6 Sneaky Tactics Banks Use to Drive Homeowners Into Foreclosure
While a foreclosure will be devastating for you in many ways, your bank can actually profit more from your home loss than they do from your mortgage.
Some of the nation's biggest banks are also the worst offenders. From refusing to accept your payments to adding on outrageous fees and even "losing" your modification documents, your lender can wreak havoc with your life and home. If you are having trouble dealing with your loan servicer, make sure you are not falling for one of these banking dirty tricks:
Refusing to Accept your Payment
The bank could state any one of a number of reasons for refusing your check; the bottom line is that this method is often used to drive you deeper into debt and further behind.
The bank could also refuse to accept a check to drive up fees and arrears or to eat up the time. You, the homeowner, has to call an attorney for help. Your bank could refuse a payment for any reason, but one of the most common techniques is to tack on extra fees -- and then decline your check for not including these phony costs up front.
Imagine you have finally worked out a deal and managed to save your home. You begin making payments on the modification as agreed – but the bank pulls the rug out from under you by switching servicers. The new loan servicers claim to know nothing about your loan – and may consider you behind if your modification payments were lower than your original payment. This method starts the foreclosure clock ticking again and ensures that your fees will quickly add up.
Modification Contract Mix-ups
Once you've completed the modification process, you are done and your home is saved – right? Not so fast! Banks use this sneaky trick to rewrite the terms of your modification, adding thousands of dollars and possibly refusing to accept your payments unless you sign and agree to the new terms. Calling won't help – they'll simply route you through their robotic phone drones until you give up.
Surprise Fees and Escrow Costs
The bank knows you'll do everything you can to cooperate and retain your home, so they add on extra fees each month to pad your bill. Even though they may have no intention of modifying your loan, the bank will continue to charge you fees – and accept your cash – for everything from taxes to "modification costs". They know you'll pay because you want to keep your home – but you'll never be able to catch up once the avalanche of fees hits.
Your state laws may offer some legal protection from foreclosure, but by filing false notices, falsifying the dates on your paperwork or adding thousands of dollars in extra fees, your bank can be sure of a hefty profit. By tacking an extra 10, 15, or 20, 000 onto your loan as arrears when they file papers, they make it impossible for you to come up with the money you would need to retain your home. These inflated fees also pad the amount the bank can expect to ask for your home when they eventually take it and resell it.
The Modification Treadmill
It is illegal for the bank to continue with foreclosure while you are in the middle of a modification – provided it is your first modification attempt. A bank that denies your application quickly, but then says you can reapply is doing so to run out the time you have to modify and removing your legal protections as well.
If you're coping with foreclosure and your bank is trying one or more of these dirty tricks, we're here to help. Peace of Mind LLC works hard to protect the rights of homeowners and prevent the abuse that is so rampant in the mortgage loan industry from impacting you. Contact us or follow our blog for the latest mortgage and banking news and learn how you can protect yourself from an increasingly aggressive and out of control industry.