It is quite disappointing to hear that many homeowners who have continued to fight to save their homes, have still not been helped.
Over 3 years we have been in a Housing Crisis and you would think the Banks would have figured out a way to assist those who would like to stay in their homes who are not looking for a "handout" but a help up.
About a year ago a Darling couple consulted with me regarding a short sale. They took great pride in the fact they built and established a very high credit rating. Unfortunatly, they were in an adjustable loan and it rose from 5% to a whopping 9.5% interest rate. Obviously, they were having trouble making monthly payments. The bank would not modify their loan or permit a Short Sale because they were not deliquent with any payments. Because they were so protective of their credit they continued to liquidate all of their assets. As a result they lost everything and it was not until they were completly disabled did the bank offer a solution. They were so resentful, they did not Short Sale or Modify the Loan.....They Walked.
How nonsensical are these banks? They just participated in a Lose, Lose situation. The attorney fees and other court costs they incurred "playing hardball" instead of looking out for everyone's best interest...ugh how dissappointing.
Well, I know my last posting was on how I Detest "doom and gloom" reports but, I have to give all those scorn by the Banks a voice.
continue reading the RGJ report on just these disappointments....Sorry guys....
By Jason Hidalgo • jhidalgo@rgj.com • January 31, 2010
Betty Garcia coaxed her 71-year-old frame out of bed on a cold January morning, the tank of oxygen by her side a reminder of some pretty tough times.
Just outside her Reno home, storm clouds painted an eerie scene of gray that made an already cold day feel even colder. But none of that compared to the chill Garcia felt after discovering what was posted on her door -- a deed of trust, the original note on her mortgage and a notice of default.
Already weary from a year spent fighting to stay in her home of more than two decades; Garcia was terrified at the thought of being kicked out.
"When I got the notice this morning, I just felt like I hit bottom -- I mean really hit rock bottom," a tearful Garcia said. "I have nowhere to go. I have no money because I gave my savings to this law office that was supposed help me stay in my house. I haven't been able to get a hold of my lawyer or my servicer for some time. I just feel like everybody's been playing games with me."
Six months before being served the notice of default on her door, Garcia was approved for a loan modification by servicer Ocwen Financial under the federal Home Affordable Modification Program or HAMP. The program is part of the Obama administration's economic stimulus package and is designed to help distressed homeowners lower their payments by having their loan modified.
Instead of lowering Garcia's monthly payment of $1,194.38, however, the modification raised it to $1,263.98. Garcia would soon learn that seeking recourse for an erroneous modification can be a daunting task, largely because of spotty enforcement of program guidelines.
At the crux of Garcia's woes is HAMP enforcement -- or the lack thereof.
Although servicers have guidelines that must be followed when modifying loans under HAMP, there isn't a clear-cut mechanism in place to ensure that modifications are done correctly.
That puts the onus on borrowers to discover the errors and report them.
Even tougher is finding someone who actually can do something if a botched modification is finalized
For Garcia, her higher monthly payment was an obvious red flag. Although, it is possible to have a higher monthly payment after refinancing, HAMP modifications work differently and are specifically designed to help delinquent homeowners who can't afford their mortgage payments.
Another red flag was the ratio of the new payment compared with Garcia's monthly income. Under HAMP, modified mortgages have a "front-end debt-to-income ratio" target of 31 percent. This means that Garcia's total mortgage commitments, including her mortgage payment, property taxes and insurance, should be no more than a third of her monthly income.
Garcia's total monthly income with Social Security included is $1,863.75. This puts Garcia's debt-to-income ratio with her new payment at almost 68 percent.
The modification job has Garcia's daughter, Cindy Moceri, seething. Since last year, Moceri has helped her mother talk to Ocwen Financial representatives about the error, with no success.
"I've been in this industry for 35 years, and I've done every single position there is, including escrow, title insurance, mortgage lending -- you name it," Moceri said. "I'm not stupid. I know this stuff inside and out. And it's frustrating when people that are supposed to be helping you don't have a clue about what they're talking about."
Nowhere to turn
In seeking to have her mother's modification corrected, Moceri embarked on what would prove to be a long and twisting journey to nowhere.
Moceri thought her knowledge of the mortgage industry would give her a leg up in the process. First, Moceri contacted Ocwen Financial to inform them that a mistake was made with their modification. Because Garcia worked from home and filed a 1099 form to the IRS, Ocwen assumed that she owned her own business and recorded a much higher income, Moceri said.
"My mother is an agent for a freight transportation broker and gets paid by commission," Moceri said. "Since she works from home, she gets to write off her designated work area, utilities, office supplies and machines, so it's a tax advantage for her to file a 1099."
Several times, Ocwen requested Garcia send a profit-loss statement, even though she wasn't self-employed. Eventually, Garcia's employer sent a letter explaining her circumstances and an Ocwen representative said they now understood the situation and would fix the issue. But the warning letters for mortgage nonpayment continued to arrive, Moceri said.
Going to the state
Unable to make progress with Ocwen, Garcia filed a complaint with the Nevada Mortgage Lending Division. But Garcia was told the division's jurisdiction doesn't extend to Ocwen.
"Ocwen is not licensed by this division," responded Tony Frascarelli, the division's chief compliance investigator, in a letter last August. "Thus, we do not have the authority to investigate the loan servicing issues identified in your complaint."
After receiving the letter, Garcia and Moceri turned to lawmakers, including the office of U.S. Senate Majority Leader Harry Reid, D-Nev. But they both found out that lawmakers are limited in what they can do. Reid's office only can help initiate dialogue with servicers if borrowers were having trouble contacting them.
