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The evolution of mortgage modification litigation


In the wake of the most recent financial crisis, many homeowners who had either lost their homes to foreclosure or who were fighting to keep their homes from being foreclosed upon learned that banks may not have handled their foreclosure and modification actions properly. As a result, several waves of litigation related to unlawful foreclosure and loan modification practices were filed by homeowners against those who had harmed them.

This kind of litigation continues to this day. However, the kinds of actions being filed currently look somewhat different than those actions filed in the immediate wake of the financial crisis and in the first few years that followed.

Right after the public became aware of the scandals plaguing the foreclosure and loan modification industries, suits were filed by homeowners who had received verbal promises by lenders which were ultimately not honored. When lenders promised to either delay foreclosure proceedings or to modify a homeowner’s mortgage payments but did not honor these promises, many homeowners believed they had no recourse to hold lenders accountable for such actions. However, public education on the issue led to a better understanding of consumer rights and many suits were filed accordingly.

Other suits which followed focused on fraud or intentional misrepresentation by lenders. Some of these suits continued to focus on verbal promise issues while others focused on other unlawful lending practices. Currently, many suits continue to target these practices while others involve complex allegations and defenses to issues with the federal Home Affordable Modification Program (HAMP).

It is important to understand that unlawful foreclosure practices and inadequate loan modification suits are still being filed by homeowners who have been harmed by lenders. If you are struggling with a foreclosure or loan modification action that seems fishy to you, please do not hesitate to contact an experienced attorney with your concerns.

Source: The Huffington Post, “Mortgage Modification Litigation Continues,” Brad Reid, May 23, 2014