Clients are always asking me why their bank is not giving them a mortgage modification, why do they tell them they would? The simple fact is, mortgage modifications are a scam by the bank, used to foreclose on your home. Banks are under no obligation to ever give you a mortgage modification and the fastest way for a bank to see its profits and re-loan the money to someone else would be through foreclosing your home.

First will start with a scenario that covers about 99% of all homeowners I have ever spoken to who were trying to get a mortgage modification, the last 1% are the ones who didn’t really need a mortgage modification and that’s why the bank actually gave it to them. But for those of you who are actually facing a financial hardship or a temporary financial setback, which puts you several months behind on your mortgage this story should sound very familiar. The first time you contact the bank, if you are not behind on your mortgage, they will tell you that they can’t work with you on a mortgage modification until you are 1 to 3 months behind. For what ever reason you contacted your bank for a mortgage modification, and they sent you the paperwork to fill out, which you did on time and sent them everything that they required. Someone at the bank keeps telling you that they’re working on your mortgage modification and then to you’re going to get a mortgage modification. Now for the next six months to two years, they are constantly asking you for more information, stating you didn’t send something, or the documentation is too old and they need new documentation or any other excuse to keep prolonging the process. And then in the end, they send you a letter stating that you are denied the mortgage modification they’ve been telling you for the last six months to two years that they were going to give you.

Now you’re asking herself why did they spend so much time, effort and money and then in the end simply deny you your mortgage modification? This is a very good question, let me try to explain how you’ve just been scammed.

For most people calling for a mortgage modification, they actually are up to date on their mortgage, so the bank tells them that until they are one to three months behind, they cannot even apply for a mortgage modification. So what does that person do, stop paying their mortgage for 1 to 3 months and then calls the bank back and starts the mortgage modification process. Now what did they just do? First of all they made you default on your mortgage, and you did this, it’s NOT the bank’s fault, regardless if a bank employee told you they wouldn’t consider your mortgage modification without you being in default, that does nothing for the mortgage you signed which is the legal document that was used in lending money to purchase or refinance your house, whatever the guy at the bank said to you has absolutely no bearing on that. So what you’ve just done is defaulted on your mortgage, which starts your penalty fees racking up and also places you in foreclosure. Most mortgages after 90 days allow the mortgage company or bank to require you pay the entire mortgage back, or they have the right to foreclose on you. That’s the first scam that happened to you, the second is even worse.

What is the bank actually doing when they’re going through the mortgage modification process? They are making you help them determine when you can no longer financially afford to save your home in a chapter 13 bankruptcy. Think about what you’re doing, you are giving them your pay stubs, your bank records, the records of your savings and your credit history report and finally your debts. This is the exact same information a bankruptcy attorney uses to fill out a chapter 7 or chapter 13 bankruptcy, see you may wonder why do they need this information if they already have a loan with me and know I’m having a problem paying it. Wouldn’t it make sense for them just a lower your payment? Not if you’re a bank that wants to make as much money as possible in the shortest amount of time, and waiting for you to pay back a mortgage over 30 years at a lower rate than you even signed up for is not a way a bank makes money, a bank makes money year-by-year not over 30 years. So the fastest way for bank to make money is to foreclose on your house. And you’ve been scammed and provided all the information for them to know when exactly they can foreclose on your house and you will have not the financial means to save your home from foreclosure through the use of a chapter 13 bankruptcy. Let me explain how. Even better, I will explain to you why.

A chapter 13 bankruptcy is used to save someone from foreclosure, as a chapter 7 bankruptcy you cannot save any secured property that your behind payments on. So what the banks want to know is when mathematically you do not have enough income and savings available to take advantage of a chapter 13 repayment plan. What is Chapter 13 bankruptcy to for homeowners facing foreclosure? It stops the entire foreclosure process and give you 3 to 5 years to pay off the arrearages you owe, while still paying the normal monthly mortgage payment. For most people when they fall on hard times, they get back on their feet but at this point Dave defaulted on their mortgage and try to use a mortgage modification to remedy this situation. What they all should do is use chapter 13 bankruptcy and stop foreclosure proceedings and within chapter 13 bankruptcy you can force a bank to provide you a mortgage modification. Most bankruptcy lawyers do not even to chapter 13 bankruptcies and those that do even less know how to file a motion for a mortgage modification. But the simple fact is a chapter 13 bankruptcy can save your home and get to the mortgage modification that you deserve for your particular financial situation.

Simply put, in conclusion, a mortgage modification is a scam by the bank in order to obtain your financial history, so they can determine when the proper time is to foreclose on you, even if you attempt to go to a chapter 13 bankruptcy attorney to save your home. Banks are under no obligation whatsoever to give you a mortgage modification or help you save your home. Regardless of what you think is right or wrong, banks have what are call shareholders, those are the people that own the bank and how much money those people get in their pockets is the only thing that matters to the bank. It’s not the CEO or anyone a works in the bank, it always comes down to how much money will the shareholders get. The fastest way for shareholders to make money over one year period of time is foreclosing on properties in using the money used from that to loan out and do the whole process over again although you may be thinking yes but sometimes they’re losing money because the house is on the water, banks get to write off in those types of debt on their federal tax return for the year that the loss happened, so every time they foreclose on the property they get to deduct that off the money they made all year long. So either way the bank wins. Even if your house is worth much less than the mortgage, the bank still wins. If you have a minute a lot of equity in the house, the foreclosure process still favors the bank. No matter what the bank wins in the end and has no reason at all to help you or your family save your house from foreclosure.
Joseph F. Botelho, Esq.

Attorneys At Law

901 Eastern Ave.
Unit 2
Fall River, MA 02723

Office:  888-269-0688


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