Mortgage Nightmare….Can you actually talk to your lender?
69Read the last paragraph for a real shocker!
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Are they deliberately making it difficult to "work with you"?
I've just spent the last 10 days or so talking to homeowners who are, for a number of different reasons, behind on their mortgage payments and receiving notices of foreclosure. I get these notices sent to me by a local title company, and for the longest time I didn't do anything with them other than watch the numbers rise drastically over the past year. I started looking a little closer when I saw a certain percentage of them were not upside down in their homes....they had plenty of equity. It's not unusual to see borrowers who've been in their homes for 10 or 15 years suddenly facing the imminent sale of their family home on the courthouse steps.
What happened? For some it was a second mortgage, for some it was the loss of a job, or a medical emergency that racked up bills and destroyed their otherwise good credit score. And for some it was an unwise refinance or home equity loan with an adjustable rate that kicked in and raised the house payment to an amount so high the homeowner just didn't have funds to cover it.
But in an alarming number of these cases, the amount in arrears was under $5,000.....owed against a mortgage where the borrower owns a higher percentage of the property than the lender does, on a house worth well over $250,000.
When the borrowers applied for and received the loan, they were aware of the adjustable rate that would raise up in two or three years. They figured (were often told by the lender and their real estate agents) they could, at that future time, refinance into a 30 year fixed rate loan. NO one told them there was a chance that even though rates would remain appealingly low, the credit scoring guidelines would become much more stringent and the score that got their loan approved last time would not be enough to be approved for a refinance. No one told them if you take on any more credit, even though you might be financially capable of paying those credit cards or car payments on time every month....it will change your credit score for the worse. And make them ineligible for a reasonably priced refinance. Some folks have been appalled to find merely reaching a certain level on their credit cards...that's level, not limit... allowed by the credit card company, that also lowers one's credit score. If you apply for and receive say, a store credit card and never even use it, it lowers your credit score.
So if you are trying to renegotiate with your lender....before you even make contact, cancel any unused credit cards. One lady I spoke with told me she used about two house payments worth of funds to pay off credit cards....just to make herself more worthy of a refinance in the eyes of her mortgage company.
But then came the reality. Try as she might, she could not actually speak to her lender, never got through the maze of phone menus to talk to anyone who had a clue as to how to assist her. Negotiating with them is a moot point right now; she cannot even get someone with a pulse to discuss the matter with her. She was shuffled from department to department, put on hold for literally hours, was told information and documents she'd faxed or sent by certified mail had not been received. She was disconnected. She does work full time so trying to reach the company during business hours is not easy. She took time off work to get the job done....wasted the whole day in frustration, on hold, not getting answers. She never spoke with one person who seemed remotely competent or in a position of power to arrange a payment plan with her. The mortgage companies are staffed with folks who define the Peter Principle...where every employee rises to a point of incompetence.
This is not a singular incident, this is more like the norm. These mortgage companies are completely overwhelmed with the inundation of borrowers who are racing the clock of foreclosure, trying to renegotiate the terms or their loan so their families can stay in their home. The one they worked so hard for, paid so long on, always in good faith.
But is it deliberate on the part of the lenders? And are they actively trying to hire and train staff to help? Is it really to their advantage to work with you? Or are they simply lying when they say "we really don't want your house back"? I contend for every borrower who now owes more than their house can sell for, and for every sale that involves a short sale (where the bank does not foreclose but agrees to take a lesser amount than the borrower owes on it)....there are also thousands of homes that represent pure profit for the lender. Remember...the bank gets it all, every penny you've paid in interest or principle so far. And your house to sell for the going market rate. Especially in cases where the borrower has been in their home for years and holds lots of equity, and are only two or three payment behind, that looks like a real money maker to me.
It seems to me that for a lender there are many ways to approach loss mitigation, and being able to grab the assets of those unfortunate borrowers with large equity in their homes would be a great way to offset those mortgages where they might take a loss.
