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Christina, Home Seller in Sacramento, CA

Is it worth doing a mortgage litigation over a loan modification?

Asked by Christina, Sacramento, CA Thu Jan 22, 2009

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Mortgage Litigation is very effective if you’re dealing with the right outfit that has a commitment of servicing your file through the entire process. When you choose a law firm to work with you'll want to ask what types of results they had with your particular lender. In many cases your Loan can be restructured through pre-litigation. One thing you need to realize though is that the bank needs to feel the real threat of someone that can actually do something in the event that the bank does not want to participate. An Attorney has the ability to make the bank feel that threat is real. With all the robo-signing scandals going on and settlements will into the tens of Billions of dollars, anyone can be clear now that the banks have done whatever they can to foreclose on whoever they want. The bank doesn't necessarily have to give you a modification it’s at their own desires to do so. Your potential modification is going to be evaluated by primarily (2) things, Hardship and Affordability of a new loan. Again, if the bank feels that this is a situation they'd like to see resolved in a amicable manner then they will be more motivated to come to the table if the feel that you have representation behind you that can push the issues through Litigation if needed.
If you have any questions please give me a call directly.
Brian Head
800 529-2959
1 vote Thank Flag Link Wed Mar 21, 2012
It's imperative to hold the banks accountable for the malfeasance they have committed. They are not honoring the settlement plan put in place and are rewarding bank employees for denying modifications. Many banks are using stall tactics to push foreclosure while home owners believe they are getting a modification. If you are serious about saving your asset, your home, and getting yourself a deduction in principle balance to 95% of current fair market value on your home, a 2-2.5% fixed rate loan, dismissal of all arrears and removal of any late payments that are damaging your credit score then you need litigation and legal representation.

If you would like assistance in this matter then you can call 213-201-6385 and I can offer more assistance as well as a free consultation to assess your case and show you how many infractions were made on your loan by your lender.
0 votes Thank Flag Link Thu Jun 20, 2013
Romel Ambarchyan, CA Real Estate Attorney

The short answer is, it depends. Mortgage Litigation may be a very effective tool against lenders for certain violations and/or breaches during the loan modification process. One example may be if the lender has failed to convert a "trial modification" to a permanent modification, although you had made timely payments. In a situation like this litigation against your lender would be a great option. Not only can you potentially obtain a permanent modification, you may be also able to receive compensatory damages (money settlement from lender).

If you have questions fee free to call our office.
0 votes Thank Flag Link Tue Feb 19, 2013
I have a question, Has anyone done litigation against a Mortgage company called Macquarie Mortgage? That was my original lender ... then I was transferred to GMAC. Now I am trouble and there is no options for me due to my investor. I can do short sale or foreclosure ... that's it.. Thanks Richelle 360-789-5520
Flag Wed Apr 1, 2015
absolutely. a stright up lawsuit after discovery by a law firm showing the loan violates several causes of action, usually the MERS transfer to another lender will get your lender's attention. this is NOT a forensic audit and MODIFICATION. Your lender will either accept a 998 which is a legal offer and compromise or be foreced into court. it's simple it's a lawsuit you're not asking your lender for something your telling them they violated the law and you want a new loan. the structure of these settlements is quite handsome. few attorneys make it affordable as they won't work on a contingency basis where the vast bulk of their income is from the settlement. I was fortunate to find some that do. I did over 75 mods and looked into forensic audit companies and this is better as it's final and leaves you in your home at it's value today with a low rate. no guarantees but attorneys don't take contingency cases unless they feel confident they will win.
0 votes Thank Flag Link Tue Feb 22, 2011
Christina, I know this is an old question, but I just wanted to provide my two cents. When using the following services based on hardship alone, it's the lender who's getting the best deal because you have no leverage to negotiate: Self Loan Modification, Using A Loan Modification Company, Non-Profit Program, Realtor, Mortgage Broker or General Attorney.

On the other hand, if you combine a Forensic Loan Audit (comprehensive line-by-line analysis of your mortgage documents uncovering Federal, State, and Predatory Lending Violations) with the services of a Real Estate Attorney, then the lender with recognize your leverage in negotiations due to those uncovered violations. From 2001 - 2007 more than 2 million loans had closed that were not backed by either Fannie Mae or Freddie Mac, so roughly 80 -85% of those loans have mortgage violations.

