SEATTLE, Wash. - As more Washington families struggle to pay their
mortgages, there's growing concern that they're not getting enough
help, from either the government or from lenders. In Seattle, attorney
David Leen, who specializes in consumer-protection law, says he's
receiving more calls from people who have asked their banks or mortgage
companies for loan modifications, but have gotten no response. He knows
lenders are swamped, but says he isn't seeing many modifications taking
place, and some companies are even using the situation to make money.
"Some lenders are trying to capitalize on this problem, and they're
charging people large quantities of money - five, six, seven thousand
dollars - to delay a foreclosure while they continue the modification
consideration. And I think that's very unfair and improper."
Leen says one problem is that lenders are not required to modify their customers' loans.
"There may be some incentives for them to do modifications through the
government subsidies, but the average consumer doesn't know how that
works, or what recourse they might have if the lender doesn't follow
through with a modification."
A bill in Congress would have allowed bankruptcy judges to order
modifications... but it was killed in the Senate, when the banking
industry said it could raise interest rates for all consumers. Leen
says it's not that the banks want to take more houses, but that they're
hesitant to write loans that they can't make a profit on.
He says it's important to get legal advice if you intend to stop making loan payments - or under other circumstances.
"If you have more than one loan on your property, you want to make sure
that if you stop making the payment on the first, the second doesn't
turn around and sue you. If you're considering a short sale, a
bankruptcy, a modification - a lawyer can usually give you some advice
about the consequences of taking these various avenues."
Leen is convinced that the foreclosure problem will worsen over the
next two years, as more adjustable-rate mortgages automatically re-set,
leaving people owing more than their homes are worth.
The State of Washington has just launched a Home Foreclosure Legal Aid
project, training attorneys as volunteers to help homeowners in crisis.
The phone number is 1-877-864-HOME (4663).
Information is also online at www.homeownership.wa.gov