Fighting Off Foreclosures, Giving a Fresh Start
Because so many have fallen on hard times, meeting their mortgage payments has become a struggle to the point where losing their home is a very real possibility. All over Brooklyn and many other parts of the country, houses are blighted with "FORECLOSED" signs and, in the worst-case scenarios, the former occupants are faced with the prospect of homelessness.
New Mortgage Solution (NMS), started by former realtor Rebecca Matalon in 2009, is a direct response to this, handling mortgage modification negotiations for homeowners everywhere. When people can no longer afford to pay their mortgages, NMS—located at 5009 Avenue M in Old Mill Basin—will negotiate with the lenders until monthly payments have been whittled down to an affordable amount. This way, the lenders continue to receive their payments, and no one has to risk being kicked out onto the street.
The last time the Courier visited NMS in March 2011, Matalon spoke of the many foreclosures taking place across the city, and the nation as a whole. In the months since, there has been a twist of sorts. At the moment, according to Matalon, there are far fewer foreclosures in progress. But that's not because of any sort of vast reprieve.
As was widely reported last fall, Steven J. Baum P.C., the firm which had handled a large portion of foreclosure cases throughout the United States— Matalon estimates as much as one half—was investigated by the US Attorney’s office for allegedly filing misleading court documents to expedite foreclosures artificially, so that many people never had a fighting chance of holding onto their homes.
Because of the firm's sudden dissolution amidst the scandal, banks have been scrambling to replace it with other firms and to get their foreclosure proceedings back on track. As it turns out, this has been a boost to homeowners who needed more time to sort out their situations and, in many cases, to seek the help they need.
And often it's needed quite badly, as many of the banks are happy to engage in duplicitous behavior themselves and take advantage of homeowners' naiveté regarding their rights.
According to attorney Michael Hershkowitz, who has been working closely with NMS and its clients during the past year, banks will often renege on the terms of a loan without explanation, placing financially strapped homeowners in immediate danger of foreclosure.
Often a bank will send homeowners official notice that it has agreed to a new arrangement, only to cancel it without an explanation a few months later.
"For no reason," Matalon said. "We've seen it happen many times. Sometimes they'll claim a document was missing, or that a signature was out of place—even when we can prove otherwise."
"And they won't tell you anything else," Hershkowitz added.
He further indicated that, although many people faced with this situation don't know it, banks are doing this in direct violation of federal law. Legislation signed by President Obama in 2009 states that as long as homeowners make all of their payments on time during the customary three-month trial period, banks are required to automatically extend the arrangement into a permanent one. Also, before a bank can pursue foreclosure proceedings, it is required to attend a settlement conference with the homeowners and/or their representatives. No foreclosures can be finalized without the banks participating in negotiations beforehand.
But banks are only too eager to ignore this, relying on the fact that many homeowners are unaware of their obligations under the law. As Hershkowitz put it, essentially this means that in going back on a deal, the banks are defaulting on their own terms.
"The purpose of the federal legislation is to prevent people from living out on the streets," Hershkowitz said. "To have the banks work out an agreement for more manageable payments.
"We feel that the bank is not justified in redacting their agreement and defaulting on the terms that they themselves provided."
Matalon does not mince words in calling out the banks' behavior.
"They're looking for any reason not to modify the loan," she said simply. "They're not acting in good faith. That is my position, and I have many files to prove it."
Often, she continued, banks will assure homeowners that they have fulfilled all their requirements in a negotiation, then turn around and say they need to see some new document or have some new signature filled out.
And even when the bank is not creating needless obstacles, the sheer size of their operation often means that the left hand doesn't know what the right hand is doing. A person in one department will say one thing, only to be contradicted by someone in another department, with no clear chain of command in sight. The fact that many banks are using call centers in India and other places further contributes to the lack of accountability.
"I really don't think they care," Matalon said flatly of the banks as a whole.
Of all the majors, she and Hershkowitz agree, Bank of America is the hardest to deal with.
"I don't take their calls," Matalon said, demonstrating her feelings toward them.
"Everything is difficult with them," agreed Hershkowitz.
HSBC, Chase and Citibank are relatively easier to work with, they agreed, but the key word here is "relatively."
Also notoriously difficult are the small servicing companies, which are backed by private investors and therefore not obligated to abide by federal legislation (which applies only to entities falling under the auspices of Fannie Mae and Freddie Mac).
Much of the time, it's the small companies that NMS deals with if their client has taken out multiple mortgages. The original primary mortgage will be dealt with through loan modification, while for any others Matalon and Hershkowitz will engage in direct negotiations with the secondary loan holders.
It's in this arena that many homeowners actually find themselves with the advantage.
"The primary lienholder is the one in the position to take your home away from you," Hershkowitz said. But with the bursting of the housing bubble, these lienholders no longer have a clear advantage over financially troubled homeowners. "They lost the upper hand with the downfall of the economy.” Since many homes have dropped dramatically in value since 2007 and are virtually worthless to the lenders, trying to benefit from forcing the occupants into foreclosure is a dead end for them. "It's like squeezing water from a stone," quipped Hershkowitz.
He and Matalon will negotiate until the total outstanding debt has been whittled down to an amount low enough for the clients to pay all at once, ending their ordeal and getting the lenders off their backs once and for all. It’s the best possible outcome— clients get to keep their homes, and lenders are repaid something instead of nothing.
Hershkowitz said that because the confusion created by the Steven J. Baum debacle has begun to settle down, and the banks have largely found new law firms to handle their cases, he and Matalon are bracing for a fresh wave of foreclosure proceedings to hit soon.
And they're more than ready for it. NMS is proud of its track record, as it has been able to help many people up against what they had thought were insurmountable odds.
"There are bound to be obstacles," Hershkowitz said, "but we do our best to find the right solution."
From its start, NMS has quickly grown to service not just clients from Brooklyn but from all over the US, from states as far away as Illinois, Arizona and California. "It's not because of aggressive advertising," said Matalon. "It's because of results. Because we have so many successful cases, that's what brings people from all over."
In the majority of those cases, she said, she and Hershkowitz have succeeded in renegotiating a loan to the point where clients end up paying pennies on the dollar. "Many people have interest rates of 6 percent, 6 1/2 percent," Matalon said. "We often try to modify it to 2 percent." Also, the total amount of the loan can be shaved down considerably.
"Many people don't know how to negotiate with the banks, and we help them understand what is available to them, and enable them to move on with their lives without the constant headaches,” said Hershkowitz.
In more than one way, too. In addition to loan modification, NMS handles debt settlements and credit repair, settling credit cards and in many cases managing to have them removed from a client's credit report.
Hershkowitz is pleased that despite its small size, NMS is able to handle everything itself without relying on outside assistance. "We do everything in-house," he said. "We have the resources to provide everyone with a fresh start.”
NMS is located in Old Mill Basin at 5009 Avenue M, between E 51st Street & Utica Avenue. They can be reached at (347) 462-9211. You can find important information about their services and the issues involved in loan negotiation at www.NMScredit.com.