And here's a little fact that few are aware of: During the years when G.W. Bush was telling us home ownership was something all Americans could aspire to, a good number of homes were bought with grant money down payments from a company called Ameriquest. (Since then the IRS has raised some real questions about the legality of those grants, and the write-off the sellers were taking.) Ameriquest contributed $7.8 million dollars to Bushes re-election campaign. Coincidence or serendipity? You decide.
Published 3/23/08
http://hubpages.com/_2t5l6vfib17qu/hub/Mortgage-Horror-Storyanother-one
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Thanks Monitor.....I'm sure some of my co-workers thought I was a wacko conspiracy theorist when I started suspecting...years ago now....that this was all planned. It may even have started with the inception of credit scoring some 13 or so years ago. And Lord knows it is a rare transaction for me when my client's credit score reflects reality....the errors are never in their favor. One of the main problems with credit scoring stems from the fact that if there has been a recorded judgment against a person....once it has been paid the person has to make sure the payment and cleared judgment gets officially recorded as well. That doesn't happen automatically, and the creditor will not take care of it.
Is there no independent authority to which banks have to answer in the US? This sort of story would be front page /prime time TV in NZ/Australia - but would probably have been sorted out first by going thru the obusdman system which is an independent gobt authority which you can complain to about banking matters (no or low cost too)
Authority? Washington DC is corrupted, compromised by special interests, and broken. Individual states are overwhelmed and conflicted. Seriously. Truthfully, I don't think anyone has figured out the depth of the matter yet; it's going on behind closed office doors. I work on the ground, the front lines. Borrowers are just frantic to save their homes, their lives. And they are very naive.....they are up against a "called in" loan, with equity in their house and the ability to sell and walk away with profit, and they don't do it. Likely because they would not be able to buy something else right away, or would have to move to lesser quarters.
The way I began to suspect malfeasance is by talking to folks facing foreclosure...behind on payments. I heard a pattern.... of those who've been in their homes the longest having the hardest time getting someone to deal with them. Those just two or three years into their loans seem to get response....quicker answers, even if they don't always get satisfaction. I think it is all smoke and mirrors anyway, not many borrowers are really getting help. It's all for show to gloss over the predatory plundering that's gone on for the past few years. The long time home owners are getting stalled as the clock ticks away on their foreclosure and the amount in arrears builds.
Since getting my license 16 years ago I have seen lenders pull some real stunts. There are regulations, RESPA rights for borrowers, but there are so many loop holes for lenders. And not much oversight....some folks don't know enough to complain, and are so beaten up and shamed by the experience, they just move on. And the problem in the U.S. now is so widespread and regulators so understaffed and incompetent, and the issue so urgent that it will be impossible to root out the evil until way after the fact....if ever. It's dirty and nasty. All I know is that if I can see the public records and see which borrowers own more of their house than the bank does....well you know the bank vultures can see it too. Recent history tells me quite how low their standards are. It is monstrous.
First off, I think all rates should be frozen at the early lowest amounts until the matter can be thoroughly and deeply investigated....(I can hear the lenders paper shredders churning already, memos being destroyed.) I believe part of the necessary overhaul of lending laws here should include foreclosure laws that allow the lender to only keep what is owed them when they sell off a foreclosed property...plus expenses and perhaps a fine or fee. When lenders walk away with the borrowers life savings, when all that was still owed to the lender was a fraction of the value of the home...it's just not right. They count on peoples' ignorance, and their reluctance to sell their own home before the bank locks it up for payments in arrears. In this country once the foreclosure process starts, the only thing the banks will settle for is full payment on the entire loan.
There are regulations for banks REO. Real Estate Owned. Propeties in their portfolio cannot be beyond a specific totalled value, or owned beyond a set length of time. And they cannot handle the sales of those holding themselves....must use an agent or real estate atty. For years now the National Assoc. of Realtors has been successfully fighting big banking's efforts to change those laws, but they keep coming back and trying again. Cynic that I am, I believe there will soon be another attempt by the banks to change and control real estate laws in this country. They will be crying over the fact they can't get rid of some holdings in some markets, etc. They would love to hold those parcels till the value goes up again. If banks ever get their way on this it will be a very bad day for borrowers.
