Loan Modification Request Not Legal Ground to Stop Motion For Relief

Nowadays, ever since the anointed one became President and converted America into a third world country, LOAN MODIFICATION, has become urban legend. Apparently, many people believe that LM is the silver bullet that keeps the mortgage lender at bay irrespective of how bad the default situation is. In fact, some people believe that you can actually get your house for free by suing the lender for predatory lending. I have people coming into my office and asking me if I can do a “forensic” examination of their loan documents, to see if they can sue the bank. A “forensic” examination I presume is where you check all relevant documents to see if the lender actually gave you the correct interest and type of loan that they said they would. The truth is that the term “forensic” exam is actually a marketing gimmick that so called 'house foreclosure expert rescuers,' another ridiculous term, conjured up to make gullible people believe that some kind of complicated legal procedure is being initiated that will make the mortgage lender capitulate after sweating blood.

The fact is that in America, as in every other place in the world where printed money, instead of sea shells is currency, if you do not pay your mortgage, you will eventually lose your house to the mortgage lender in a foreclosure. That is the plain and simple truth. It may take the lender a longer time than usual to foreclose because of the current recession and the applicable mortgage foreclosure delay laws, but eventually, you will lose your house to foreclosure if you default on your mortgage. Yes, some people have been living in their houses for one or two years without paying their mortgage, something unheard of before the time of Obama. But the length of time that the house has not been foreclosed does not mean the house will not be foreclosed and the debtor gets to have the house for free. Sure, debtor gets to live in the house for free until the house is foreclosed. But the house will get foreclosed.

A peculiar situation arises when debtor has filed a bankruptcy. The bankruptcy stops the foreclosure because of the automatic stay. However, creditor has the right to file a motion for relief, to start or continue foreclosure despite bankruptcy if debtor is delinquent on mortgage payments. A motion for relief asks for the court’s permission to allow foreclosure to start or continue despite bankruptcy. Debtor has the right to oppose the motion for relief on the grounds that he is not delinquent, there is substantial equity in the property enough to provide adequate protection to the lender and that the asset is required to reorganize the finances of debtor. If debtor cannot argue the foregoing, then he has no legal ground to stop the motion from going forward, and the court will grant the motion for relief. Some people think that just because they have filed a request for Loan Modification, they can oppose the motion for relief. Not so. A loan modification request is not a legal ground to oppose a motion for relief. When the court grants the motion for relief, creditor is given permission to continue with foreclosure proceedings despite debtor’s bankruptcy. This simply means that creditor has to comply with applicable foreclosure state laws when it forecloses. In California, the mortgage foreclosure prevention act requires that if debtor has submitted a complete loan modification request, creditor must first evaluate the request, then inform debtor of its decision. If creditor rejects the request, creditor can continue foreclosure proceedings after notifying debtor of the rejection. If creditor approves the request, normally, creditor will delay foreclosure until debtor defaults anew on the terms of the Loan Modification.

The only sure way of stopping a foreclosure and buying time to keep your house is Chapter 13. In Chapter 13, the foreclosure stops for three years as long as you make plan payments curing default. On the 36th month debtor becomes current again.

Lawrence Bautista Yang is a graduate of Georgetown University Law Center and has been in law practice for thirty years. He specializes in bankruptcy, business and civil litigation and has handled more than four thousand successful bankruptcy cases in California. He speaks Tagalog and looks forward to discussing your case with you personally. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 1000 S Fremont Ave Bldg A-1 Suite 1125 Unit 58 Alhambra, CA 91803.