Failed loan modifications – 3 stories and a warning

No One Needs This Kind of “Help”

Chris Serres, in a Star Tribune article, reported these stories of homeowners who were offered help – or promised help – and are far worse off for their efforts.

The nightmare begins with the first contact, when homeowners learn that they must first stop making their mortgage payments.

* If you’re now attempting a loan modification and being put through a wringer,call 619-929-1413 or write td@tomdunlap.com. We can answer your questions, offer you insight as to your chances of success, and advise you on what to do next to avoid foreclosure.

The Weddles

”Patti, 51, and Scott Weddle, 57, of Harris, Minn., were ecstatic when J.P. Morgan Chase offered in November 2009 to cut their monthly mortgage payments by about 20 percent under a trial modification. Patti was out of work with a neck and back injury, and the Weddles were having difficulty making ends meet.”

“Nearly a year later, the Weddles were told that their application for a permanent modification was denied and that they would have to pay $24,228 to bring their mortgage current and avoid foreclosure.”

”The Weddles insist the demand came as a shock, because they had made all their payments on time under the trial modification. “We did everything that was asked of us, and it only pushed us deeper in the hole,” Patti Weddle said.”

”When the Weddles got turned down for permanent relief under HAMP, they decided to stop making their monthly payments. They expect to receive foreclosure papers any day and most of their belongings are packed. “If we had $24,000 lying around, then we wouldn’t have sought help to begin with,” Patti Weddle said.”

Paula Viehman

“Paula Viehman, 60, recalls the day she was approved for a trial modification in June 2009. After a 30-minute conversation, a CitiMortgage representative agreed to cut her monthly payment by half to $929. “It was the answer to my prayers,” said Viehman, a state employee who lives in Minneapolis.”

”Fifteen months later, CitiMortgage sent two letters claiming she was in default on her mortgage and owed $13,569 in back payments, late fees and other charges. When Viehman called to complain, she learned that CitiMortgage had denied her application for permanent relief under HAMP, though the bank had never notified her.”

”Viehman refuses to make the lump-sum payment, largely on principle, because that would mean accepting Citi-Mortgage’s claim that she’s in default. Though she continues to make monthly mortgage payments, she suspects the bank will eventually foreclose on the house where she’s lived for 25 years.”

“The longer I go through this, the madder I get,” she said. “I did everything they asked and more.”

”Citigroup, CitiMortgage’s parent company, declined to comment about Viehman’s complaints because of privacy concerns. However, in a written statement, the bank said the original terms of a mortgage remain in place during a trial modification.

Borrowers only receive relief from delinquent payments if they get permanent modifications.”

And of course, the banks claim that homeowners have fair warning via the paperwork they sign.

Lynda Devine

”Lynda Devine, 49, of Faribault, said she had not even heard of HAMP until she called her mortgage servicer, Aurora Loan Services of Colorado, about a routine matter. While on hold, she found herself listening to a recorded message that said she might qualify for HAMP. She checked it out and learned it was a program sponsored by the Obama administration. “It all seemed very legit,” she said.”

”Aurora agreed to cut her monthly payment to $1,400 from $2,000 under a trial modification. But Devine, a children’s mental health social worker and waitress, soon found herself mired in a bureaucratic nightmare. As she sought permanent relief, Aurora kept asking for the same documents — including bank and tax statements. Devine estimates she has faxed documents to Aurora more than 60 times.”

”Nonetheless, she received notice in July that she was in default. Soon after, she got a letter from Aurora’s law firm saying she would have to come up with $13,496 or face foreclosure. Devine couldn’t stomach the idea of losing her 1920s-era farmhouse and her 35 acres, where she keeps three beloved horses.”

”Devine borrowed against her truck and horse trailer to pay the $13,496, but she’s considering suing Aurora to get the money back.”

These stories are but the tip of the iceberg…

Carl Christensen, a Minneapolis real estate attorney, told writer Chris Serres that he gets 15 calls per week from shocked borrowers who thought a loan modification was going to allow them to keep their homes.

To quote Mr. Christensen: “The banks put out their hand and say, ‘We’re going to help you,’ and then stab people right in the back.”

To some homeowners, it seems as if the banks are simply coercing people into making a year or more of extra payments before seizing their homes.

The warning:

If you want to attempt a loan modification, be careful. Don’t proceed on what someone tells you over the phone. Instead, read every word of the paperwork they send you, and if you don’t understand even one sentence, get help. Seek out a qualified real estate attorney and find out what you’re signing before you get in over your head.

If you want to discuss your options, call 619-929-1413 or write td@tomdunlap.com. We’ll be happy to share our knowledge of the bank’s guidelines regarding loan modifications. We’ll also answer your specific questions about short sales.


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