Mortgage Modification. More like Mortgage Mortification.
My friend Sue lost her primary source of income in early 2009 with one day’s notice. That’s when she decided to apply for mortgage modification assistance through her bank – Wells Fargo/Wachovia.
Show Date: June 17, 2010
The key criteria for receiving mortgage modification approval at Wells Fargo/Wachovia – like most banks – is your ratio of debt to earnings. If you lost your job, if you had a bad year, don’t bother applying.
Sue had worked for a company for four years, but was paid as a consultant in order to eliminate the need for benefits. Now the company was in danger of going belly-up, and she didn’t qualify for unemployment compensation.
Bonus for pushing the government option
“It’s a terrible catch-22,” admitted one Wells Fargo insider. “It’s a rotten game,” said a banker. “The banks will do everything in their power NOT to reduce your interest, because that’s where they make their money. Why should they give up hundreds, if not thousands, of dollars in monthly interest payments?”
Sue naively assumed that Wachovia would treat her with respect. Starting with an 8 percent mortgage many years ago, she’d already refinanced three times as interest rates began to fall. Her points alone had cost $7,500. So she approached her bank officer – the same person who had helped her previously. She was told that mortgage modifications were being handled by a special department that could only be contacted by phone. Bank officers were no longer involved.
Finally reaching a pleasant woman at the other end, she learned that there were two types of modifications available – Obama’s 2009 program and the bank’s internal program. Announced in April, 2009, few banks had signed up for the government’s Mortgage Modification Program by March, 2010. Wachovia enlisted and thereafter pushed the government option.
Explained a knowledgeable property investor: “To modify a mortgage, the bank must obtain approval from every financial institution that bought into the pool and thereafter, from the mortgage insurers. Its too much work, so they’d rather foreclose, take the write off and collect the mortgage insurance. Obama sweetened the deal by offering banks a $1500 cash bonus for each homeowner that applies for the government option.”
What’s the difference between the two mortgage modification programs?
Embedded in the fine print of the U.S. government option: Applicants must agree that their personal information can be assessed by employees of the Department of Housing & Urban Development, other relevant agencies and by foreign governments! Moreover, if any government or foreign official harbors “suspicions” that the applicant’s information is incorrect (with or without proof), she/he can be prosecuted for fraud. It was terrifying. Sue chose the bank option instead, which carried no such bottom line. Wachovia reluctantly accepted her verbal application.
The bank also demanded a brief letter explaining her current predicament – the reason she was applying for the reduced rate – along with supporting documentation that should have been in her file. It wasn’t. She was starting from scratch. The bank appointed a liaison officer to handle her case. Two months later, she received a call from the liaison requesting additional information.
He stated that she would receive a personal phone call – not a letter – confirming whether her application was accepted or rejected. Then silence for the next few months. Sue tried reaching his extension. He never answered and never returned the call.
She finally reached a woman who would not disclose her last name or title. She instructed Sue to call back every month. After five months of phoning, a person at the other end of the line – not her official liaison – disclosed that the there were handwritten notes in her file indicating that she’d been rejected. But he couldn’t tell her for sure, since he had no authority to do so.
Another month went by. More calls. Nothing. Finally, she received a rejection letter in the mail – solely based on her loss of income. She didn’t earn enough to warrant interest rates she could afford. Imagine that!
The national press seems mystified that mortgage applications are down. To my view, American homeowners have been beaten down by humiliation and mistreatment. Mortgage modification is just another way of saying: Enjoy the ride.
Here’s an August 20, 2010 update from the US Treasury Department:
Nearly 50 percent leave Obama mortgage-aid program – BostonHerald.com: “A new report issued Friday by the Treasury Department said that approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the effort have been cut loose through July. That’s about 48 percent of the 1.3 million homeowners who had enrolled since March 2009. That is up from more than 40 percent through June.
