Texas Needs Harsher Penalties For Sloppy BankersIt has become so common that it barely shocks even the most sensitive of us, a homeowner has spent months negotiating and waiting on a home modification only to discover that their home has be sold at foreclosure.  This is the type of disconnect that is impacting thousands of homeowners in Texas and especially in the Dallas-Fort Worth area.  They end up in foreclosure because of a job loss, toxic mortgage or some other unforeseen emergency that prevents them from keeping their mortgage payments current. But when they work overtime to try to work with lenders so that they can get paid and the homeowner can remain in their home they are often greeted with a mind numbing experience such as their home being sold in foreclosure while they are still at the negotiating table with the lender.  What can the state of Texas do to stop this type of callous and counterproductive behavior on the part of the mortgage lender?

Let’s take a look at a few possibilities:

  1. Require that mortgage lenders keep meticulous records of who is in the process of negotiating a mortgage modification.  Right now, horror stories about how modification paperwork is routinely lost has become more common that it should be.  If mortgage lenders are so incompetent that they cannot keep track of borrowers’ paperwork then they should be made to give the homeowner more time before the foreclosure and/or they should be fined for having a pattern of this type of behavior.
  2. Require that mortgage lenders stop the foreclosure process while homeowners are awaiting approval for their home modification.  This will encourage lenders to make decisions quickly instead of dragging their feet like they are now doing.
  3. Allow borrowers to sue and win damages when a mortgage lender sells their home in foreclosure while they are still in the process of negotiating their mortgage modification. It is unfair and unethical that a mortgage lender would give a homeowner false hope that they could save their home when all the while they are in the process of foreclosure.  That homeowner could have used their time and effort elsewhere and it really is a form of deception that can place the homeowner in dire straits when they discover that they must now suddenly move.