Foreclosure and brainlessness

A recent New York Times article illustrates the nonsensical nature of the foreclosure industry. After landlord Imar Hutchins missed one monthly mortgage payment on his apartment building, the bank immediately filed for foreclosure. Mr. Hutchins lender, then Washington Mutual, refused his payment thirty days later and refused the next series of payments he attempted to make. While Mr. Hutchins was sending checks in the amount of $3500, $7,500 and, finally, $25,000, the lender was proceeding towards a foreclosure judgment.

When Hutchins learned of the action, he was able to set aside the default and is now attempting to settle the case with his lender. But the bank departments not knowing what the other was doing- one negotiating with a very willing borrower and the other steamrolling towards foreclosure- illustrate a common problem many borrowers are currently facing. Borrowers who are attempting to negotiate loan modification need to be aware that their lenders may still file a foreclosure action, even if the loan modification appears to be going well. This may, sadly, be due to the fact that the lender’s litigation department may not know what the loan modification department is doing (if only we’d all communicate just a little more). Or, it may, as some suspect and just as sadly, be because the lender is misleading the borrower- stringing him/her along with promises of modification which are not being made in good faith.

Either way, it is borrower beware. If you are behind on your mortgage, a foreclosure action may be filed against you at any time. It does not matter if the loss mitigation/loan modification officer tells you otherwise.