Any homeowner that has attempted to get a home loan modification on their own has undoubtedly encountered a number of hurdles that delayed the process, and generally frustrated the homeowner. A homeowner looking to get a modification because of changed financial circumstances should hire an attorney experienced in the process. However, for those homeowners still willing to pursue a modification by themselves, protect yourself and think like a lawyer to avoid some of these common pitfalls.
1) Get it in writing. When dealing with real estate transactions in Texas, the Statute of Frauds will be the Bank’s number one defense later when you argue, “But they said on the phone that I would qualify for a loan modification, and my new payment would be $XXX.” Lots of negotiations, promises, and agreements may sound real and binding over the phone, but Texas Courts have rejected oral agreements for modification of loans on real estate. Remember that helpful voice on the other end of the phone works for the bank, not you the homeowner. Number one rule is that you must get any promises, offers, or deals in writing.
2) Keep your own paper trail. As a Houston Attorney familiar with foreclosure defense it is frustrating to have someone, who is losing their home, come into your office and tell you a heart wrenching story about how they believed they were getting a modification, submitted three separate application packages, never received a response other than the two times requesting the additional application or additional information. Now they have received a notice that their home is up for foreclosure. The frustrating part is when I ask if they have copies of the applications submitted or any tracking information for the certified mail showing when it was submitted, the reply is generally, “I don’t have any of that; do I need that information?” It is not necessary to have that information to attempt to prevent or stop a foreclosure in Houston, but it makes it significantly more difficult to be successful in any lawsuit based on those grounds. Without evidence of their own, the homeowner must rely on documents turned over by the banks in discovery; otherwise it comes down to the homeowner’s word versus the bank’s word.
3) Acceptance must be EXACT. If you are a homeowner that does manage to thread the needle and does get a loan modification offer from the bank. Hopefully, it is in a signed writing, and the terms are acceptable. Generally though a homeowner in need of a loan modification is in the position of having to take the offer on the table to avoid losing their home. If that’s the situation, and you are going to accept the offer, make sure to comply with the requirements EXACTLY. Generally the requirements will include things like the following: two copies that need to be signed and returned, a payment amount to be made, and a specific deadline for when these requirements need to be completed. Unlike horseshoes and hand grenades, close enough on a loan modification does not count, especially in Texas. A client lost his case at the U.S. Fifth Circuit Court of Appeals because his payment was $3.00 short and a few days late. Don’t miss out on your loan modification and possibly lose your home, because you were a day late and a dollar short.
-Written by Brent Smith (Partner at Guerra | Days Law Group)