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Q&A: Will I lose against mortgage company?

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For a brief moment in August 2009, my business just all but stopped. I'm an accountant, and my clients had trouble paying their bills. I asked my lender for a loan modification. After I applied, they said everything was great except that I hadn't sent a copy of my Social Security letter -- which they had never asked for. So, I was denied.

After I called them, the lender reopened my loan modification petition and made me jump through hoops forever. I was within three days of hearing back about the modification, when I called on a Thursday to verify they had everything. They did.

Later, when I called again, they said I had been declined. When I asked why, they told me it was because I hadn't sent in my Social Security letter. So I simply said, "Fine, sounds like a good court case to me, I'll see you in court." And I hung up.

Two weeks ago a representative of the lender called and told me that they had started foreclosure proceedings. I'm just waiting for the court date because I have all my documentation from every day I tried to contact them and proof that they received all of the documentation.

Shortly after I got this call, one of the big banks took over my lender. I now receive notices from the big bank and my lender, but I don't respond to anything. I just keep the paperwork in my file.

Why would I go to these people when I was refused twice for something stupid? They don't want to help, and I am not wasting my time! I paid the modified payments on time, and I did everything they said, but to no avail. In the meantime, I am waiting for the court date. I am waiting to see if they will give me the loan I qualified for and my payments should be $257 month. Then I will be happy and pay on time just as I have done for 11 years!

Response.  I'm not sure you're going to win the game with the hand you have and how you have decided to play it. You need to know that, despite the fact that you applied for the loan modification and that you may have been qualified for it, your lender may not have had a legal obligation to give you the modification.

If the lender had no legal obligation to modify the loan, and you have stopped making payments, the lender has the right to proceed and foreclose on the home.

At the foreclosure hearing, the judge may only need or want to focus on the issue of whether the lender has proceeded in the foreclosure properly, with all the documentation in order. The judge may ignore or not even want to look at your documentation relating to the loan modification.

What you might want to focus on now is working to stop the foreclosure. You can go to your county courthouse and see if someone there will help you determine whether the lender has filed the documents properly in its case against you. Many people have contested their foreclosure proceedings on this basis; you may need an attorney if that is what you choose to do.

In the meantime, you should also file a complaint with the Office of Comptroller of the Currency, which regulates the large banks. They have someone in their office who works with your particular lender, and they may push the case from their end to make sure you get a fair hearing. You can file the complaint at helpwithmybank.gov.

In general, if you're not getting anywhere with your lender on a loan modification, there are some things you can do to get the lender's attention:

1. File suit in small claims court or regular court.

2. File a complaint with the OCC.

3. Call your state banking regulator and file a complaint (or work with its ombudsman to get in touch with the lender).

4. Go into a branch office and sit down with the branch vice president and see if you can get some assistance there.

5. Call the corporate offices of the bank and ask to speak to the senior vice president or chief of operations (even the COO's secretary can probably assist you). You may want to follow up with a letter to that person with any documentation and details you have.

6. Talk to an attorney about your case, in the event that you need legal help to protect your home from foreclosure.

Of these options, I think filing suit in small claims court or finding a way to stop the foreclosure proceedings will certainly attract the most attention. But each of these avenues should be pursued in tandem because it is difficult to know which will work the best. At times, a letter to the senior management of a big bank works pretty well, and you can try that while looking into your other options.

Ilyce R. Glink's latest book is "Buy, Close, Move In!" Samuel J. Tamkin is a Chicago-based real estate attorney. Distributed by Tribune Media Services.

Need some real estate advice? E-mail your question to realestate@newsday.com.

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