Why Did My Mortgage Company Lie To Me About Postponing My Alabama Foreclosure?

Alabama consumers often wonder why mortgage companies will lie about postponing a foreclosure. When we sue mortgage companies for doing this – and we have over 20 lawsuits dealing with this exact subject right now – the mortgage companies and their lawyers claim that there’s no reason for them to lie about postponing an Alabama foreclosure.

I was recently presenting to a group of several hundred foreclosure defense lawyers at a national seminar and I was discussing the reason why mortgage companies lie about the foreclosure sale date and several of the attorneys came up and said that they found the discussion to be useful so I wanted to share it with our readers here on our website.

One thing to keep in mind is that before a foreclosure a homeowner (at least in Alabama and generally in other states) has more options than after the foreclosure.

For example, before a foreclosure the homeowner can cure the default. It may be difficult but perhaps with family money or accessing retirement accounts or other assets a homeowner may be able to bring the account current and stop the foreclosure.

Certain loan modification programs are available — we rarely see these work but they are an option.

A homeowner can file a bankruptcy petition and stop the foreclosure due to what is known as the “automatic stay”. While we do not generally recommend bankruptcy to deal with wrongful foreclosures, it certainly is a viable option and in some cases is the best option.

But after a foreclosure the homeowner can no longer file bankruptcy, can no longer qualify for a modification program (there is nothing to modify anymore) and can no longer cure the deficiency.

Instead the homeowner has the choice of moving out within 10 days of the foreclosure or forever losing the one-year right of redemption. The homeowner will also be sued for ejectment or eviction.

So, lets go back to our original question about why these mortgage companies lie about postponing a foreclosure.

The answer is that the mortgage company does not want you to have the option of filing bankruptcy or curing the default. While they violently disagree with this, the truth is that mortgage companies make a lot more money when you are in default or when you go into foreclosure. When you cure a default, the mortgage company – specifically the servicing company – is deprived of a lot of fees and profits that it can make if it can keep you in default and even push you into a foreclosure.

When we sue for fraud we often point out that the purpose of the fraud is to take away the options that the homeowner has before the foreclosure actually occurs. So the typical fraud involves telling the homeowner that the foreclosure will be postponed if the homeowner will pay a certain amount of money or submit a loan modification package or do any number of things. When the homeowner does this, it is quite natural to believe the mortgage company and to be confident that the foreclosure sale has been postponed. However, the shock occurs several days later when the homeowner is told that not only has the mortgage company lied, but foreclosure has occurred, and all of the options which existed pre foreclosure (including some of the governmental loan modification programs), are now ripped away from the homeowner.

It is not by accident or chance that all across the nation and certainly all across Alabama mortgage companies and servicing companies are routinely and deliberately engaged in a campaign of systematic fraud against homeowners to push them illegally into foreclosure so that the options that the homeowner has are greatly reduced or eliminated.

If you would like more information about wrongful foreclosures in Alabama please feel free to contact us at (205) 879‑2447 or through our website and you are welcome to have our “no charge” book on “Stopping Wrongful Foreclosures In Alabama” – just let us know you are interested and we’ll send it right out to you.