Should you trust your mortgage company when in foreclosure? Go with your gut.

Does this story sound familiar? A homeowner is struggling with his mortgage payment and wants to work something out with the lender to avoid foreclosure. He has read in his local newspaper that lenders have pledged to help distressed homeowners in these difficult times, and so he calls the loan servicer (whom he thinks is the actual owner of his note and mortgage, but that’s another story), asking to speak to loss mitigation department. What follows is a series of transfers and eternal holds and no answers. Then he is served with the foreclosure complaint.

Now the homeowner is in a panic, and he calls the law firm at the bottom of the Complaint. The law firm eventually puts the homeowner in touch with someone from the servicer that says, “Don’t worry. We’re gonna work this out.”

“Thank God!” says the homeowner, and the loss mitigation process begins. The homeowner dutifully fills out all the required paperwork and submits it timely to the mortgage company. Then he waits . . . and waits, until one day he gets a Motion for Summary Final Judgment of Foreclosure in the mail.

Now the homeowner is back to the state of panic, and he frantically calls the law firm and mortgage company. “Don’t worry,” they say, “We are almost done with your paperwork, and everything looks great! That motion you received is just part of the process.”

Relieved, the homeowner goes back to the uncomfortable process of waiting . . . and waiting, until he receives a Notice of Hearing regarding that motion he got a couple of weeks earlier. Once again, he calls the mortgage company, and once again, they ensure him that this is part of the normal process. “We have great news! You have been approved for the loan modification, and the paperwork is on its way.”

As a result, the homeowner fails to attend the hearing on the pending motion, and instead of the mortgage modification paperwork, the homeowner gets the Summary Final Judgment of Foreclosure with the sale date set three weeks away. Confused, he calls the servicer for what will be his last time. His uneasiness is justified, as they tell him, “We’re sorry, but the modification was rejected by the investor (or whomever). There’s nothing more that we can do.”

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This is often about the time the homeowner comes to see me, and sadly, it is usually too late. I read all of the foreclosure paperwork, and I am sickened because I see all of the potential defenses and counterclaims that could have helped the homeowner. I read the absolutely false allegations contained in the Complaint, and I hear the story of deceit and broken promises.

The homeowner asks, “Why did they lie to me?”

Make no mistake. The lender is the enemy in court – that’s why it is called “plaintiff” and the homeowner is called “defendant”! The lender wants the house back, plain and simple.

I believe lenders know how weak their foreclosure complaints usually are, and so they use loss mitigation as a distraction. As long as the homeowner feels like he has no leverage, he will follow the mortgage company’s empty promise, allowing the foreclosure to continue right under his nose.

The last thing the lender and its lawyers want is for the homeowner to talk to an attorney that understands how to fight foreclosures. Fighting the foreclosure shifts leverage away from the lender and toward the homeowner and ensures that the lender will negotiate in good faith.

If you are in danger of losing your home, meet with a lawyer immediately to discuss your rights and defenses.

Related posts:

1. What Is the Difference Between a Mortgage and a Deed of Trust?
2. How Can I Still Own My Home After The Mortgage Company Foreclosed?
3. What Happens When My Mortgage Company Goes Bankrupt?