point? I would like to speak to someone and get input on what I can do. I am not sure my attorney/paralegal is giving me all the information.

    • It is shocking for me to read it unless some essential facts are missing here. Your attorney supposed to keep you posted on all the development in this case and update your banks with your financial statement in your request for loan modification. If the bank sold your home, you should have received plenty of notices from the lender unless you changed your address to that of the attorney’s office. Even in that case, the attorney should have informed you about the impending foreclosure. You should not worry about the three day notice. I am not sure what is your jurisdiction? If, Nevada, you cannot be evicted without a judicial lawsuit for eviction which generally has 20 days to reply, and probably you can get another 15days from the judge to move out. Also, possibly, you can bargain cash for keys–some small consolation here.

    • I am sorry to know that your home is foreclosed. Your attorney should have known the auction sale date, and kept you informed. A bankruptcy could have stopped any foreclosure and your attorney could have opened another negotiation with your lender during the mandatory stay period of the bankruptcy.

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