I was busy closing loans for institutional lenders in 2006 and I thought I would be doing that forever. The economy soon after cratered and those of us in the Legal Profession started dealing with folks in foreclosure who couldn’t pay their mortgage because of the economic crash of 2007 that changed the trajectory of everything.
I had always practiced Bankruptcy Law and I have spent quite some time stopping foreclosures and modifying loans in the Bankruptcy Courts. Before the Economic Crash of 2007, most bankruptcies were chapter 7’s where the Debtor discharges his debt. After the crash, Chapter 13 Bankruptcies became more prevalent, although Chapter 7 Debtors can apply for Loss Mitigation in a Chapter 7 and try to modify their loan.
Foreclosure Defense has developed into litigation which usually revolves around whether the institution foreclosing, the Plaintiff, has standing to commence the foreclosure at the time of commencement. The original Note, not the Mortgage is the Negotiable Instrument (money substitute pursuant to the UCC like a stock or bond or check) the Plaintiff must have possession of to have standing to commence the foreclosure lawsuit. Many banks and servicers frequently sell and buy mortgages like a commodity in the secondary mortgage markets and many pension funds and IRA’s are invested in portfolios that contain mortgage backed securities. Sometimes the banks make a mistake and commences a foreclosure before they have possession of the original “Wet Ink” Note. It’s my job to put the bank to the test and try to show gaps in their possession of the original Note or that the interest that they claim to have been “assigned” to them, was not actually correctly assigned to them.
There are many other technicalities the bank must comply with that I am trained to look for while defending a foreclosure such as RESPA and TILA Z Violations along with authenticating records of other financial institutions that were predecessors in interest to the Plaintiff and possible non-compliance with the proper procedure in serving the required 90 Day Notice prior to the Complaint that is a condition precedent. I will discuss them in more depth and detail during a foreclosure consultation. As I am defending the foreclosure, I am also attempting to modify the terms of your loan and put it back into performance at a monthly payment the Client can afford.
Loss Mitigation and Loan Modification are names that are synonymous with one and other. In Bankruptcy Court it’s referred to as Loss Mitigation. It’s called Loan Modification in the Foreclosure Settlement Conference Part of the Supreme Court of New York State. There are many reasons why clients prefer to modify their loan in foreclosure without going bankrupt. Pursuant to the New York State Civil Practice Law Rules (CPLR) § 3408. The Federal Program that was known as HAMP ended in 2016 so now most modifications are the lenders own in-house modification programs that are usually governed by what’s known as a Pooling and Servicing Agreement (PSA) between the lender and the servicer.
Many of the programs rely on getting the homeowners debt to income ratio to less than 40% and coming up with a loan payment that allows the homeowner to pay his/her mortgage. The bank does this by calculating the homeowner’s income, and debt to income ratio, the value of the collateral and several other factors such as the amount of the loan and how much is past due. The Plaintiff then derives a Net Present Value (NPV) of the loan and then usually either gives the homeowner a trial modification consisting of three payments, that if the homeowner pays, turn into a Final, Permanent Loan Modification, or, The Plaintiff denies a modification based on the NPV inputs (income, value of home, amount of loan, etc.) which the homeowner can appeal, or go bankrupt or decide to litigate the issues usually in a Motion for Summary Judgment.
I have represented many people in foreclosure the past 10 years and understand how to keep a homeowner in Supreme Court to modify the loan there or, if the Client might be better served in Bankruptcy Court and if so, the appropriate time to put the homeowner in Bankruptcy so as to give that homeowner all the chances that homeowner has to litigate the issues of his/her foreclosure and the best chance to modify his/her mortgage payment. Call me. I’m Paul Silk Cooper and I will give you your best chance to keep your home and modify your mortgage payment.