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Lender Practices Only Further Complicate Loan Modifications

While a loan modification could help a homeowners avoid foreclosure, with recent lender scandals, the process of actually getting a modification is proving to be difficult at times.

According to the National Consumer Law Center, only 10 percent of homeowners who are having problems paying monthly mortgages are actually qualifying for modifications, which has many homeowner advocates pointing the finger at lenders who failed to carry out legal obligations.

A recent Orlando Sentinel article looked at the mortgage industry's role in the uptick in the number of foreclosures nationwide, and even pointed to Florida as being one of the hardest hit states in the country.

The beginning of the foreclosure crisis can be blamed on a number of factors. Sources point to a decrease in home values, high unemployment rates and people buying homes that either he or she couldn't afford, or homes that lenders lured them into, knowing very well that a person did not make enough to afford the home.

And, to make matters worse, several banks had lenders that were robo-signing, meaning the employees were just signing off on foreclosure documents without even reading them, and also presented "false or misleading documents" to just speed up the entire foreclosure process.

Now, with loan modifications, sources are claiming that bank call centers are not properly handling requests, which is resulting in people not being able to modify payments and stop a home from going into foreclosure.

With the increase in foreclosure filings, Florida's 9th Judicial Circuit was even given additional funding this summer to pay retired judges to go through a backlog of filings that was up to almost 40,000. However, the money was originally given with the thinking that the filings would be uncontested, which may change with homeowners learning more and more about how loan modifications and foreclosures were treated by many banks and lenders.

All of these recent scandals and investigations into lender practices only go to prove how complicated filing for a loan modification can be. An experience attorney can help make the process go smoothly and in the best interest of the homeowner.

Source: Orlando Sentinel, "Foreclosure foul-ups," 30 Nov 2010

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James H. Monroe, P.A.
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