Principal Loan Reduction: Ruling To Protect Backfires On Consumers

Customers whose cases were handled shamefully have little way of knowing how bad their situation actually is. Even if they were to find out, they would be hard-pressed to challenge a financial institution without utilizing a legal expert "Consumers just don't know what is going on," said Walter Hackett, a former banker who is now a legal professional for a nonprofit service in Riverside. He continues: "They get a notice alleging they are going to lose their homes and they freak out." The problem for lawyers is that even a simple loan reduction, in which the loan is restructured so the consumer can afford the monthly payments, is a timely marathon, putting off their payday for months if not years. If the bank refuses to come to terms, the applicant may have to file for bankruptcy in which case the legal expert will never be paid. This is clearly unsatisfactory. Many analysts are relating that the banks were also confidentially behind this legal tactic in California as they do not want to have to deal with legal experts as they try to help these frustrated consumers. This unfortunate development and legal snafu has now given most banks (a.k.a institutional swindlers as some would say) "carte blanche" as in full powers in doing whatever they feel is advantageous for themselves and clearly not for the poor homeowner who desperately needs a loan reduction.