The Different Avenues That People Explore To Avoid Foreclosure Prior To Filing Bankruptcy

Interviewer: When people call you and say they just want to save their home, what have they tried before they come to you?

James Logan: A lot of people tried working on a loan modification before they come to see us. Unfortunately, a lot of people have also been ripped off by loan modification consultants. In Maryland, they actually passed a law that says that you are not allowed to collect money for a loan modification until you actually get somebody a loan modification. The loan modification scam artists collect thousands and thousands of dollars from people and they’ll never do anything for them. A bank cannot be forced to give you a loan modification, so basically a loan modification is just applying with the bank and hoping that they’ll give you a loan modification and there’s not a whole lot you can do to force them to give you a loan modification.

The Process for Loan Modification Involves A Lot of Paperwork and is Similar for Different Banks

But the process for loan modification is pretty much the same for every bank is you submit a whole bunch of paperwork and you follow it up on it. Many times, they’ll tell you, “We didn’t get this piece of paper”, so you send them that and you send them another piece of paper and they’ll say, “We didn’t get this”, and it just drags on and on and on. I’ve seen people who are in a loan modification process for 4, 5, 6 years and they just get farther and farther behind in their mortgage and they never get any kind of resolution. Unfortunately, a lot of people will come in like that and those are very difficult situations.

Certain Lenders like Ocwen Are More Willing to Help People in Restructuring Loans

Interviewer: Do some banks work with people?

James Logan: Certain lenders, Ocwen being one of them, are much more willing to help people because that’s what Ocwen is really designed to do. They basically buy these loans from other lenders with the intent of helping people restructure them and to make them working loans again. The other banks, as far as I can tell, just don’t really care one way or the other. They’re doing it because the government is making them do it and they’re under some order. Some of the bigger banks got sued by attorney generals in bunch of different states. They kind of have a gun held to their head and forced to do these loan modifications but they’re not really interested in doing them. People just get the run around for years and years it’s really unfortunate.

The Banks Suffer From Bureaucratic Indifference Towards People in General

Interviewer: Why would they do this, like is it better for them to just foreclose and take someone’s home versus do the loan modification? And why don’t they care, the banks?

James Logan: It’s bureaucratic indifference. Most of these loans were charged off years ago by the original lenders. The bank that is servicing the loan now or even who owes the loan now is not the one that made the loan. It’s not really a drag in their earnings or a drag in their portfolio because they didn’t make the loan and they’re not really bothered that it doesn’t. There’s a house down the street from me that’s been vacant for four and a half years. It’s got a Bank of America loan on it and they’ve never put it in foreclosure, they’ve never done anything and the house is worth $300,000 and it’s been sitting vacant for three years. Other than bureaucratic incompetence or indifference, I don’t know why they drag these things out.