HAMP 2.0

I am one of the many people who have undergone mortgage modification issues with Bank of America and the Home Affordable Modification Program HAMP/MHA. Here is the story, most of it.

I lost my job back in October 2008 I contacted the bank immediately to find out if there was anything I could do; but they denied me any assistance. They literally turned off my online access to my account and froze it so I couldn't make ANY payments. In February 2009 the HAMP program became available so I immediately contacted the bank they stated that they “currently didn’t have any specifics on any policies for the HAMP” that I should “call back in two weeks to see if they had anything then”. I called back in two weeks to find out if they had come up with any new information but they continued to push me off and not offer me any help. I contacted them over and over, speaking to a new representative/new department/new manager each time, finally they told me to“contact HUD and maybe they would have more information on how to get approved or receive help”.

I contacted  a group. and spoke to a representative. He stated that the bank was very hard to get help from but I should fill out a hardship letter, financial statements, a budget, and all other required paperwork and he would try his best to do what he could to get me assistance. After waiting to get approved finally I got a call from the rep stating that he went to a conference where he spoke to other representatives and that he thought that what I was trying to do was “pointless and that I would probably lose my house anyway”. (Had I know I would be throwing money into a black pit I should have listened)

Figuring that I wasn’t going to get any help from him or The bank I continued along other avenues I found another help site and continued to try to work through any avenue I could to save my house to no avail. The bank was then sold to another bank so I tried to work with the new bank to get help modifying my loan. I was told that I “didn’t make enough and didn’t have enough money to pay my mortgage”. I said is there anything I can do to get my payments caught up or make partial payments. They offered me a payment plan of $2750 per month for 1.5 years if I did an initial $3000 payment to get my mortgage caught back up. There was no way I could make that payment obviously.

I finally found a job in May 2009 so I contacted the new bank they stated that I now “make too much to be qualified for the modification” I stated that “I had been behind for 2 years without any help because I didn’t make enough now I make too much!” I continued to contact them about the HAMP modification but they continued to give me the run around for 2 years thereafter. They put my house up for foreclosure without giving me any options. I had so much stress that my health started to disintegrate and I became depressed and ended up being put on medical leave from work. While out on medical leave the company I worked for was laying off people and asked me not to come back. I did not intentionally lose my job I had literally fell into a suicidal downward spiral because of the effects this situation put on me. I had always had really great credit and had succeeded at school and any job that I had but I couldn’t even function at this point. I was ready to give up on everything, including the house.

Finally, I spoke to a financial advisor who referred me to Freddie Mac the servicer of my loan. I filled out all of the appropriate paperwork and was finally approved for the HAMP. Per the agreement the foreclosure was supposed to be suspended as I made my first few trial payments. I contacted the new bank to make my trial payments but they said that I couldn’t because my house was still on foreclosure status and that I was up for Sheriffs auction at the end of the month. I explained to them that I had been approved for the HAMP via Freddie Mac and they said they had “never heard of Freddie Mac being able to approve loans for HAMP”. I faxed them over my information from Freddie Mac 3 different times because they kept stating they "never received it". I kept the person on the phone and faxed it while I was on the phone and waited until they had it in their hand. They again stated that they had never seen anything like it before but they would temporarily put a hold on the sale of the property.

I then got another notice for Sheriffs auction while waiting for the HAMP approval so I contacted the bank they said that they were still looking into it and that they would escalate the issue. I stated that I was supposed to have a payment in per my trial payment agreement by the end of the month but I couldn’t because the account was in foreclosure status and the payments had been turned off. They gave me the run around and never got anything accomplished. I contacted Freddie Mac and explained the situation they said that the bank is supposed to comply with the agreement on their end and that Freddie Mac couldn’t do anything but refile the information. I called Freddie Mac back 3 times because the bank "never received it" AGAIN! I finally called Freddie Mac and requested a conference call with the bank we got them on the line and finally they said they would approve the modification.

After again receiving multiple foreclosure notices and multiple calls back to the bank I finally received paper work of a modification program they modified my loan by extending it out to 40 years and adding $22,000+ on top of the loan; lowering my payments only $200. The $22000 included the principal and interest of missed payments, plus other fees for attorney and escrow. Bringing my loan to a whopping $168,000, my house is appraised at $142,100 which is close to 120% over the retail value. I didn’t have any time to have an attorney review the paperwork because I had to get it into them to get the Sheriffs auction stopped.