Previously, only real estate investors were knowledgeable about Forensic Loan Audits because they used it as a tool in order to determine the risk factor of pools purchased. I hope this tidbit of information is helpful.
0 votes Thank Flag Link Fri Jul 24, 2009
You better believe it. I wish I had more customers like you Especially in California where there are tricks to turn a non judicial foreclosure to a judicial foreclosure. Also I'd sue the mortgage company before they sued you.
For about $5,000 you can hire expert who know the in's and out's of how to get your mortgage reduce to about half of its principal balance and or maybe back for overages.

To find out if this statement has truth to it I would get a mortgage audit done by someone that issues a the a legal opinion and understanding of how these loans where sold on the secondary market.

I'd also get an attorney versed in mortgage litigation but I'd get the audit first so you can have a case to bring to an attorney who will be more motivated to take you on as a client because he know he can win.

You come armed with this information and your mortgage company will definitely give you a loan modification with favorable terms. This is a secret that mortgage professionals, lawyers or any one with some legal understanding of mortgages uses to get a principal reduction loan modification. You figure they would tell the world their secret but they sit back and keep it to themselves

Truth be told if you don't have any leverage over your lender in terms of violations they committed associated with your loan then a loan modification that's worthwhile to you on your terms is a joke.

No forensic audit and threat of litigation against the lender means no favorable loan modification.

Ask any of the other people who answered below if they perform a forensic mortgage audit, found violations and hired an attorney to notify the lender and threaten litigation if they don't comply and were they still down for loan modification and I'll eat my right shoe. The lawsuit in federal court alone scare heaven out these lenders why because you make a request for the original loan documents in court and if they happen to not have them it turns a bad situation worst for the lender.

Here are some questions I ask all my clients before I ask them to pay for mortgage audit.

Did you receive a stated loan where the lender guess the income you were making and went off your credit score?
Has your monthly loan payment has increased more than $200 in the past year.
Has your monthly payment will increase by more than $200 in the next six months, or
Did your loan has a pre-payment penalty longer than three years.
Was your home was originally appraised for a higher value than homes were selling for in your neighborhood.
6. Or if your Realtor or title company steered you to a specific mortgage company.

If you can answer yes to any of these questions then you need to run not walk to get a mortgage audit

I hope this helps.

For a free consultation you can email me at or call me at 718-530-0738
0 votes Thank Flag Link Fri Mar 27, 2009
Hi Kathleen, was it your principal residence? If so...

One of HR 3648's (Mortgage Forgiveness Debt Relief Act of 2007 - effective until 2012) major points was the elimination of the “phantom tax” on foreclosures, short sales or other discharges of debt on a primary residence.

For Christina...
Consider this scenario: A property is worth $250,000, and the mortgage balance is $300,000. Under the old rules, if a lender forgave the $50k difference as part of a foreclosure, short sale, refinance or loan modification, the borrower had to claim the $50k as income and pay federal income taxes on that amount.

The new law eliminates this “phantom tax”, and the forgiven debt is no longer treated as taxable income to the borrower as long as certain requirements are met, such as the discharged mortgage balance must be on the taxpayer’s principal residence.

Get all the details here:,,id=179414,00.html

Best, Steve
0 votes Thank Flag Link Thu Jan 22, 2009
If you start the process of loan modification, you must be assuming that the lender wants to work with you.
They will make you stop making payments for at least three months
Then they will consider talking with you.
They will ask for ALL your assets and debt....a full accounting of your financials.
401k and all.
They will then review it to decide if you are having a "hardship" and if you qualify for assistance.

All the while this is going on you are not making mortgage payments. This can take from 3 months to 18 months. During that time your credit score is declining...and believe me it does.

I cannot recommend to you what you should do. But personally, I went through this hell for over 22 months and in the end the bank did not modify my loan, did not accept any offers I brought on the property, eventually foreclosed and is now sending me a 1099 for the debt relief that I will owe taxes on.

How is that for "Helping the Homeowner"
0 votes Thank Flag Link Thu Jan 22, 2009
Kathleen, you are absolutely accurate. This is what the banks are doing right now and they are giving bonuses to employees that deny these modifications. The firm I work for offers assistance to get people out of this situation and not sit in the bread line hoping for a hand out. Through litigation you are skipping this process and getting right to the point. This allows a faster solution with little to no damage to your credit. When a suit is filed then the bank is required to provide a solution because now the OCC and the FDIC are policing the outcome. If you would like more information about this please feel free to email me at and I can send you over all the literature I have collected. You may also have clients that are dealing with this so please pas me information on. 213-201-6385 Raymond Croteau
Flag Thu Jun 20, 2013
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