Sorry to rant....this all really pisses me off.
Wow I had no idea - Ive always been a bit envious of the US with your 30 year fixed rate loans and the ability to asign the loan along with the house -neither of which exist in my part of the world - 5 years is a long fixed rate and 2or 3 years more common. Also your rates are so low! Our floating is over 10% and the fixed rates 8+ - what are the US rates now?
It would be considered illegal and a huge invasion of privac for a realestate agent to be able to see what a borrower owed! The only person who can know is the bank and you - and your solicitor.
Banks foreclose at the last resort here - its considered very bad publicity. The house goes to auction and any $ left over from the outstanding loan plus penalties plus expenses goes to the borrower - so there is no advantage forcing a mortgagee sale unless the house has gone down in value and the borrower owes more than than there equity. Even if you are in that situation so long as you keep up payments then there is nothing that they can do until the mortgage comes due.
I dont understand if someone has significant equity and they have been paying off a standard loan (i.e. paying principal as well as interest) why if they need to reduce their payments they can't just refinance with another lender - or the same one for that matter? After all re-financing will just make the bank more money in the long run - much more than forcing a a sale. I know people tend to be a bit head in the sand - but we have a whole mortgage broker industry built around refinancing for no cost to the borrower!
Well there has been a (supposed) whiplash reaction from the banks....they have really stiffened up the guidelines and raised the acceptable credit score for borrowers. Making it so that the financial standing that got the first loan, two or three years ago, will not be enough for approval on a refinance. Tricky, huh?
Granted an unhealthy percentage of borrowers have taken on more credit, cars, furniture, cards. Immediate gratification has been pushed on people by Madison Ave. "You can have it now"....for years. (We're not seeing many ads for credit cards now!)Unwisely, many Americans took them up on the offer. One late payment and the rate jumps on credit cards, too. Plus your credit score goes down. Paymwents skyrocket. All legal. And sadly due to the state of our health care/insurance here, far too many people get behind because of major medical situations. 50 million or more uninsured in the U.S. Huge bills for minor surgeries, and such. Just an office visit to a Dr. here can run a couple of hundred bucks...not including tests, procedures, and meds. A job lost means health insurance lost, etc. In the Bush's first term the bankruptcy laws were stiffened so that people have a hard time getting out from under even major medical expenses. All these reasons and more contribute to fewer refinances....but mostly it is the more stringent qualifying guidelines from the lenders. And here there are big costs for someone who refinances...often as much as the intitial mortgage costs.
So yes common sense tells us that the banks need to loan money to make money.....accept now, as I contend, they are making money taking the assets from the borrowers. It's legal. It's like all these storms converged on the average American to squeeze every last drop from our stones. As taxpayers who support the government that alloows this....we should all be screaming 'foul'.
I do not have a lot of assets, having had to start over about 12 years ago....divorce & medical. But thank God I have no debt.
Here in California, I have been going through the same thing. Borrowers do have rights but it's all about finding out where to get help. I found that when the loan has been split in the sale between a servicer and Investor ( Wall Street) there has been a great deal of difficulty because there is no particular bank to go to and no procedures to follow. Therefore it has been very difficult to get results because the servicers don't own the loans, the investors do.
However, if the loan is serviced by a bank and was sold to an agency such as Fannie Mae and the borrowers cannot get through to their servicer, they can call 1-800-7FANNIE (1-800-732-6643). If the loan is a FHA loan, they can go to HUD website under foreclosures and contact a HUD approved counselor who will help them with the lender. I used a non-profit agency consultant and the person was finally able to get through to the correct division of her lending institution and do a loan modification. It took months, but she got it done. If you are seeing a pattern of banks not helping persons with a lot of equity,a FHA Secure lender will help people who have been on time with their payments and have lower scores. However, if banks are not helping persons with a lot of equity, I would have borrowers report this to the state attorney general, their congressman, and the FTC. A letter of inquiry from a government agency to a lender, usually pushes a button. Six months ago I was having no luck but it appears as though there may be some help. Now if the banks would stop raising interest rates when they are receiving money at a low cost, that would be nice.
