Tracy Davis and her husband were victims of such a case.  After meeting with a Bank of America representative on October 30^th, 2009, the Davis’ were told that they qualify for a loan modification under HAMP guidelines.  With the exception of a few calls from a collections center in India, they had not heard anything regarding their loan modification for the next four months.

The Home Affordable Mortgage Program was created in order to keep 3 to 4 million Americans in their homes.

“Federal Statistics show banks are making plenty of offers, but relatively few of those loan changes are being made permanent.”  (Berger 1)

In fact, out of roughly 1 million homeowners originally approved for HAMP, only 116,000 have had the new mortgage terms become permanent.  The most common occurrence is a trial period of payments that the lender outs the homeowner on.  The trial period of modified payments should only last for three months; however lenders are either requiring homeowners to continue making more trial payments after the scheduled 3 months, or are failing to communicate with the homeowners on a permanent modification all together after the trial period is completed.

Tracy Davis and her husband both had steady employment as of late 2006, but an unfortunate turn of events left them both laid off and looking for work.  Both took sporadic jobs here and there, and both eventually ended up working at a grocery store for about one third of their original pay.  With mortgage payments at $1000 per month, they continue to struggle to make their payments on time.  The Davis’ are just one example of the millions of families that are in similar situations.  These people need help, and here at KEL, we are dedicated to helping each client who comes to us in their time of need.

At the end of 2009, Orlando netted a foreclosure rate of 8.2%, which translates to one in every twelve homes receiving a filing for foreclosure.  The total number of filings was 72,141, which is a 54% increase from 2008’s total. 

Factors such as high home prices, poor lending practices by brokers and financial institutions, and a high unemployment rate have contributed to the large increase in foreclosed homes, and the most severely impacted counties include Lake, Orange, and Seminole, with Lake county leading the way with 7791 filings (a 65.3% increase). 

Although the economy is beginning to grow again at a slow pace, the rate of foreclosure actions filed will continue to increase as long as the unemployment rate remains high and new opportunities for employment remain scarce (Reuters).  During these difficult economic times, KEL Attorneys continues to take the fight back to the lenders on behalf of the consumer.

By Mary Shanklin Orlando Sentinel

January 16, 2010

William and Lida Negron don’t know the details of a $75 billion federal program designed to protect homeowners such as themselves from foreclosure.

The senior citizens know only that they have tried to get new terms for their mortgage but now face losing the southeast Orlando-area house they bought three years ago at the peak of the market.

“I was talking to my father yesterday,” said Carlos Negron, their son, “and he’s at the point where he’s about to turn in the house. He’s an elderly person, and it’s so much stress on him. … And my mother has been to the hospital twice because of this.”

The Negrons are among about 600,000 homeowners across the country who have hit a dead end with the trial mortgage modifications they received through the federal government’s Making Home Affordable program. Orlando had the 11th-highest rate of mortgage modifications of U.S. metro areas in December, with 15,516 homeowners in trial modifications and 1,400 who have permanent new mortgage terms, according to a new federal report released this week.

Here’s how the 10-month-old program is supposed to work: Banks reduce certain customers’ monthly mortgage payments, often by cutting the interest rates, for a three-month trial. If the homeowners make their payments on time, the banks are supposed to convert the temporary loan terms into long-term modifications, which may involve extending the 30-year loans’ terms to 40 years.

Treasury Department officials initially estimated that more than half of the trial deals would become permanent. But as of the end of October, fewer than 5 percent had been converted, according to a Congressional Oversight Panel’s report released last month.

“I’m not really sure why the banks are not making these modifications permanent,” said Matt Englett, of the Altamonte Springs law firm Kaufman, Englett and Lynd, which represents thousands of foreclosure cases. “We have a lot of clients who have met the criteria — they have gone through the three-month trial period, and now they’re just sitting and waiting. … Our take on this is: The taxpayers bailed out the banks, and now the banks are bailing on the taxpayers.”

Englett said his firm plans to file lawsuits against a half-dozen lenders that are not giving their customers a permanent solution even when those homeowners successfully complete their three-month trials.

Last month, the U.S. Treasury Department drew hundreds of local homeowners to a Making Home Affordable foreclosure-prevention workshop in Orlando, one of the top 10 metropolitan areas in the country for foreclosures. Participants met with a representative from their mortgage company to discuss getting a trial or a permanent mortgage modification.

One south Orange County man at the workshop said that, even though he had made timely payments for three months on his trial mortgage modification, he received a foreclosure notice Nov.19 on the home he had bought three years earlier for $156,000 in the giant Southchase development.

Reasons the trial modifications are not becoming permanent remain unclear. Treasury officials reported to the Congressional Oversight Panel in September that they would have more a more accurate assessment of the program by the end of March.

