Law Offices of Robert E. Brown, P.C.
On July 3, 2011, the New York Times reported that banks such as JP Morgan Chase and Bank of America were quietly modifying loans for tens of thousands of borrowers who were not even in foreclosure, going so far as to reduce reduce principle balances by 50%. This is unheard of for borrowers actually in foreclosure who are purportedly given the opportunity to apply for loan modifications. In particular, the kind of loan that seems to be getting this special attention is the so-called pay option adjustable rate loans, which were popular in the wild late stages of the housing boom but which banks now view as troublesome. Most troubling of all is observation of Adam J. Levitin, a professor of law at Georgetown University who observes:
See original article below. There is a zoom in option at the bottom of the frame.
Loan modifications that should be happening aren't happening, while loan modifications that shouldn't be happening are. Homeowners of any sort, whether current or in default, would rightly be confused and angered by this.I would like to credit Paula Odellas for bringing this article to my attention.
NY Time Article reporting on banks reducing principle balances for at risk loans