U.S. District Court in Minnesota determined that borrowers do not have a right to loan modifications.
The decision came in response to a lawsuit by Minnesota home owners that maintained that borrowers had a right to loan modifications. The lawsuit sought class-action status.
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The lawsuit alleged that the Obama administration’s foreclosure prevention plan violated borrowers’ constitutional rights because home owners who were denied help under the program were not given a written denial and an opportunity to appeal. The suit sought to halt foreclosures on home owners eligible for the Obama plan until the government put in place certain procedural safeguards, such as creating a formal appeals process.
On November 9, 2009, in its decision, U.S. District Court Judge Ann Montgomery said that modifications were NOT a legal entitlement and pointed out that the Treasury Department gave mortgage companies discretion in evaluating the borrowers it helps. In other words, the final word belongs to the lender.
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The same goes for the 125% LTV, Loan-to-Value. Although the federal government increased LTV from 105% to 125% for refinancing, very few lenders actually refinance mortgages where a mortgage is as high as 125% of the present market value of the house.
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SOURCE: The Wall Street Journal; REALTOR Magazine
Northern Virginia Real Estate Blog by Vivianne Rutkowski, REALTOR 