When I received my first real statement 6/5/2009 I received another notice for Sheriffs auction. I tried to call the bank but they were closed so I logged in to my account online. I didn’t see anything that reflected there should be anything incongruent to the agreement I had reluctantly signed then I noticed a statement that was printed exactly 2 days after my original statement including $811 in “fees”. Monday I contacted THE BANK and inquired about the auction they said they also didn’t see anything about an auction and the “fees were miscellaneousfees from the foreclosure”. I stated that I signed all my paperwork with all the fees were supposed to be included in the modification. They said that I could try to dispute the charges and that they would put in a request for someone to look into the auction. I received multiple notices for foreclosure after the modification periodically for approximately a year!

Apparently, since my loan is owned by Freddie Mac I don't have the same rights as a normal person would if their loan was owned straight from the bank I was not eligible for the www.nationalmortgagesettlement.com because my loan is through Freddie Mac; this was stated and reiterated to me by my state Attorney General. I did however receive a $500 check from Rust Consulting for the www.independentforeclosurereview.com showing there was discrepancies and fraudulent activities that happened in the processing of my mortgage modification. I am not sure how they came to that specific dollar amount or that $500 is an acceptable amount in my situation, they did not explain that and apparently I would have to wait on hold for 3 days before I can even get to an actual person. I have called www.IowaMortgageHelp.com, help.consumerfinance.gov/app/mortgage/ask, www.IowaLegalAid.org, and www.IowaAttorneyGeneral.gov. These banks are giving out pennies compared to the massive damage they did, all the while making record profits.

I have attached the conversation with the attorney general's office they are unwilling to investigate my issues even though they were given millions of dollars from the the bank settlement because I am under Freddie Mac, which is ludicrous. the bank did this to me not Freddie Mac. I feel like my rights as an Iowa citizen and a consumer have been grossly disregarded. The Attorney General has pushed my case off since 2010 when I started making my complaints after the fraudulent and corrupt treatment by the bank. They have told me that I need to get a personal attorney that basically what happened to me was legal because I “agreed to the contract”, it was either that or foreclose and have my credit ruined for the rest of my life. I contacted a personal attorney and they are refusing to help me also because it is “too time consuming and costly”. So basically I have no rights and no options.

I have been paying on my loan now since without so much as one late payment but I haven’t even made a dent in my mortgage to gain any equity on the home. The old bank sold my loan to yet another bank in 2012 which is just as bad as the old bank. Every time I call them I get transferred dozens of times and wait on hold for an hour just to get non-answers. I am trying to file for HAMP Refinance which I have received multiple letters and emails from Nationstar stating I am prequalified; via Freddie Mac I am definitely qualified. Yesterday, I finally spoke to a person who told me that “it wouldn’t be in my best interest to refinance since I already have a good loan setup” I am paying 4.25% for 40 years how is that any good; the man was rude and wasn’t going to assist me in anyway.

I called them again to talk to someone different hoping for a different answer, when they looked into my loan they noted that since I already did a modification back in 2009 that I wasn't eligible for modification. I said per the MHA I am eligible for a REFINANCE due to not being able to get a normal refinance because of my loan being underwater, due to the bank. Why does Freddie Mac website even state I am eligible then?

I know for a fact the bank sold my loan to this new bank to get rid of me because I was a liability trying to fight back. I am sure they sold the loan for pennies to this new bank because I have been paying on time now for years. My loan is down to $164,000 from $168,000 with 4.5 years of monthly payments. Comparables in my neighborhood are selling for less than that, my house was reassessed with the County at $145,000.

I am so fed up right now that I just want out of the house. I have paid on this house since 2007 and am in more debt than I started, I am afraid I might just pack up and leave, it isn’t worth it anymore. This is the first house I ever owned.



Thank you,
Erica


 

Dear Erica – Wow.  Experiences like yours leave us all speechless.  Where can we possibly begin to unravel what went wrong and how things could, have, should have, would have been handled had we all known then what we know today?

Your story may be especially helpful for other folks still navigating these challenges today.  But I feel it will also be helpful for folks who never had any issues with their home or home mortgage and don’t understand what all the ruckus is about so I feel certain events and details are worth mentioning.

BEING UNEMPLOYED: To that end, anyone who lost their job when employment tanked back around 2008 was stuck in the same rushing river as everyone else, but they were stuck without any paddles.  There were very few solutions other than foreclosures and, to be honest, not without reason.  Afterall, if you have no income to pay a mortgage, what bank wants to loan your money?   In fact, in general as a society, we don’t WANT banks loaning money to folks with no jobs and won’t be able to repay it.  The HAMP modification was specifically designed for folks who made enough money that they could afford to make mortgage payments of about 31% of income and who did not make so much money that affordability was already not an issue and they did not truly need a modification (ass you learned was likewise an issue when you got a job the next year and reapplied) .  Unfortunately, this was not accurately communicated to the public. Instead the message many heard was that everyone who asked was going to get a loan modification.  As a result millions lined up and most only got a lot of aggravation (which in my opinion resulted in a lot of strategic defaults we could have avoided and certainly an anti bank climate which set a lot of other dominos in motion).  In fact the HAMP program as well as HARP and HAFA under MHA were laced with problems that were tweaked over the past few years.   Fortunately, after some time and because the problem was so wide spread, programs like the Hardest Hit Funds came out for 18 or so of the hardest hit states which provided mortgage relief for folks who were temporarily unemployed.