"Because they're private companies and not federal agencies, we really can't make them do anything," said Mary Conelly, state director for Reid's office.
Contacting the feds
Unable to get help at the state level, Garcia and Moceri turned their attention to the federal government.
First, they called the Treasury Department and were referred to Department of Housing and Urban Development. Once they reached HUD, a staffer told them to contact the Federal Housing Administration, which wasn't much help, either, Moceri said. The FHA simply recommended calling the HOPE hot line (888-995-4673) and talking to a counselor.
When Garcia and Moceri contacted the hot line to report the error, the counselor simply provided a new number for Ocwen. Garcia and Moceri called the number and got a recorded message, left their information, and basically found themselves back at square one.
"I just wanted to crawl through the phone and choke some people," Moceri said. "All we want is to make someone realize that there's a problem here that is not being addressed. The banks got their bailout. These people are supposed to be stepping up to the plate and helping distressed homeowners."
Legal firm woes
Desperate for a resolution, mother and daughter decided to seek help last year from national law firm United Law Group. In the beginning, the law firm was very responsive.
"They asked me how much money I had, and I said I only had $1,700," Garcia said. "They said they would help me out and put me down as a hardship case, which I thought was awfully nice of them."
After initially paying $1,000, the firm took another payment of $2,200. That's when things changed.
"We haven't heard from them after we paid more than $3,000," Moceri said. "We've contacted them several times, and they haven't responded to our calls or our faxes. Were we just scammed? I don't know. All I know is that I'm really upset about it."
Queries by the Reno Gazette-Journal to the firm were not returned. United Law Group currently has an "F" rating from the Better Business Bureau of Los Angeles. Reasons for the rating include "grossly misleading" advertising, noncompliance with licensing and registration requirements, serious complaints against the firm, and failure to respond to complaints.
Limited recourse
The issues with HAMP come as no surprise to Ernie Nielsen, a supervising attorney and administrator for the Washoe County Senior Law Project. The Senior Law Project currently assists homeowners in foreclosure mitigation.
"It's still new, so servicers are still learning how to do it right," Nielsen said. "Any new program is going to have growing pains."
Loans owned by Fannie Mae and Freddie Mac, which make HAMP participation mandatory, are typically easiest to deal with when problems occur. Since Fannie Mae and Freddie Mac have specific guidelines, alerting both entities about questionable modifications typically gets a servicer in line, Nielsen said.
Loans owned by other entities are not as clear-cut. For one, HAMP participation in such cases is voluntary. Even a borrower's legal options are limited if they're denied a modification, said Geoffrey Giles, a Reno attorney who has negotiated loan mods for several clients.
"There isn't even a way to go through the courts," Giles said. "Federal district courts across the country have held that because of a service agreement that exists between servicers and the government, homeowners who are denied can't sue if they're denied under that agreement."
Giles also acknowledged the futility of normal lines of communication when having loan modification problems. For his successful cases, Giles credits access to people outside the typical lines of communication.
Distressed properties are especially an issue in Nevada, which has led the nation with its rate of foreclosure-related filings for three straight years. In addition, the number of loans in the state that are delinquent by 60 days or more jumped from 32,770 in the third quarter of 2008 to 58,351 in the third quarter of 2009, according to Hope Now. The number represents a 78 percent increase and includes both prime and subprime loans.
Lack of accountability with problem loans was a big source of frustration for Nevada lawmakers in the last legislative session -- and a key driver for creating the state's foreclosure mediation program, according to Assembly Speaker Barbara Buckley, D-Las Vegas.
"We're hopeful that the mediation program would provide accountability that, frankly, has been sorely missing," Buckley said. "If lenders aren't following HAMP guidelines, then the homeowner can bring that up and the mediator can find out if that lender is not operating in good faith and not following federal law."
A little help
With her mother suffering from heart problems and starting to show signs of dementia, Moceri moved in with Garcia in January 2008.
A year ago, Garcia's husband of 30 years left her. Two months later, Garcia's employer committed suicide. Both events, along with the economic downturn, severely affected Garcia's finances.
And just as Garcia got a new job and started piecing her life back together, her loan modification problems took a turn for the worse.
When contacted by the Reno Gazette-Journal, Ocwen Executive Vice President Paul Koches initiated a review of Garcia's case and provided a statement a few days later acknowledging that a mistake was made. Ocwen said it would rework Garcia's loan and is "optimistic that a lower payment will result," Koches said.
"While we strive for perfection in execution of our loan modifications, and all other mortgage servicing functions, errors such as this do occur," Koches said. "The heavy volume of borrower inquiries and applications for loan modifications has been challenging for loan servicers."
Koches touted Ocwen's high rate of conversion of trial modificiations to permanent modifications as proof the company is one of the better performers in the industry. Records from the Treasury Department from September to December bear out Koches' claim.
But being fast at conversions doesn't matter if they're done wrong, Moceri said.
"It makes you wonder if some of these servicers are just churning out modifications and abusing the program so they can get paid by the government," Moceri said.
Help finally arrives
A week after Garcia discovered the notices on her door, word finally came from Ocwen about her new loan mod terms. Including principal, interest, taxes and insurance, Garcia's new monthly payment was $961.42. An ecstastic Garcia finally could "enjoy a happy ending to this year-long nightmare."
In the end, all Garcia wanted was a little help. But like many borrowers, it unfortunately was something they couldn't get on their own, Garcia said.
"Last year, I saw five cars get stuck in the snow in front of my house, and everyone in the neighborhood helped," Garcia said. "Everybody was laughing and hollering, and they actually made it fun to get stuck in the snow. People here care, and they try to help you. I just wish companies were the same."
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