Loan modifications have been the biggest creator of false hope by banks and the government since this foreclosure crisis began.
Waltham, MA (PRWEB) December 03, 2011
McGeough Lamacchia Realty, the #1 Listing Agency in Massachusetts, issued the following statement in response to the lawsuit brought against five major banks by Massachusetts Attorney General Martha Coakley for alleged illegal foreclosures and loan servicing practices:
“We’ve been saying this for years. Loan modifications have been the biggest creator of false hope by banks and the government since this foreclosure crisis began,” says John McGeough co-broker/owner of McGeough Lamacchia Realty.
Coakley announced Thursday she is suing five national banks, Bank of America, Wells Fargo, JP Morgan Chase, Citi, and Ally Financial (formerly GMAC), as well as Mortgage Electronic Registration System, Inc. (“MERS”) and its parent, MERSCORP Inc., in connection with their roles in allegedly pursuing illegal foreclosures on properties in Massachusetts as well as deceptive loan servicing including loan modifications. (Commonwealth of Massachusetts v. Bank of America N.A., 11-4363, Suffolk County Superior Court, Boston).
"The single most important thing we can do to return to a healthy economy is to address this foreclosure crisis," Coakley said in a statement Thursday.
Among other claims, Coakley alleges each of the Bank Defendants deceived Massachusetts borrowers about loan modification requirements resulting in increased and unnecessary defaults.
For instance, the lawsuit alleges the Bank Defendants deceived Massachusetts borrowers by informing them they must be over 60 days delinquent to get a loan modification, when the truth is that delinquency is not always required. In fact, if default is imminent, borrowers are supposed to be considered. Borrowers who otherwise may qualify for a loan modification were being improperly denied or dissuaded from applying.(1)
“I applaud the Massachusetts Attorney General for including these loan modification practices in their suit. We have seen hundreds of homeowners over the last three years stop paying their mortgage because they were told they had to be late in order to be considered for a loan modification. Then after waiting months, the loan modification was denied. By this time, they are at least six months behind with no possibility of catching up,” says Anthony Lamacchia, co-broker/owner of McGeough Lamacchia Realty.
Trial modifications were found to be deceptive as well. Prior to June 2010, Bank of America converted only approximately 30% of trial modifications to permanent modifications. Wells Fargo reported a similar conversion rate for the time period, while Citi and Chase hovered at approximately 40%.Borrowers were strung along in trial modifications for nine months or longer, subjecting them to plummeting credit scores and mounting delinquency amounts.(1)
The Bank Defendants' modification efforts have been so poor that, for the first quarter of 2011, the United States Treasury Department withheld payment of the HAMP (Home Affordable Modification Program) Servicer Incentives to Bank of America, Chase, and Wells Fargo, noting they were in "need of substantial improvement." (1)
They have also been accused of writing loans and modifications they knew their clients could not afford and foreclosing on properties where they were not the mortgage creditor.(1)
“We have been saying all along that distressed homeowners want the truth more than anything. If they do not qualify for a long term loan modification they deserve to know and to know quickly so they have enough time to explore other foreclosure alternatives such as short sales which provide a graceful exit from a home if they are underwater and can no longer afford their home,” stated Lamacchia.
For more information about the lawsuit, visit the New England Short Sale Blog
1.Commonwealth of Massachusetts v. Bank of America N.A., 11-4363, Suffolk County Superior Court (Boston).
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