Thank you for this page.
And thank you ebc for reporting your own experience. Clearly regulations on the selling and buying of loans need rigorous examination. A borrower should never be left in a position of not being able to speak to the entity that holds their "paper"....and a good chunk of their real estate. It's like having a business partner who cashes his paycheck but never shows up to work...AND holds the power to pull the plug on you!
Hi, an Australian just published this hub http://hubpages.com/hub/Foreclosures--Sub-Prime-Lo
its a really good description of the differences between the markets in Australia (and NZ we are pretty similar) and the US!
And why the US market is fundamentally flawed ...
Jenny
Just happened by, started reading a couldn't stop. This is shocking. Thanks, Mary, for this eye-opening view from the front lines. I'm horrified--and I think your theory is probably right on the money(to coin a phrase:-)--keep writing. I'll keep reading.
Thanks again robie2. Have you checked out my Mortgage Horror Story hub? One mortgage company happened to misplace $18K and change which the borrower had sent them to catch up arrears, and which the company received just AFTER they'd sold the mortgage to another company! The money went missing for nearly 2 months...and only intervention by the foreclosure trustee...also an overworked and understaffed area...."found" the $18K and straightened out the mess.
Great Hub!
From what I've read mortgage companies and banks are paying lip service to government appeals to help people work their way out of foreclosures, but in actuality they are not being halpful. Instead they are failing to credit payments they have received and piling on phony appraisal fees, lawyer's fees and in general acting like vultures waiting for an animal to die so that they can pick the bones. I watched Angelo Mozilo, former CEO of Countrywide, testifying before a House committee, and I've never seen a witness that equalled his appearance as a liar and a crook. One exception: Alberto Gonzalez.
Mr. Deeds....indeed! I'd love to see our next prez appoint an aggressive Atty Gen. Someone who will kick some corporate butt and let them see what it's like to have their backs against the wall, and no rescue in sight. 'Course it will be hard to get their money off them....out of the Grand Caymans. But maybe we can show them what a jail cell looks like from the inside, through the seasons....many seasons.
Unfortunately most Americans do not know, or understand the depth of the evil here, or the complexity of the crimes.
Amen!
The guys running this show should all be wearing orange jumpsuits!!!!!
"But then came the reality. Try as she might, she could not actually speak to her lender, never got through the maze of phone menus to talk to anyone who had a clue as to how to assist her. Negotiating with them is a moot point right now; she cannot even get someone with a pulse to discuss the matter with her. She was shuffled from department to department, put on hold for literally hours, was told information and documents she'd faxed or sent by certified mail had not been received. She was disconnected."
I work part-time as a CSR for a bank that currently has half a billion in subprine mortgages and helocs and has seen its stock price plummet 70% in the past two months. Currently the bank is looking for a buyer and the longer they look and don't get one the worse it gets. Anyway, I can validate what you are saying here--NO ONE seems to know how to handle many of the situations you describe, or they pretend not to know. I once spent over an hour with a lawyer in NY cussing at me while I went from dept to dept to supervisor to supervisor--all she needed was a bank rep at closing (NY state law required it) on a co-op with a heloc going bad, and we'd sold the heloc, no knew or cared to who, and no one knew what to do, no one. Finally I hung up on her. I know it was wrong, but by that time I was taking so much abuse from all sides, and was no nearer the solution, I was overwhelmed---plus my supervisor was leaning on me to "get rid of her." We are supposed to keep our calls under 120 seconds and we are timed.
