Lisa Simpson
Sep 22,2009
In: Finance, Foreclosure

New Strategies Are Being Thought of to Tackle Foreclosures

strategy

New strategies are being thought of to tackle foreclosures – one of them being loan modification in which the interest rate is reduced. But it is easier said than done.

One of the victims is Wilma Ervin residing in Delaware County. She completed piles of paper work, hung around for four months and was finally denied the modification benefit. She was instructed to continue trying.

Krystyna Buonchristiano living in the northeast had a more frustrating experience. Her application was denied after being initially approved. Recently she has been told that it has been approved once more.

Another sufferer is Nicholas Illich of Mayair. He was refused modification because his earnings were too high. Next it was refused because it was too low. He is hanging around in a state of limbo.

The administration is trying to introduce some sense into the process by offering incentives to the servicers who handle 81% of the mortgages in the country. But that will not solve the problem because of the bundling of these mortgages into securities and being sold to many investors across the globe. It means that one mortgage may be in the hands of many people or entities.

The loan servicers contend that without the permission of each and every investor it is not possible for them to take the decision regarding modification. The returns from the investment cannot be altered. Lately that very argument is being turned against the lenders and servicers. They are being asked to identify the investors.

In July a judge in Atlantic County dismissed a foreclosure case that had been brought by Deutsche Bank because the identity of the owner of the promissory note could not be made. This ruling set a precedent which other courts are following.

Towards the end of 1990 Vincent Tecchio, a chiropractor being disabled could no longer practice. Ultimately he lost his home in 2000. Not to be put down he contacted people who gave him the invaluable advice that before taking on the challenge he should browse around in the legal library. He took the advice and came to the conclusion that the promissory note is owned by the investor and not the servicer. It meant that the servicer had no legal stand sans the promissory note. Tecchio observed, “We are guaranteed the right to face our accuser in court. If the accuser is not there, then foreclosure cannot proceed.” However the judge did not buy this argument in 2005 and refused to have the foreclosure vacated. But it started off a new chain of thinking that has started to pay dividends.