Partial Claim – This is the hidden danger in “renegotiation” of loans. In addition to the rewriting of the loan itself, there is the issue of what happens to the unpaid late payments, unpaid penalties, or deferred interest incurred at the higher rate or payment recast.
One thing that counselors at HOPE Now don’t explain to borrowers in much detail is the PARTIAL CLAIM on the amount of loss that the lenders have to somehow account for. The Partial Claim can be any number of things that the homeowner simply “agrees to” with an initial or signture on a single-page disclosure.
Types of Partial Claims:
– Add late payments and unpaid penalties to balance of loan
– Place a separate lien on the property for the unpaid payments and penalties
– Issue a separate unsecured note for the said amount to the borrowers.
– Place a lien on borrower’s other property or future wages for unpaid lates and penalties via UCC-1 (varies by state).
Most, if not all of the above would never get past consumer advocacy groups, but I can see how any of them could be easily slipped under the nose of a desperate homeowner trying to stave off forclosure. All it takes is a signature on a disclosure that they hope the homeowner never reads.