POOR ROLLOUT:   Programs under MHA were accounted in what seemed to me to be more of a political publicity campaign than a program actually  intended to help folks.   Original advertising said the HAMP program would help 3 to 4 million homeowners. So far outcomes are just over 1 million (though the program has added other value such as establishing standardized models banks have used for their own proprietary modification programs).   The Administration rushed to announce the program months before any of the banks and servicers had any idea what to do.  Hence your experience with your own bank having no idea about “specifics” when you inquired about a HAMP modification was common and could have, should have, would have been easily avoided able had the roll out been better planned.  My personal opinion is that the politicians had zero idea what real world implementation of their brilliant ideas would entail, not the least of which was changing centuries of deeply imbedded banking culture.  Frankly the gap between politicians, regulators and the real world is one I don’t believe will ever be bridged, so expect more of the same L

SINGLE POINT OF CONTACT:  Among to the top frustrations was feedback from folks forced to begin over and over again with new representatives every time they called their bank or servicers (along with the now infamous “lost paperwork.”  I’m convinced that some day in a far off galaxy in the far off future, some innocent time traveler will stumble across a forest of paperwork long lost during our foreclosures crises).   This problem has allegedly been solved with new servicing standards that require banks and servicers to provide you with a single point of contact (“SPOC”).  To date none of the folks Ive heard from have actually seen this happen.  But I have heard success stories from folks who throw around the term “Single Point of Contact” when speaking with the bank or servicer…maybe it sends the message that they’re informed and mean business?

INDUSTRY COMMUNICATION: I love your reference to the fellow who spoke to others at an industry conference and was then able to tell you your strategy was a waste of time.  As crazy as it sounds, this is often how folks in the industry communicate.  If we all think about our own business and industry we may realize that what we expected from banks and servicers in terms of communicating with each other fax exceeded what we ourselves are even capable of. 

SERVICER V. OWNER-ROLE OF GSEs:  Your experience being caught in between your bank-servicer and Freddie Mac is also not surprising.  Many folks have languished in this lost land.

DUAL PATH:  Many folks have likewise found themselves approved for a trial modification but still in foreclosure.  The new rules prohibit this, but will likely add to the price we all pay for home loans as not being able to dual track loans in default adds to the banks risk and potential losses.  The idea is that they want to give you a chance with a trial modification, but if you cant sustain that, they don’t want to have to waste time gearing up a foreclosure – they want to be able to foreclose right away if you strike out again.  The point being that no matter how thin you slice these issues, there are always two side.

INCREASING BALANCE:  Like many others, by the time the lawyers and late fees were tacked on, you found yourself even deeper in trouble than you had been before.  Let me share a bit of history with you for context when it comes to legal fees.  For years, the GSEs and many banks required lawyers who handled their foreclosures to cap their fees at what the legal industry considered a very low amount – for example under $1000 to complete a foreclosure (since most loans require the borrower to be ultimately responsible for the legal fees, there is good reason everyone wants to keep these fees down) .  While this may sound like a lot of money, remember most lawyer bill their time hourly at at least $150.   This is in part due to the costs of operating a law practice.   In the old days when banks would make a loan and then keep it on their books (ie not sell or “securitize” it)  that cap was fine.  It basically meant that if you were going to do that kind of work it had to be done on a very efficient volume basis.  But that was OK since it was relatively simple cookie cutter business that you could train lower cost paralegals and clerical folks to do.  The problem came when banks started selling their loans and the legal work required to properly document and handle a foreclosure case got more sophisticated, complicated, time consuming and expensive, but eh banks and GSEs would not agree to pay any more per file.  In my opinion this is, in large part, what caused many firms to begin robo-signing and similar practices – they had to do much more work for the same price and needed to find ways to cut corners.   And remember, around the same time the volume of cases increases dramatically.   This is also one of the reasons (aside from pure greed) that many of these firms began other questionable practices that resulted in more revenue for them and higher costs for borrowers.   But you are correct, the bottom line is that these practices too caused many who many have otherwise recovered to wind up more in debt and unable to pay than they were before and ultimately to lose their home.  And this is the exact reason why I have told so many folks who were on the fence about trying to get a modification (which you’ll recall initially meant not paying your mortgage) to not “go there.”

