Colorado Homeowner Obtains Temporary Restraining Order Halting Foreclosure; Alleges Loan Servicers Failed To Respond To HAMP Loan Mod Applications

In Brighton, Colorado, The Denver Post reports:

• Traci Willms turned to the federal Home Affordable Modification Program to save the childhood home in Brighton she bought from her mother and shares with her two children. But after two separate loan-modification applications with two different servicers in the past six months, she never received an answer.

• Last week, she sued to stop the foreclosure sale of the home, arguing that the HAMP program prevented such an action. "All we want them to do is run the paperwork and do their job," Willms said. An Adams County judge issued a temporary restraining order to prevent a sale, in what could be an early test case of the new loan-modification program. "We are arguing that this foreclosure is illegal and should be stopped," said Sarah Parady, a consumer attorney with Colorado Legal Services in Denver. Mortgage servicers participating in the HAMP program agree to suspend foreclosure proceedings for borrowers whose applications are under review or who are in a trial modification period, Parady said.

• Complicating Willms' case, GMAC Mortgage, which participates in HAMP, transferred servicing rights to her loan to MGC Mortgage of Plano, Texas, which does not, in July. Within days, the owner of the loan, LNV Corp., initiated a foreclosure. To prevent lenders from giving loans the hot-potato treatment, HAMP requires anyone accepting a loan under review for modification to treat it as if it were still under the program, Parady said.

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• Shannon Peer, director of housing counseling with Brothers Redevelopment, said many lenders keep the foreclosure clock ticking even as they review a modification application. Some servicers will deny a modification request right before the deadline for a foreclosure sale, he said. But in Willm's case, she never got an answer.

For the story, see Brighton homeowner in fight to stop foreclosure (Cites loan-modification delays).