The “Expired Authorization” Ploy By Bad Faith Lenders In Loan Modifications

My law firm in Midtown Manhattan assists clients with mortgage defaults. Many people call us for help with loan modifications. Over the past year, my firm has experienced a new problem with the lenders handling these loan mod apps. They frequently state that they are missing documents. Then they take months to review (or ignore) them. When we don’t hear anything from the lender we call them. Then they tell us that our client’s authorization (to communicate with my firm) has expired and they refuse to speak to us without a new updated authorization. When did it expire we ask? I didn’t know that these things had an expiration date like milk. At least not before the lender has actually reviewed the papers and made a decision. I view this as bad faith negotiations by the lenders. Some of them ignore homeowner’s legal counsel and then outright refuse to speak to counsel. Nice. The HAMP laws need some teeth. For now, we get them the updated authorization and call again. And again. And again. Some Judges, but not all, are taking action to prevent this kind of behavior by lenders.