One issue, officials have said, is that homeowners sometimes do not file the paperwork necessary to make the loan changes permanent. Because of such hang-ups, the Treasury Department approved a two-month extension of the trial modifications launched before Sept.1, 2009. The program’s success rate improves to 38 percent for trial modifications converted within five months, as opposed to a 4.7 percent success rate for three-month trials.

For the Negrons, the terms their bank offered them for a permanent loan modification were untenable.

When the couple — who said they had near-perfect credit scores before William Negron lost his car-sales job about two years ago — got into a trial modification last year, it dropped their mortgage payment from $2,000 a month to $1,280 a month. But the permanent loan modification would have extended payments on the 30-year loan for 10 more years and would have required a $25,000 balloon payment in 15 years — when William Negron would be approaching his 90th birthday.

“That was a major slap in the face,” said Carlos Negron, the couple’s son. The Negrons own a second home, which they rent out for income.

Perhaps the larger problem facing the Negrons and thousands of other Central Florida homeowners at risk of defaulting on their mortgages is that they are struggling to stay current on houses now worth a fraction of what they paid for them several years ago. The Congressional Oversight Panel, created by lawmakers in 2008 at the height of the global financial crisis, criticized the Treasury program last month not only for being slow in converting trial loan modifications but also for not addressing the fact that 23 percent of all homeowners now owe more on their homes than the properties are worth.

Derrick Bennett, a Pine Hills homeowner stuck in a trial modification, has lost much of his income from detailing vehicles for auto dealers. He said he is struggling to pay his trial mortgage payment of about $1,200 a month, even though it’s down sharply from his old monthly payment of $2,000.

He said he paid $120,000 for his home 11 years ago but now sees similar houses down the street selling for less than $43,000. He has never missed a house payment, he said, but now it’s tough to know what to do.

“It would be hard to start over,” he said.

Mary Shanklin can be reached at 407-420-5538 or mshanklin@orlandosentinel.com.

Copyright © 2010, Orlando Sentinel.

In the short time I have been a part of the KEL family, I have seen first hand the many ways in which our firm has helped change lives by helping them get a new start financially.  Whether it has been helping clients save their homes from foreclosure, helping them with a modification of their mortgage, or assisting them with credit cards or a bankruptcy filing, we have been there every step of the way, and we will continue to serve our clients with our expertise and understanding.

It has been my pleasure to work for a law firm that truly cares about their clients and the community they work in.  On behalf of everyone at KEL, we want to wish you a safe and happy new year.

Be sure to listen to Mr. Englett’s very own talk show, Under Oath, tonight at 6pm on WFLA 540am in Central Florida.  If you live outside of the central Florida area, you may listen to the program live on our website.  Matt fields listeners calls, and would be happy to take calls from out of state listeners in addition to local callers.  If you have questions regarding foreclosure defense, bankruptcy, credit card debt, or IRS tax debt, please feel free to call the show toll free at 866-916-5400.

Those are just a couple examples of effect the economic downfall. Congress passed legislation to extend unemployment benefits, although there does not look appear to be a glimpse of light at the end of the tunnel anytime soon. However, I know firsthand our elected officials in Washington are working hard to get our great country back on track. Working at KEL Attorneys, everyday demonstrates the negative impact this has on people everywhere.  I see clients who have racked up a great amount of debt through credit cards as well as clients who are not making their monthly mortgage payments because of economic hardships. So many people feel helpless and want to give up. KEL Attorneys can give hope in this unfortunate time through the multitude of our services that we provide our clients.

“We heard about Barack Obama’s plan for loan modification help, and grew hopeful that we would be able to qualify for this in time to get caught up on our mortgage.  We want to keep our home.”  Despite hearing about loan modification as a definite possibility on the news, the reality proved to be far from clear.  No one answered their calls, no one returned their messages, and then, instead of a letter in response to their written requests for assistance, the foreclosure notices from their lender arrived in the mail.  Eventually, my clients were able to connect with someone at the bank, but a Foreclosure Complaint had already been served on them.  Should they answer it?  Not having the benefit of counsel, they asked the lender, and were told not to worry about it because the foreclosure action would not proceed as long as they were negotiating with the bank.  And then they received the court order granting the bank summary judgment, and giving them just 30 days to vacate the home they had shared for 20 years.  In which they had raised their children.  It was only then that they called a lawyer.

This story is all too common.  It is critical that an attorney is contacted at the earliest stage of a possible foreclosure action, to avoid the steamroller it becomes when procedure and deadlines are neglected.  Because of the immense volume of foreclosures handled by our firm, we have the developed expertise to handle every stage of the loan modification process.  Our team of experienced attorneys works together with the modification group to assure the best possible results for our clients.