Pre Foreclosure Mediation Settlement Saves Client over $100,000.00

A Shuster & Saben client’s investment of $1,600.00 in legal fees, will result in over $100,000.00 of savings from a pre-foreclosure mediation agreement negotiated by firm attorney Richard Shuster. The client came to the firm’s Melbourne, Florida office after their prior loan servicer, Chase, denied permanent loan modification of their mortgage. Chase had placed the client in a trial modification that reduced their monthly payment from over $3,000.00 to approximately $1,648.00. After the client made their monthly trial payments Chase refused to convert the loan from a HAMP trial modification to a permanent modification.

After meeting with the couple, attorney Shuster recommended submission of a qualified written request to the loan servicer to investigate whether Chase had a valid reason for denying permanent loan modification. The firm then submitted a Qualified Written Request (QWR) to Chase for a flat, one-time fee of $250.00. Chase’s response to Qualified Written Request revealed that the loan was owned by the Federal National Mortgage Association (FNMA or Fannie Mae) and that Chase alleged that the permanent modification was denied because their file was incomplete. The clients asserted that they submitted all of the requested documents. Some consumer advocates refer to incomplete file denials as the “dog ate my homework” excuse for not making permanent modifications.

After Chase denied permanent modification the client creased making further mortgage payments. The client, a couple nearing retirement age, realized that they could not wipe out their retirement savings to save a home in which they were significantly upside down and had no equity whatsoever.

A few months later, the loan owner, FNMA, transferred servicing of the loan from Chase to Lender Business Process Services (LBPS). When the client advised Shuster & Saben of the change of servicers the firm submitted an updated HAMP application and updated financial disclosures to LBPS. Thereafter LBPS requested pre-foreclosure mediation.

Firm attorney Richard Shuster welcomed the chance to mediate the case before any foreclosure action was filed against the client. Shuster explained that LBPS was proactive and responsible by saving FNMA (the loan owner) the expense of paying a filing fees and attorneys’ fees to file a foreclosure action against the homeowner. Lenders often ask for as much as $4,000.00 to be added to homeowners’ loan balances to pay for such expenses. Since our firm did not have to defend a lawsuit, the homeowners’ legal expenses were also much smaller.

The client hired Shuster & Saben to represent them at mediation under a written agreement that called for a fee of $350.00 together with a success bonus form $500.00 to $1,500.00 depending on the nature of the loan modification obtained. ($500.00 for a small loan modification up to a $1,500 for a loan modification with both interest and principal reduction). The result obtained, a loan modification that will reduce the client’s interest rate to 2% for the next 5 years and to 5% thereafter, qualified the firm for a $1,000 success bonus. The total cost to the client was $1,600 ($250 for QRW, $350 Mediation, $1,000 success bonus). The client’s new mortgage payment of $1,561.78 is a huge savings from their original payment of over $3,000.00 and is less than their prior trial modification payments. At the mediation, attorney Shuster insisted that conversion of the new trial modification to permanent modification be guaranteed in writing and would happen automatically so long as all payments were made. Under the loan modification obtained by Shuster & Saben, the client will save over $85,000.00 during the next five years and over $100,000 over the life of the loan. Shuster’s biggest bonus was two hugs, from the couple whose home was saved by this settlement agreement.

To review the redacted mediation agreement and redacted confirmation letter from LBPS please click the links below.

Mediation Agreement

LBPS Confirmation of HAMP Modification

Florida Default Law Group Sued for violation of Fair Debt Collection Practices Act

A Class Action lawsuit for alleged violation of the Fair Debt Collection Practices Act has been filed against the Florida Default Law Group, P.L. in the United States District Court for the Middle District of Florida.

The class action was filed by attorney James E Kallaher, of the Law Office of Bohdan Neswiacheny of Orange Park, Florida. At issue in the lawsuit is the practice of the Florida Default Law Group to send letters to consumers who were behind on their mortgages in envelopes upon which a return address bearing the words “Florida Default Law Group, P.L." was printed.

The purpose of the The Fair Debt Collection Practices Act (FDCPA) is to insure that debt collectors refrain from using abusive debt collection practices. The specific statute alleged to be violated is 15 USC 1692(f)(8) which prohibits:

“Using any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.”

The lawsuit, in our opinion correctly asserts that the business name “Florida Default Law Group” is a business name that indicates the company is in the debt collection business.

Under the Fair Debt Collection Practices Act, any individual who has been a victim of a violation of the act is entitled to both their actual damages and such additional damages as awarded by the Court not to exceed $1,000.00.

Our law firm is in the process of filing individual law suits for clients the firm is defending in foreclosure actions in Dade and Broward County. These actions will be filed on as individual cases in county court. We anticipate that our first law suits will be filed later this week. A copy of the class action complaint is available on-line at http://thetruthaboutloanmodification.wordpress.com/files/2009/09/florida-default-class-action-complaint.pdf

Any consumer who has questions about whether their rights have been violated may contact our firm at foreclosuredefenselaw@gmail.com

Consumers who believe that the Florida Default Law Group has were sent an envelope with the words “Florida Default Law Group” on the envelope should be aware that any lawsuit brought to recover damages under the Fair Debt Collection Practices Act must be filed within ONE YEAR of the alleged violation.


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