After a software error that occurred in Wells Fargo's system sometime between April 2010 and October 2015, a settlement has finally been reached between the company and some 6,000 mortgage holders who were impacted by the error. The software error caused customers to be incorrectly denied modifications on their loans and repayment plans when they actually should have qualified. In several cases, foreclosure proceedings began after the denials.

The Beginning Issue

Wells Fargo used to be a shining example of how a big bank should be run, but now they can not seem to stay out of the news for all the things they have done wrong. They recently revealed an error in their mortgage underwriting software that resulted in hundreds of denied mortgage modifications for borrowers who were facing foreclosure. The error affected some mortgages that were foreclosed on between April 2010 and October 2015. The error created a miscalculation of attorney fees that were used to determine if a borrower qualified for loan modification.

The error resulted in some 625 customers being denied modification and out of those customers, some 400 of them were foreclosed on after being denied. Wells Fargo has set aside $8 million to use as remediation for the customers who were affected by the error. While this may seem like a lot, it only equals out to $12,800 per customer, hardly adequate compensation for losing a home.

When you are facing financial distress, you might explore options like modifying your mortgage loan terms or negotiating with your creditors to avoid bankruptcy. Filing for bankruptcy can have a substantial impact on your current and future credit and in many cases, bankruptcy is too extreme of a remedy for the issues an individual faces. In cases like this, modification of a mortgage loan's terms can be the right way for an individual to get his or her debt under control.

Requesting a loan modification does not always result in an approval. Your request can be denied for a variety of reasons. In many of these cases, it is possible to resubmit the request and potentially have it approved a second time. If you are facing this situation, speak with an experienced bankruptcy attorney about your options.

Trulia, a leader in the real estate industry, recently reported that refinance rates for a 30 year fixed mortgage in Waukegan, Illinois can be obtained for as low as 2.250 percent. Trulia further reported that the median sales price of a home in Waukegan is $91,250, a 30.4 percent home value increase as previously reported a year ago.

This may come as welcomed news for prospective sellers but for those homeowners facing financial difficulty, possible foreclosure and in receipt of a loan modification denial by their original lender, this news falls on deaf ears.

If you recently received a formal denial of your loan modification request in hopes of adjusting your original loan terms and to halt possible foreclosure status, your best line of defense is to contact an experienced foreclosure attorney to discuss whether any of the following infractions may have lead to the denial.

If you're a typical homeowner, you probably feel like David facing up at Goliath when you speak with your lender about modification of your home mortgage. Despite efforts to put the odds more in the consumer's favor, most aspects of modification are in the bank's hands. But there are some ways to make easier.

Hire an experienced attorney. The bank has plenty of legal advice and firepower on their side. Plus, they're the ones who make the contracts you sign. So they're at a distinct advantage when negotiating anything with you. In order to even things up, secure an attorney who is knowledgeable and experienced with loan modification.

Write our a concise hardship letter. Explain why your circumstances have changed to the point that you can no longer afford your payments. Were your hours cut back at work? Do you have unexpected medical bills?