Avoiding Foreclosure when your not at fault?

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Bank “A” refinances my house, and misplaces my first three monthly payments, carrying me 90 days late for a year. I dispute and send receipts and proof numerous times. Bank “A” is seized by government, and after 3 months, the Mortgage is given to Bank “B”. I continue to make payments as scheduled and on time, but now Bank “B” says I am 90 days late also. I show them my receipts, and they say, “If your disputing your history, stop making payments until we straighten it all out. I then receive notice from Bank “B” that they intend to foreclose unless I pay them 20k. Another division of Bank “B” then offers to make a Mortgage Modification loan of 20k to bring me current, which includes me paying for the first three payments again. The Modification loan is interest free, but it is tacked onto my current loan raising my payments about $ 100 per month over length of the loan.
It seems the easy thing to do is take the Modification Loan and come current and then try and refinance under better terms…but am I accepting the fact they lost 3 payments that I made, or can I still dispute this legally? Do I have other/better options? Do I hire a lawyer and continue to dispute, hoping for a day in court eventually? Whom do I look to for expert advice when funds are limited. I am currently serving in the Army (over 21 years now) and also wonder if there is some type of Veteran Assistance? Any assistance would be greatly appreciated. Thanks for your time and input.
Quick Facts:
I live in Newport News, Virginia in the house in dispute. This house is my primary (and only) residence. My wife and three children live with me. My Home of Record is Florida. I do have the option to retire from the Army, or continue to serve 5 more years. Thanks again.
As Gorkbark was gracious enough to suggest “This sounds bogus because no bank would advise you to stop making payments until they straighten it all out” I might add that actually its the law. While a mortgage is under dispute the borrower has the right to stop payment. Now I don’t know if the law is local or Federal, but the bank did refer to it when I was told to stop paying.

3 Comments
  1. Reply
    Gorkbark Porkduke Gefunken Fubar
    May 1, 2011 at 3:12 am

    This sounds bogus because no bank would advise you to stop making payments until they straighten it all out. That makes absolutely no sense at all. What they would say is to continue to make your regular payments until they straighten it out, and then they would give you any credit if necessary. But NO bank would tell you to stop making payments.

    If you have receipts that is all the proof you need. It is hard to imagine why this is a problem.

  2. Reply
    Felix S
    May 1, 2011 at 3:48 am

    1. get a lawyer….If you are in the Army you will be able to use one for free on base. That is the best way to stop a fore closer. Also make sure you have all your bank statements that show and prove that you paid your monthly payments. Is one of the banks Bank of america? Lol the same thing happened to me. With bank of america. It took almost a year for them to figure out that we actually did make the payments. With a lawyer and proff that is all you need. It will take a long time but they wont be able to foreclose on you if it goes to court and you have proof.

  3. Reply
    philospher77
    May 1, 2011 at 4:00 am

    I think the answer to that question depends a lot on whether those first 3 months were actually deducted from your account. Or did you send them a check which hasn’t been cashed yet? If it’s the latter, then I think the bank is in the right in saying that you are delinquent, since you could put a stop on the lost check and reissue it. Now, if they actually took the money out of your account, and haven’t applied it to the mortgage, I think I would have gotten a lawyer involved a long time ago, and would get one now if you haven’t.

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