HOMEOWNER COMPLAINTS SPUR CHANGES TO NATIONAL FORECLOSURE SETTLEMENT

Amid continued complaints that banks are not still not making things any easier for struggling homeowners, the rules surrounding the $25 billion national foreclosure settlement are being modified.

When it was initially created, the multi-billion dollar settlement was supposed address the needs and concerns of the various homeowners who were allegedly victimized by lenders during the foreclosure process. However, the settlement also called on the nation's five largest mortgage servicers - Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally/GMAC - to comply with updated mortgage servicing standards in order to ensure that the previously employed wrongful foreclosure practices were eradicated.

Sadly, however, the Chicago Tribune recently quoted Illinois Attorney General Lisa Madigan as stating that these standards "were supposed to eliminate headaches for borrowers, but homeowners continue to report problems." In fact, complaints are still rolling into state attorney general offices throughout the country claiming that lenders are not adhering to many of the updated 304 mortgage servicing standards, which prompted many of the recent changes.

For instance, one of the recently announced changes to the mortgaging standards includes a new procedure in which lenders will now give homeowners 60 days to submit the additional documentation needed to obtain loan modifications in order to stave off foreclosure - which is an increase from 30-day period that homeowners previously had. In addition, two of the lenders, Bank of America and Wells Fargo, have agreed to adopt additional policies that will hopefully make the entire process simpler and more streamlined for homeowners.

Unfortunately, the need for the recent changes merely illustrates how foreclosure problems persist for beleaguered homeowners despite the national settlement - meaning homeowners may need to explore various other avenues of relief if facing an imminent foreclosure.

Bankruptcy may be an option to avoid foreclosure

If other forms of foreclosure relief - such as loan modifications - has proven unsuccessful, homeowners may want to think about using a Chapter 7 bankruptcy in combination with their traditional foreclosure defense. By filing for bankruptcy, a homeowner can stop all collections actions, including foreclosures, and challenge lenders in court. Importantly, a homeowner's credit is likely improving while this process takes place, so that even if the homeowner loses to a lender in court, he or she may be eligible for financing for a new home that he or she can afford.

Strategic planning such as this is why it is important to contact an experienced consumer rights attorney if you are facing foreclosure and believe bankruptcy may be helpful. Given that potential remedies vary depending on the circumstances, a skilled attorney can review the facts of your foreclosure and help develop the best foreclosure defense possible.