Union County homeowner Barry Lancett signed two agreements with Wells Fargo this year to modify the terms of his mortgage but still received a disturbing piece of paperwork: a foreclosure notice.
"A deputy comes to your door and delivers it in front of the community," said Lancett, who later avoided foreclosure but is still dealing with lingering issues. "It was humiliating, to say the least."
His experience is one of the biggest frustrations for struggling homeowners - getting hit with a foreclosure proceeding at the same time a loan modification is being worked out with a bank.
Recent laws and regulations in North Carolina are supposed to prevent this, but officials say they're still getting complaints from consumers. Now it's an issue coming under scrutiny from attorneys general investigating allegations that lenders mishandled foreclosure-related paperwork.
"This is of great concern to me because it's important homeowners have a fair chance to keep their home," Attorney General Roy Cooper said in an interview. One of his colleagues in the probe, Arizona Attorney General Terry Goddard, recently said he was most angry about "simultaneous modifications and foreclosures."
One possible outcome of their investigation may be pledges by banks to improve their loan modification efforts. These programs strive to lower payments for struggling borrowers by reducing interest rates or even principal owed.
Cooper, who is in charge of the potential remedies in the probe, said he would like "easier and more streamlined" modifications to be a goal. Potentially, lenders could agree to make changes to their modification processes, add more resources or provide a single point of contact to borrowers trying to work out payment plans, he said.
"One of the most important issues is making sure foreclosures are done properly as we go forward," Cooper said. "That includes serious attempts at modifications."
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