Borrowers say the program is “a bureaucratic nightmare.” Banks lose their paperwork and then claim the borrowers never turned it in. The report suggests foreclosures could rise in the second half of the year and weaken the ailing housing market, analysts say.”
How to be charged an additional monthly fee a mortgage reduction? Don’t apply. (You read that correctly.)
I received a comment about mortgage modification nightmares at Bank of America that all should read. Homeowner David Russell wrote:
In February 2010, I was solicited via the internet by my mortgage lender Bank of America about their Making Homes Affordable Program. I called to inquire, but was told I did not qualify. About 6 weeks later, I receive a FED-EX package about the program. I called Bank of America, was told the documents were sent by mistake and to “toss them in the trash.” That is exactly what I did.
On June 4, 2010, I noticed that $95.54 was missing out of my checking account. After looking through my bank statement my fixed rate mortgage had jumped from $474.03 to $523.75 in May of 2010.
I contacted Bank of America and was told, “This is your new payment as we opened an escrow account to pay your property taxes and insurance for the Making Homes Affordable Program. I explained to 7 people over a 2 hour time period that I was not eligible for the program, never signed any documents, nor submitted an application, and have paid my own taxes and insurance outside of the loan since I first purchased the property.
The bank did admit that I did not qualify for the program, but the escrow account had been set up and it could “never be terminated.” “You will have to just live with it Mr. Russell,” the rep explained. “I told her my taxes are $199 a year and my yearly insurance is $200, but “You’re withholding almost $600 a year!” Her response: “Well, at the end of the 27 years, we will refund you the difference.” I then informed her that Bank of America fraudulently changed the terms and conditions of my loan without permission, my knowledge, or any signed documents. Response: “We do this all the time. It’s perfectly legal for us to withhold for your taxes and Insurance. I stated that my taxes are paid to date and so is my insurance. They can’t legally raise my mortgage! (But they did.)
I explained to the representative that I may not even be able to pay my mortgage next month as Bank of America funneled $100.00 out of my checking account due to the increase. “Well Mr. Russell, if you don’t pay your mortgage, we will simply have to foreclose on you and have the Sheriff remove you.” I explained to her that I have a limited amount of money and pay my property taxes each year with a small bonus check I receive from work. My insurance is paid in small increments monthly, and I can’t afford a $50 monthly increase in my mortgage. The representative then hung up.
I called Bank of America back and basically was told pretty much the same thing after speaking with 4 more people and a supervisor. The supervisor informed me that he could “try to opt me out of the program” (could take months) – you know, the program I did not qualify for and never returned any documents or applications. He said, “Yes sir that one.” I demanded the $99.54 that Bank of America had fraudulently removed from my bank account via auto-pay. The authorization was only for $474.03 a month not $523.75. Response: “It’s not possible Mr. Russell.”
Bank of America fraudulently increasing my mortgage and is illegally withdrawing more than agreed upon. It is quite apparent that Bank of America is committing blatant fraud in order to account for the TARP money they received.
I contacted the “President’s office” of Bank of America. John Priest promised me that he would look into the matter and said this happened to thousands of people. Since then, Mr. Priest has not returned emails or phone calls.
I have spent countless hours on the phone with Bank of America, only to be threatened with foreclosure and the sheriff removing me from my home. The stress is making me physically ill – just trying to figure out how I can stretch my budget further. I have gone without eating to pay my mortgage, HOA dues, property taxes and insurance. My home (condo) takes well over half of what I make just to not go into foreclosure. I’m now ready to let them have it back! I owe 69,000 on a home that’s now worth 20K at best.
If you’re wondering why Bank of America numbers have increased by 70% in one month, allegedly enrolling more people in the Making Homes Affordable Program, this is how they are doing it. I will never be able to catch up or pay the higher unlawful increase in my mortgage. Did I mention that my taxes, insurance, HOA dues and loan payments have never been late!
I may end up losing my home just for inquiring about the government’s mortgage modification program.