In an interview conducted on Monday February 23, 2015, Brian McCaffrey, a New York foreclosure attorney explained that he is at his wits end with HUD officials who absolutely refuse to enforce the rules that HUD itself has laid out for cases where a borrower has had a discharge in bankruptcy, in a case where Citimortgage has told HUD that they cannot perform a partial claim on a loan where the borrower has gone through bankruptcy.
“Our claims of unequal application of the law arise from the fact (and are supported by), the redacted subordination agreement which contains the very language required by HUD.” said McCaffrey, adding “What’s even more disturbing is the fact that Citimortgage has done exactly the same thing that they claim they are unable to do for another client that I represent”
McCaffrey has developed a reputation as a no-nonsense hard hitting Queens foreclosure attorney who fights for homeowners against many an intransigent lender who refuses to modify a loan to allow a homeowner to keep their home.
McCaffrey stated “My staff has provided several copies of partial claim documents that clearly show the language that HUD requires in the loan modification documents to HUD officials, but they are unwilling to force compliance with their guidelines, and have instead abdicated their responsibility to insure compliance and seem perfectly willing to cow tow to Citimortgage.”
HUD is charged with the responsibility of oversight and insuring compliance with the guidelines that they enact, however here it appears that HUD is abdicating those responsibilities to Citimortgage.
FHA loans are eligible for modification under FHA HAMP and it appears that the borrower in this case qualifies for modification. However Citimortgage has refused to issue the modification and claims that they cannot offer a modification that requires a partial claim (subordinate mortgage), to a borrower who has had a bankruptcy discharge in the past.
As shown in the two FHA HAMP modification documents provided by McCaffrey, not only is there specific language that HUD has provided for inclusion in the modification for borrowers who have had a bankruptcy, but Citimortgage has itself used this language and provided partial claim modification to other clients with similar situations.
McCaffrey’s office has communicated with Amy Foster, Branch Chief and Mortgagee Compliance Manager of the Loss Mitigation Division at the U.S. Dept of HUD – National Servicing Center in Oklahoma City, OK. McCaffrey says that HUD and Ms. Foster have refused to direct Citimortgage to comply with HUD guidelines and has instead insisted that Citimortgage is free to interpret the guidelines the way that they see fit, and that HUD cannot and will not force compliance.
Communications to Ms. Foster in anticipation of publishing this article have gone unanswered and resulted in no comment.
As you can see from the 1st attached Partial Claim Subordinate Mortgage – borrowers in bankruptcy can in fact be granted a modification and partial claim with language provided in HUD’s guidelines (see section 6 of attached partial claim).
As you can see from the 2nd attached Partial Claim Subordinate Mortgage – Citimortgage does in fact use the wording provided in HUD’s guidance and does in fact offer Partial Claims to borrowers who have had a past bankruptcy.
McCaffrey is working with his client to determine the best course of action to deal with Citimortgage’s refusal to offer his client the modification he qualifies for, and for dealing with HUD’s apathetic approach to enforcement of its guidelines and apparent acquiescence to Citimortgage.
McCaffrey closed the interview by saying “my client is of the opinion that our government is bought and paid for by the banks, like Citimortgage… Unfortunately, from what I have experienced in this case with the HUD officials in Oklahoma City, it’s hard to dispute what my client feels.”