Citigroup has agreed to pay $1.13 billion to settle claims by investors who demanded that it buy back billions in residential mortgage-backed securities. The bank reached an agreement with institutional investors who purchased over $59 billion in home-loans-backed securities from 2005 to 2008. For the full story go toDealbook.

Goes to show the power of clout and sophistication in the mortage game. Institutional investors have the skills and money to go after Citi and bring them to the table. The average homeowner however is lucky enough to have access to a pro bono or volunteer group offering mortgage assistance because he or she cannot afford to retain a lawyer while keeping the lights on. The foreclosure crisis is not a hot as it was couple of years ago, but hundreds if not thousand of homeowners across Maryland continue to face the threat of default and eventually foreclosure. Loan modifications are slow to come and when they do the terms are often untenable, setting the homeowner for further default just a couple of months down the road.

Recent Loan Mod Success

In a arecent case that I assisted one, a homeowner had begrudgingly accepted the only loan modifcaiton offer she could get only to default less than six months later. Once again she was on the foreclosure train. When we met she brought a recent lawsuit that her new lender had filed. Her loan had recently being sold. It turns out the lender had failed to record a deed of trust when it refinanced the loan several years prior. A deed of trust is a document prepared to give the bank a security interest in teh homeowners home so that when the homeowner defaults on the note the bank can go after the property. In this instance, none was recorded. Technically, this homeowner own the house free and clear home.  Now the bank has potential defenses that have being upheld by the Maryland courts, but the failure to record created an opening for my client to get a second shot at a modification.

The servicer’s representatives were pretty clear early on that my client would not get another loan modifcation without a substantial down payment beause she had defaulted in her last one. After walking them through the issue as I saw it, I was told to expect a call back soon. Interesting it turns out the bank’s foreclosure lawyers may not have briefed the servicing reps about the issue with the loan. Another case of the bank’s left hand doesn’t know what the right is doing. If you have attemped a loan modificaont you know what I am talking about.

Nonetheless, I received a gracious email indicating that the bank would consider my client for a loan modfication. It was the fastest loan mod ever granted in my office. Now comes the hardwork of actually making the payments.

If you have a question or concern about your mortgage drop me a line and I would be happy to discuss.