Can I get a loan modification to reflect the true value of my house?

Unfortunately, the situation you describe is all too common in Florida during the past 6 years or so. Here in Florida, due to extensive mortgage fraud, literally all residential real estate was horrifically overpriced even above what would have happened in an overheated market, because the industry was intentionally overvaluing the houses to make higher loans. In may cases realtors and developers were working with mortgage brokers and originators to push the values higher. Depending on exactly when you bought, it may have been at the very "top" of the market. There was a point when prices were increasing virtually every day. Then of course it hit a point where the "bubble burst", and then prices went down very fast.

You may have a fraud claim against the realtor and mortgage lender if the price was not truly consistent with the market. The mortgage brokers and lenders chose the appraisers, who in many cases "played ball" to deliver an appraisal that would on paper support the deal.

You should speak to a highly qualified consumer attorney in your area. The National Association of Consumer Advocates (NACA) is a non-profit consumer advocacy organization. NACA maintains a web site at www.naca.net where it lists geographically consumer law attorneys all over the US. If you don't already have an attorney, please look there for someone in your area who specializes in consumer law to review the details with you and advise you.

Words from an Opinionated California Lawyer

If you seek help in a loan modification...

In California, the Department of Real Estate website (www.dre.ca.gov) lists the companies that have DRE "permission" to modify loans... add to this list any licensed California attorney, and that is where you should begin your due diligence when you seek help in California. Other states probably have similar laws, so check with your own state DRE.

My law firm has been getting more and more calls recently from homeowners that were victims of predatory lenders who put them into an unaffordable loan and now fell into the hands of those same people who sold the toxic loans but profess to be saviors... DON’T BE A VICTIM TWICE!

Do your homework and THOROUGHLY investigate any firm before hiring them to save your biggest asset and the place you call “home.” These scammers are popping up like dandelions on a freshly mowed lawn. They advertise on the Internet, freeway billboards, radio, television, and print media everywhere. Make no mistake, in many cases, these are the exact same loan officers and mortgage brokers who fleeced homeowners the first time around. After losing their jobs with the crash of the mortgage industry, they have found a new way to make ill-gotten profits from hard-working homeowners through loan modifications.

In California, with very few exceptions (and attorneys are one exception), it is against the law for anyone to take money up front for helping a homeowner who is in default. Don’t trust a company that begins its relationship with you by breaking the law.

Of course, this is one lawyer's biased opinion, but one based on many distressing calls to my office every day. And, yes, my firm does take cases against loan modification companies who have violated laws. This field is quickly becoming one of the fastest growing sections for our mortgage law firm.

- Paul J. Molinaro, Esq.

Thanks for your question. Since I am an attorney, I cannot ethically give you specific legal advice on your situation, since you are not my client, but I can only provide you with general information that you may find helpful.

I believe that you may have a cause of action against the realtor, mortgage broker, and appraiser, especially if they were all “in cahoots” to commit a fraud on your loan. There is a statute of limitations that may toll if you do not act that would prevent you from bringing suit.

I agree with Margery Gollant’s answer and she has given you an excellent source for information. You would be wise to proceed promptly in engaging an attorney.

Best of luck,

Shawn C. Newman, Esq.
Attorney At Law
1881 NE 26th Street, Suite 212E
Wilton Manors, FL 33305
(877) 552-9385
Shawn@ShawnNewman.com