RUSHED AGREEMENTS:  This is also not the first Ive heard of folks who were essentially forced to rush into an agreement without legal guidance.

FREDDIE AND FANNIE LOANS:   Its interesting that you point out so many details that revolved around the fact that your loan is owned, guaranteed or insured by Freddie Mac.  How many folks ever realistically ask at the cloaing table whether theirs’ will be a Fannie Freddie loan and yet in this crises that one fact turned out to be a game changer for so many.

OCC AND ROBO SIGNER SETTLEMENTS:   It’s interesting to hear that you received $500 under the OCC settlement.  One of the criticisms against the way that played out was the establishment of the payment framework.  After billions were wasted trying to independently review files (by outside auditors some of who were claimed to have not been so independent) that plan was scrapped and a dozen or so somewhat generic buckets created to decide who would be paid how much.  Appearantly folks in your bucket got $500 each, a few less than perfect solution, but one probably necessary based on the scope of the challenge and need to get past it.  Frankly, I find the $21 plus billion spent on independent reviews that didn’t work far more offensive.  Did they really need to waste that much money – which could have been used to pay folks like you – before someone realized it was not going to work?  The good news is by being paid that $500 you do not waive any other rights you may have.  The bad news is that pursuing those rights often requires lawyer and costs money.

GETTING HELP:  You’ve noted how difficult getting help is.  The DOJ, your State AG and others are there to pursue wrong doing can stop the bad guys for all taxpayers in general-the general public, not to essentially provide legal assistance for you to recover compensation for your own personal losses.  And I’m not sure that your characterization of these issues as “fraudulent” and “corrupt” actually squares with the requirements elements as laid out in the law that describe these acts and omissions.   You may have more luck seeking help from a HUD approved credit or housing counselor – find one at www.HUD.gov.  The service is free or  relatively low cost if you can afford to pay. Often times these folks have back line access to the banks and servicers.   They’ve helped over 9 million folks so far.  As for hiring lawyers,  for a variety of reasons, lawyer can add more problems than they solve (I am one, so I know).  I covered tips on hiring and managing lawyers in my last book Financial Fresh Start.  Im well aware that some of these guys rip people off or make promises they can never keep.  And their communication is notoriously bad.  In fact the whole business model of paying for services hourly should be left to hookers.  Ive also heard a zillion stories about lawyer who charged a zillion dollars to collect a few bucks.  Lawyers are just people – don’t trust them any more than you trust anyone else.  And if they take your case, its still your problem, not theirs.   Its up to you to choose the right person and set up a payment agreement you can live with – no point blaming your lawyer after the fact. The thing is lawyers normally charge hourly.  They cost money.  Your problem is not their problem.  And there’s no reason on earth they should work for you for free.  Im not sure why so many people seems angry or frustrated that lawyers wont work for them for free.  You wouldn’t ask your house keeper to clean your house for free.  I just don’t get that.  Now the bigger issue is the fact that our entire legal system is really not accessible unless you have a lot of money – that’s a problem.   The lawyers are not refusing to take your case because it’s “too time consuming and costly.” They’re telling you they don’t think it’s worth your money – its throwing good money after bad. But if you want to hire them to try to help you, there’s no doubt you can find a lawyer who will be willing to take your money and give it a shot.

LOAN SALE: When banks sell out loans or assign the servicing it no dount adds another layer for us. On the other hand, just to be clear, banks don’t cherry pick loans to sell. Your l;oan may be in a bucket with others of loans in default or otherwise, but the bank did not sell your loan in particular because they wanted to get rid of you in particular. These are multibillion dollar organizations. Your loan is one of millions. That’s just not how it works.

It seems the real question at this point is what should you do. You’re underwater. Im not hearing that your mortgage poayment is unaffordable, just that youre not sure worth paying. And – obviously for good reason – youre very frustrated. The first decision you have to make is whether you want to get even and pursue what you believe is “right” or whether you simply wantr to do what makes the most financial sense for you at this point in time and out the past behind you.if you wish to pursue the former, hiring lawyer and filing a suit against your bank and servicer in appropriate. Your lawyer can help you evaluate the claims, potential damages and costs. But if it’s about getting even, then costs are not as relevant. The fact that you were paid under OCC settlement indicates that someone somewhere found some kind of mistake that may help your case. If you wish to oursue the laer, than you need to decide if staying put (either with or without a refinance or other solution) makes more sense than moving out – probably with a short sale since you’re under water. A HUD apprioved counselor is best suited and most reliable in helping you evaluate both of those options as the answer depands on many variables including how quickly your home value is recovering, the impact on your credit, costs of new housing and the like.

I hope this helps you and maybe others to better understand all that has been in motion. Good luck! Shari O



 

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