The following information will be useful to anyone who owns a home that is “underwater” (the home is worth less than the secured debt against it) or for those that are simply having difficulty making their existing mortgage payment(s). If you fall into either of those categories or know someone who does, please keep reading!
Over the last three to four years, Orange County bankruptcy lawyers have seen a drastic increase in debtors who are led to file bankruptcy in large part due to significant reduction in home values. Many homeowners who had ample equity in their homes prior to 2008 made the decision to borrow against that equity via a HELOC (Home Equity Line of Credit) or a second note. Many new home purchasers prior to 2008 got into adjustable rate mortgages with high interest rates believing the housing market would continue to appreciate and they would have no issue refinancing in a few years.
When the housing market crumbled in 2008 and household incomes declined, borrowers/debtors were sent scrambling to figure out how they could afford all this new secured debt. Many debtors used credit cards, retirement accounts, or other liquid savings in order to stay current on their mortgage(s). However, once those variable rate mortgages adjusted or the savings and credit ran dry; borrowers had very few other viable options to keep their homes.
Many homeowners attempted modifications with their lender, either directly or through a third party, only to find out that the entire process was confusing at best and infuriating/futile at its worst. Orange County bankruptcy attorneys and lawyers in general were reluctant to assist in these loan modifications because lenders would regularly say one thing, yet do another. And the process, while burdensome and frustrating to the individual borrower was a loss leader for a third party service provider because loan modifications could take years to successfully complete.
If you have ever personally dealt with one of the major lenders in an attempt to modify your loan (or really for any matter); you should know very well how maddening that process can be. However, there is a new light at the end of this tunnel!
The National Mortgage Settlement is probably the greatest sword ever wielded by the common borrower with respect to loan modification. Though you may have heard that this judicial settlement between the Attorney Generals of 49 states and the five largest lenders (Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo) orders the lenders to distribute payment to certain borrowers who lost homes to foreclosure by such lenders; most are unaware that as part of the settlement, these lenders are required to provide IMMEDIATE aid to homeowners needing loan modifications.
The National Mortgage Settlement is not just a tool for borrowers who are behind on payments to either a first or second mortgage (as has traditionally been the case), but the relief set forth in the settlement is also available to those homeowners who are current on their payments, but whose property is simply worth less than their mortgages.
The website hyperlinked above and here for the National Mortgage Settlement is the official website for this settlement. It provides a wealth of information on the settlement and all the information a borrower might need in order to contact Ally/GMAC, Bank of America, Citi, JPMorgan Chase, or Wells Fargo in order to be evaluated or re-evaluated for loan modification.
So, even if you have run into a brick wall over and over in the past few years trying to get your lender to work with you; now is definitely the time to try again as all five lenders have been incentivized by the settlement terms to complete new loan modifications with borrowers in the first year under the settlement.
The websites (hyperlinked on names of lenders below) and contact numbers for the five lenders subject to the National Mortgage Settlement are below:
Ally/GMAC – 800 766 4622
Bank of America – 877 488 7814
Citi – 866 272 4749
JPMorgan Chase – 866 372 6901
Wells Fargo – 800 288 3212
As an Orange County bankruptcy attorney who has seen far too many individuals and families file bankruptcy because of their inability to work out a feasible arrangement with their mortgage lender, I am truly happy to be able to pass this information along to anyone who needs or wants it. Christian Spaulding and Spaulding Law Group have no connection to the National Mortgage Settlement and do not assist in loan modifications in any respect. This post and all the information contained herein are simply to provide information to homeowners who may be in need of assistance with respect to their home loans or for those who can benefit from the National Mortgage Settlement.