Homeowners to Avail of Loan Modifications From Banks Only if They Waive their Legal Rights
The year has been fairly dramatic for the lending industry with requirements being changed, news that fifty percent of the housing market is now distressed, and continuous infighting over how to resolve the robo-signing fiasco where banks wrongfully foreclosed on homes.
A number of homeowners have stood up against the banks by launching hunger strikes and filing multi-million dollar lawsuits to the point that questions are already being raised on how the legal system will handle the blitz of lawsuits of the victims.
However, all of these can potentially change.
Based on a new study made by Slate and Propublica, banks are now becoming proactive by “burying in the fine print” a rights waiver. The waiver states, in effect, that the homeowners agree to never file a lawsuit against the bank for anything relating to the loan in order for them to be granted a loan modification.
While the waiver is part of a standard settlement and might have a semblance of fairness, some sectors argue that it is a form of blackmail, particularly since this type of practice has already been prohibited.
The report implies that may homeowners will not realize that they are already signing a waiver since it is not written on a separate form, but instead, “buried” in fine print within the loan modification offer.
Propublica has identified 8 banks and other mortgage services who offer help that effectively restricts the ability of homeowners to fight foreclosure or sue.
When contacted, the lenders offered a variety of responses, such as, the inclusion of waivers had been a mistake and would stop, the language that appear to waive the rights of homeowners do not actually do so, or that their inclusion in certain agreements is proper.