Friday, June 1, 2012

Enormous Principal Reduction Loan Modification

Old Principal Balance:  $213,834.00
New Principal Balance:  $66,000.00
Percentage Savings:  69%
Old Principal & Interest Payment:  $888.62
New Principal & Interest Payment: $312.06

Shuster & Saben, LLC recently obtained a principal reduction loan modification for a Palm Bay, Florida homeowner that cut his mortgage by over 69%.  When the client came to the firm in March of 2009 he already had a loan modification offer in hand.  Before he ever hired a lawyer the loan servicer, Ocwen Loan Servicing, LLC offered the homeowner an “Trial Modification” that after a successful trial modification would have reduced interest rate on the loan to 3.95% for five years.

When the homeowner met with foreclosure defense attorney, Richard Shuster for a free review of the loan modification offer he wanted to know the pros and cons of accepting the offer versus defending the foreclosure action.  Shuster advised that the offer was a band-aid the would, in the short term, make the home more affordable but in the long term would do absolutely nothing to solve the client’s huge negative equity problem.  The client owed over $215,000.00 on a home in Palm Bay worth about $80,000.00 (in 2009) that was continuing to lose value in a declining real estate market.  Further, after five years the 3.95% interest rate would end and the client would be stuck with a very high interest rate of his original mortgage that was nearly 8%.

The foreclosure lawsuit filed against the homeowner alleged that the loan on his home was owned by a securitized trust.  Shuster explained to the homeowner several of the weaknesses in the foreclosure action filed against him.  Ultimately, the homeowner decided it was better and far cheaper to fight the foreclosure than to accept a bad loan modification offer.

For over two years the firm defended the foreclosure action.  Along the way the firm obtained Court orders directing the lender to produce various documents that the lender's counsel failed or refused to turn over.  During this time the client made no mortgage payments and therefore his loan balance grew from $213k to approximately $240k.  While tightening a vice on the lender’s case with discovery court orders, attorney Shuster sent out an olive branch to the lender’s attorney and Ocwen offering to settle the case if they would cut the client’s loan balance down to $66,000.00.  Shuster ‘s settlement offer included the client’s current property appraisal form the Brevard County property appraiser.  Ocwen in turn sent back a settlement offer that mirrored most of the terms set forth in Shuster’s offer.  Unlike Ocwen’s first offer that had 3.95% interest for only five years, the new offer has a 3.92% interest rate for the life of the loan.

Both the original 2009 offer and the 2012 offer are linked at the bottom of this blog entry.  Please view both of these offers to see what a difference fighting a foreclosure can make.  During the two and half years we defended this case our client saved over $18,000 that he would have spent on rent or mortgage.  The principal reduction saved him an additional $147,834.  For ever dollar invested in foreclosure defense he saved over ten dollars in housing expenses.  For obtaining this huge principal reduction our firm qualified for a small contingent bonus that will be paid out over a year.  Our client thinks this is a great deal and one he can easily afford with a principal and interest payment of only $312.06 for the next twenty-four years. 


Shuster & Saben is a law firm for smart homeowners who understand the difference between foreclosure defense and foreclosure delay.  We think a good outcome if a foreclosure case is one where the bank’s case is dismissed or settled under terms solve or substantially diminish the homeowners financial problems.  A good foreclosure defense lawyer in a problem solver with the ability, desire, and stamina to fight like heck for their client.  We are not the firm for everyone and there are other foreclosure defense firms who change less.  To arrange a consultation to see if your case meets our requirements and we meet yours please call offices as follows:  Melbourne  (321) 622-5040, Fort Lauderdale (954) 423-0052, Miami/Doral (305) 629-8806 or e-mail