Beware of deceptive practices by your mortgage company while you are going through a foreclosure. Mortgage foreclosure is a duel-track system. The first track is managed by the loss mitigation department at the mortgage servicer and the second is managed by an outside law firm that is hired by the mortgage company to handle the actual foreclosure.
Most of the foreclosures in a particular geographic area are handled by the same law firms who do them every day and are very proficient. The law firms on a general basis do things by the letter of the law, but the loss mitigation people are the ones you need to be wary of.
The Foreclosure Process
As I mentioned above when the foreclosure process starts the two different groups, the loss mitigation people and the lawyers, can give completely different messages to you the consumer. The loss mitigation people are employees of the servicer and are charged with communicating with often scared and frantic consumers about a forbearance or potential loan modification. These individuals have a tough job and some do it properly, but unfortunately some do it poorly.
You will often hear from the loss mitigation people either “everything will be fine,” or “we have your application and are processing it and everything looks good.” You might even hear “we are not really going to foreclose,” or “you have plenty of time to work through this forbearance or loan modification process with us.” Simultaneously, your mortgage company has hired a law firm to foreclose on your home. The law firm has no idea what discussions you are engaging in with your mortgage company and honestly, they have no reason to care as they were hired to do a job and until they are told differently, they will complete it. So the consumer then gets an official notice that a foreclosure is happening or sees an ad in the paper advertising their home for sale.
What is the Problem
The mixed messages are deceptive and can cause harm to a consumer if the loan modification or forbearance does not go through. Frankly, a lot of the time they do not ultimately go through and the homeowner has been told not to worry and thus sits on their hands and before they know it their home has been foreclosed upon.
How to Avoid this Situation
If your mortgage company even hints they are about to begin the foreclosure process or at the very least you receive any mail mentioning a potential foreclosure, please call the Bond & Botes office closest to you and discuss your options with one of our licensed attorneys so we can help you keep your home and avoid any deception or mixed signals.
Grant McNutt is a Managing Attorney at the Bond & Botes Law Offices in Florence and Haleyville, Alabama. He holds a Bachelor of Science from the University of Alabama, and a Juris Doctorate from the Birmingham School of Law. He has been practicing Consumer Bankruptcy Law since 1999. Read his full bio here.