Co-op Foreclosure Stopped and Client Gets A Successful HAMP Loan Mod at 2%

One of my firm’s clients was being foreclosed by his mortgage lender. No foreclosure action was started because he owns a co-op and in New York that is treated more like personal property than real estate. A co-op owner has stock in the co-op corporation that owns the building and also has a proprietary lease to use his unit in the building. Mortgage lenders usually hold on to the stock as collateral. When the mortgage is not paid and a default is declared the lender may choose to notice a foreclosure sale without actually suing – meaning that there is no judicial foreclosure started. That is what happened here putting our client in the unusual position of having to sue his own lender to obtain a restraining order to stop the sale. So our client actually was a plaintiff and his lender was a defendant. In spite of the flip flop of the usual positions that each party might normally have in a foreclosure, the court recognized that this was similar to a foreclosure action and allowed the parties to negotiate a loan modification to try to settle the case. I’m pleased to report that we now have a tentative HAMP loan modificaton agreement that will reduce our client’s interest rate down to 2%. This comes after many months of submitting financial information to the lender and after correcting many errors made by the lender during this process. The lender had initially sent us a non-HAMP settlement agreement but mistakenly stated that it was a HAMP agreement. The lender has now agreed to correct this and the papers are being drawn up.