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California consumers should be wary of offers to stop foreclosure

When a California homeowner is in serious financial trouble, the reaction is often to seek out any viable form of debt relief. This is an understandable course of action, especially when it seems that one's home is at risk of foreclosure. Consumers should be aware, though, that offers to stop foreclosure or otherwise drastically improve one's financial standing are not always effective, even when offered through one's mortgage lender.

Such was the case for one woman who financed her home through Bank of America. When she encountered a serious injury and was temporarily unable to work, she sought foreclosure assistance from her lender. She made application for Bank of America's loan modification program, and submitted the required documentation to support her request. During the same period of time, she continued to make her monthly mortgage payments, using her savings to do so. She sought loan modification assistance due to her fears that she would soon be unable to make the payments and could risk losing her home.

However, despite the documentation that the woman submitted, the bank denied her application, stating that she failed to adequately document the nature of her injury. As a result she sued the bank, and won a recent award of $22,449. That money will largely go toward the costs of closing a refinance loan, with the remainder to be paid directly to the woman.

As this case demonstrates, there are circumstances in which a homeowner can make every effort to seek assistance from their mortgage company, only to be denied the chance to modify their loan. While this woman had the means to bring her case before a court, how many others simply accept the bank's denial of their application and go on to lose their homes? California consumers who are looking for way to stop foreclosure should research their options, including filing for Chapter 13 bankruptcy, before signing on to any debt relief offer.

Source:, "HUD: Bank of America Settles with Woman Unfairly Denied Loan Modification," June 8, 2013

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