If a Loan Modification Is in Progress, Is the Scheduled Sheriff's Sale Cancelled?

Saying One Thing and Doing Another

A May 2011 article in the "Las Vegas Review-Journal" reveals that a Nevada attorney is suing Bank of America because it promised some of its borrowers it wouldn't foreclose while modifications were pending. The attorney is suing the mega-lender for violating the Nevada Deceptive Trade Practices Act because, the suit claims, the bank foreclosed on these homes despite its promises not to. This suit is being consolidated with similar suits in other states, pending in federal court in Boston at the time of publication. It is a situation, then, that is not isolated.

If you have received a notice of default or summons and complaint for a foreclosure and are attempting to secure a loan modification, a natural question for you to ask your lender is, "Will you stop the foreclosure while we are negotiating the modification?" Or, if you have been approved for a loan modification, you might ask, "Will the foreclosure be cancelled if I keep up on my modification payments?" It is important to ask the question because if you don't, there is no way for you to know where you stand.

A lot of foreclosing lenders are large banks or large mortgage servicing companies. Loan modification departments may be a thousand miles away from the department processing the foreclosure. Or the foreclosure might be handled by a law firm that is overseen by another division in the bank. Do not assume the loan modification officer is in contact with the people who are processing the foreclosure. He probably isn't.

If the lender assures you it will not foreclose, ask for something in writing. Then follow up with the company, department or people sending the foreclosure documents and notices. Send them the agreement authorized by the loan modification division with a cover letter highlighting the bank's commitment. Then follow up with a phone call. Then call again the following week. Document your calls and save all of your paperwork. Even this won't guarantee the bank won't foreclose anyway, but it will help.