If you have applied for a mortgage modification and are considering retaining counsel for either modification or foreclosure defense assistance, read on.
First, I want to mention a practical matter: Even if a homeowner hires an attorney, the lender will inevitably contact the homeowner directly, even after the lender has been told (repeatedly) to go through the homeowner’s attorney. Try to remain calm.
A homeowner has two options when the lender calls: (1) He can speak with the lender directly to continue to facilitate the loan modification process; or (2) he can politely decline to speak with the lender, and refer them to speak with the homeowner’s attorney. I have many clients who do not wish to speak with the lender after retaining counsel, but it is often easier to speak with the lender and relay the information to the attorney. The attorney can then take whatever action is needed on the homeowner’s behalf.
Modification and Intervention are two separate processes.
They will both continue moving forward, independent of each other, and without communication between them. Think of this scenario as “double-tracking” the account.
Typically, a homeowner will try to get a loan modification through the lender prior to seeking legal assistance. Once the homeowner is served with a foreclosure lawsuit they seek legal representation, which, at that point, is a good idea. The modification process is still ongoing, but now the homeowner must also deal with the impending foreclosure issue.
Lenders will, without a doubt, tell a homeowner that they will not initiate foreclosure proceedings while they are working with the homeowner to secure a loan modification. That is a lie!
If you are served with a foreclosure lawsuit and the lender tells you not to worry about it because you are going to get a loan modification, ignore them!!! And take action to protect your legal rights. There is a reason the lender will only speak with you on the telephone and will not send you any confirmation in writing.
Once the foreclosure lawsuit is initiated, there are certain protections that are afforded to homeowners under South Carolina law, who are still living in their home as their primary residence. This is where the intervention process comes into play.
Intervention is a form of loss mitigation.
To read more about the South Carolina Supreme Court’s Administrative Order outlining the purpose of, and necessity for loss mitigation options, click here.
The intervention process is similar to the loan modification process, except it takes place within the foreclosure lawsuit, and under South Carolina law, must be thoroughly documented before the lender can move forward with the foreclosure action. It is essentially another bite at the loan modification apple and a request to see what other loss mitigation options the homeowner may qualify for (for example, a short-sale, a deed-in-lieu of foreclosure, or a payment plan).
In order to apply for intervention, the homeowner must return the intervention application form sent with the summons and complaint; or, if one is not provided, the homeowner should send a letter requesting the intervention application within the time allowed to respond to the complaint.
Once the request for foreclosure intervention is sent to the attorney for the lender, the lawsuit is stayed (put on hold) until the lender analyzes the loss mitigation options that the homeowner may qualify for, and informs the homeowner whether they are accepted or denied for loss mitigation assistance.
Another practical matter: If there is a silver lining in the foreclosure process, it is that once the lawsuit is filed, the homeowner can deal with the attorney for the lender, which is much easier than dealing directly with the lender–as I’m sure many of you reading this already know.
Although every story is different, many of our clients have had success with the intervention process. Therefore, if you are served with a foreclosure action, it is imperative that you do not miss the opportunity to request loss mitigation assistance because it is the first step towards favorably resolving the foreclosure action.