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Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 33717
Experience:  15 years real estate, Realtor. Landlord 26 years
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In 2012, my husband lost s job and we had family

Customer Question

Hello,
In 2012, my husband lost his job and we had family difficulties. We own a house in Irvine, with a mortgage with Wells Fargo. Our monthly payment was high, and so we went to ask if we can modify the loan. WF's reps [I met with three different reps and my husband did the same] advised that since we have never defaulted on the payments, they cannot modify our loan and advised that we should default to force WF to modify our loan. So we did. Six months later WF denied our loan mod stating that we are not Fannie Mae and Freddie Mac. and we have to pay what we owe or they will foreclose. We hired a lawyer supposedly expert in RE law. Told us the case should take a maximum three months. We are now in 2015 and we lost the case against WF because my husband has a job now, and I am working as well. So No modification, no refinance, and they want over 100 thousand up front to keep us in our house. No other bank will refinance us because of our legal battle with WF. Is there a way we can keep our property and get our loan refinanced and add the late payments of 100,000 USD into the loan?
Thank you for your assistance.
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Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Barrister replied 1 year ago.

Hello and welcome! My name is ***** ***** I will try my level best to help with your situation or get you to someone who can.

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I am afraid that I don't have very good news, so please don't "shoot the messenger". What many people don't know, and the media is not focusing on because it is not good for the politicians, is that a loan mod from a lender is a completely voluntary program. No one, including the President, can order the banks to modify your loan if the lender chooses not to. That is one of the fundamental underlying concepts of contract law... that a mortgage is a contract that is binding on the parties and can only be modified by mutual agreement.

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You aren't going to like this but the lender holding any loan in default can legally decide to pursue a foreclosure action after the borrower has been denied for a loan mod. You don't mention whether they have started foreclosure proceedings, but there is nothing holding them back if you are in default on your loan. If a loan mod is denied outright, then the lender will usually continue any foreclosure proceedings.

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Despite all the podium pounding and loud speeches about how the government is going to help the homeowner in distress, the truth is that it is all hot air and posturing. They can't force the lender to do anything. The judge doesn't have the power to look at a case and say that "this is a really nice guy and he really deserves to stay in the house, so I will rule for him". He must apply the black letter law to the case and see if the parties have lived up to their contractual obligations.

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Apparently the lender has decided to give you the runaround with your loan mod request and then deny it. Since a loan mod is completely voluntary, they are able to refuse to modify a legally binding contract and enforce the original agreed upon terms of the mortgage in the event of a default.

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I hate it that I don’t have better news, but please understand that I do have an ethical and professional obligation to provide customers with legally correct answers based on my knowledge and experience, even when I know the answer doesn’t make the customer happy...

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Barrister

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