Graham Legal, P.A.
814 Ponce de Leon Boulevard Coral Gables, Florida 33134
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Changing a Loan Servicer Should not Result in Foreclosure

Lower your excessive mortgage modification payments
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Graham Legal recently got their client’s foreclosure sale cancelled for the sixth time! The best news is that there is no reset sale date.

The judge denied the plaintiff’s motion to sell the home on the argument made by Graham Legal: “substantial change of circumstances: servicer sabotage.” In this particular case, the bank changed its loan servicer while the client’s loan modification was under review. This forced the client to have to start a new loan modification, throwing them back into foreclosure.

A mortgage lender is the financial institution that issues borrowers their home loan. The loan servicer is responsible for processing the loan payments, responding to borrower inquiries, keeping track of the principal and interest paid, and processing borrower loan modification applications.

The practice of transferring loan servicing is very common in the mortgage industry. The company that holds your loan does not have to ask for the borrower’s permission, but it does have to inform you of the transfer.

However, things get complicated when a borrower has applied for a loan modification and the servicer is changed. Documents get lost and the new loan servicer demands a new loan modification application and financial documents from the borrower all over again. Luckily, there are rules in place to protect borrowers. Federal regulations prohibit the servicer from foreclosing on borrowers who have submitted a complete loan modification application.

Our client with six sale cancellations had filed a completed loan modification application with the original servicer and was entitled to have it reviewed. With that said, the new servicer must complete a full review and offer a reasonable loan modification if our client qualifies for it. Until then, the foreclosure sale is off.

If you have filed a loan modification and your loan was transferred, it is important to verify that your new loan servicer has your loan modification application. If you are unsure of what steps to take to avoid having your home foreclosed, we urge that you meet with a consumer law attorney specializing in foreclosure defense. Call our office today to schedule a free consultation.

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