Update: 01/13/2010: New post on getting a loan modification from Carrington; you can find the new post here: Carrington Mortgage Services Loan Modification.

As we all know, it is very difficult for homeowners to achieve a loan modification on their own, and many lenders are not helping homeowners as much as they can to successfully modify their loans.  In fact, after much pressure from HUD and the Treasury Department, top CEO’s of the major banks were called to the White House to meet with President Obama and explain why more has not been done to save families from foreclosure.

It seems the Government is finally becoming more proactive in going after servicers that are not helping homeowners avoid foreclosure.  Yesterday, Ohio Attorney General Richard Cordray became the first State Attorney General in the Nation to file suit against a mortgage servicer when he filed a joint lawsuit with the Ohio Department of Commerce against Carrington Mortgage Services.

Carrington Mortgage Services is notorious for not helping homeowners that do in fact qualify for assistance.  In many cases, it actually makes more sense financially for Carrington to grant the modification to the homeowner, and they still do not grant a loan workout!  Bruce Rose, CEO of Carrington Mortgage Services, has been listed with NACA as one of their top ten financial predators.

On another note, if you are a homeowner who’s mortgage is currently held by Carrington, it would make sense that it should be much easier to get a loan modification in light of these recent events.

In response to the Ohio lawsuit, a spokesperson from Carrington responded:

“We regret that the Ohio Attorney General has declined our offer to continue to work constructively to help homeowners and has instead chosen to pursue meritless litigation against the company.  Carrington remains single-mindedly committed to helping homeowners throughout this difficult economic cycle and has modified loans for approximately half of its customers, the vast majority of which are now back on track and remain in their homes.”

While much of the statement above is perfidious and untrue, certainly Carrington will be more inclined to make their lies a reality and of course are much more motivated with an Attorney General on the warpath to modify loans for deserving homeowners.  If you have not yet applied for a loan modification from Carrington, or you have but it was declined, I strongly urge that you apply or re-apply.

Much concern and debate recently has been over whether a servicer or lender has the ability to modify a mortgage that is held by an investor.  According to LoanWorkout.org, “A mortgage servicer’s fiduciary duty is “only” to the investor for which they are servicing the pool of mortgages for and not the homeowner.  Every loss mitigation technique they perform, such as a loan modification, repayment plan, and or short sale needs to be in the “best interests” of the trust and these instructions for servicing a pool of mortgage loans are outlined in what is called a ‘Pooling and Serving Agreement’ or PSA.”

Carrington was a mostly subprime mortgage lender, and most subprime servicing agreements allow the servicer to modify loans that are in default, or when it is obvious that default is “immediately foreseeable”.

For the most part, servicers have authorization to change the interest rate of the loan, forgive principal balance, capitalize arrears (place the past due on the back of the mortgage), and change the duration of the loan (the number of years of the loan term).

Ohio Attorney General Richard Cordray

Ohio Attorney General Richard Cordray

According to the Ohio Attorney General, Carrington breached the agreement by failing to help homeowners get reasonable terms to avoid foreclosure, did not provide the state with a copy of the terms of many of the modifications, and failed to provide borrowers terms within the 21-days allowed in the agreement.

Additionally, Carrington is charged with violating Ohio’s Consumer Sales Practices Act by failing to investigate and resolve consumer complaints, by failing to offer loan modification options, and by putting undue pressure on borrowers to sign loan modification agreements that did not help them.

Again, if you currently have a mortgage held by Carrington Mortgage, it is strongly urged that you attempt to re-negotiate the terms of your loan.  ModificationZoom has helped many homeowners get an aggressive mortgage loan modification from Carrington Mortgage, and this entire affair simply underscores the fact that most servicers do in fact walk all over unknowing borrowers.

Now, more than ever, it is becoming increasingly apparent that good legal representation is almost always a must to get the best loan modification.  ModificationZoom is an ethical, quick, cost effective, attorney backed solution that can guarantee a loan modification.