Bankruptcy is often the best way out of a mortgage morass
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Trying to work with a lender to modify an existing mortgage can be so onerous and complex that many borrowers give up. And it's not much easier for lawyers who work on behalf of clients facing foreclosure.
"What we have found is that it's easier to take someone facing foreclosure into bankruptcy because the modification process has no teeth," said Alan Patterson, a partner at the Gross & Patterson law firm, Downtown.
"As attorneys, we don't seem to have the ability to force banks that are foreclosing to modify the terms of their loans," Mr. Patterson said. "There's really no one to talk to on the mortgage side to get anything accomplished."
The federal government has tried to encourage lenders to modify troubled loans in an effort to get the economy back on track, but many borrowers remain mired in red tape even with help of an attorney.
Homeowners saddled with payments they can't afford are reporting that mortgage lenders are not always easy to deal with: Many of them lose paperwork. Their loan officers are rude. Borrowers can never talk to the same representative twice and sometimes wind up spending all their limited resources making payments to save a house while relying on promises lenders make that don't come to pass.
"Customers looking to obtain a loan modification and use legal counsel to assist them will find it is extraordinarily expensive," said Ron Roteman, a partner and business and bankruptcy attorney at Stonecipher Law Firm, Downtown.
The time required to get a loan modification is very lengthy and chance of success are about 50-50.
"Dealing with lenders is very frustrating," Mr. Roteman said. "It's very difficult to have a conversation with the ultimate decision-maker. The file seems to get passed from one company representative to another.
"It requires the owner or their attorney to repeat the story every time they talk to someone," he said. "The whole process is highly undignified."
In Allegheny County, homeowners facing foreclosure can resolve their problems with lenders through the "Save Your Home" program established in January 2009 by President Judge Joseph James.
Participation in the program cannot start until the lender files a Mortgage Foreclosure Complaint action against the borrower in Civil Court.
First Published December 20, 2010 12:00 am