I think it's criminal. Every day, sick as it is, I hope I show up and the bank is belly up. God, they deserve it so much the greedy bastards. What really angers me is we will probably never see justice done--heck, the Fed bailed out Bear Stearns!
pgrundy....for me the oddest part of all this is that I began to smell a rat more than a year ago. When I told my co-workers at a staff meeting that I thought it was all deliberate on the part of the lenders and wall street, like throwing hot potatoes around...I got silence and then denials. "Oh no, that's against the law." NO it's not entirely against the law....sleazy and unethical, misleading and oh so slick. AND long-term stupid.
And I am very sad for all the jobs being lost....all the office staff and off-shoot industries who just wanted a paycheck and maybe some bennies, a way to feed and shelter their families. A lot of people are hurting through no fault of thier own, and it is shameful. I can think of very few areas of employment that won't ultimately be hurt by all this. They say health care....but with so many jobless and having lost insurance...fewer folks will have the luxury of seeing a doctor when they need one. I can hear the dominoes clicking as they fall faster and faster.
This is terrible, I really feel for people caught in this mess... its all the banks doing but its ordinary people that are made to suffer...
It's a train wreck. I fear the whole thing will impact our societal future far after the financial aspects have settled. There will be a lot of wealthy landlords and property holders and a lot of people who will never again own a home....renters for the rest of their lives.
On the news the homeowners are getting blamed. Their laughing about people just not paying their bills. Not even checking into the fact that homeowners can not get passed the jerk that answers the phone at the mortgage company. Just talk to your bank or loan company they will help. Yeah Right.........
Mary, you make some really good points there. Over the past few years, in the UK housing has been falling back into the hands of private landlords, that is not a good thing IMO.
Worse still, a few years back the government sold off a lot of the social housing it owned to the occupiers. The occupiers got the houses at a heavily discounted rate (subsidised by the tax payer of course).
Then these new owners started to move onward and upward (a good thing) and needed to sell their old houses, only, quite often they were in poor run down areas and selling them was sometimes difficult.
So, who stepped in.. landlords. Where I live, within 3 years I saw the local government renting houses back from private landlords that it had GIVEN AWAY 3 years earlier, and, within another 3 years had PAID MORE OUT IN RENT than it had originally sold them for.
Now in the UK we have a housing crisis and there is no social housing available.
It makes me really mad, I dont know why politicians cannot seem to engage their brain and predict the obvious consequences of stupid policies...
"the jerk that answers the phone at the mortgage company. Just talk to your bank or loan company they will help. Yeah Right........."
Hey I'M that jerk! I'm not really a jerk at all, I'm a nice person, but 1) there are NO JOBS in Michigan so I am stuck working part-time in hell for the health insurance, 2) we are empowered to do NOTHING, zero, zip. If we are on the phone more than two minutes we have someone hovering over us to wrap it up. We can't make arrangements, we can't refund fees, we can't do diddly squat. We are there to take the abuse so the CEO and corporate suits don't have to--its that simple. If someone is persistant enough to survive our 15 option phone menu, that person gets to cuss at me. If I could quit this hellish job I would. In a heartbeat. I make plenty of money writing, but without health insurance I risk losing everything if I get sick.
My daughter worked briefly as a mortgage broker about two years ago. She kept coming to me with horrendous stories of illegal activity. She quit after two months, she couldn't take it. So it isn't like no one saw this comingl LOTS of people saw it. Mary saw it coming, lots of people saw it. But our government rewards corporations for acting like this. Meanwhile, they try to turn the little people at the bottom against each other to take the heat off themselves.Its criminal.We are in for tough times I think---you ain't seen nothin' yet.
Very interesting comment from the inside! Michigan is indeed in sad shape. And I have a hard time seeing light at the end of the tunnel.
I thank all of you so much for your feedback. And PGrundy....my heart goes out to you. Try to leave it at the office if you can...but I suspect, since you care enough to comment here, that it is as difficult for you as it is for me to leave it behind. So much suffering, coupled with so much endless talk and no action from our government....hard to bear. No one blames you fro trying to feed your family, so to speak. I know a lot of Realtors who were in a place to see the malfeasance by lenders.....and bought property with horrible loans and by loan fraud...telling the lender who knew better and went along with it anyway...that they were owner occupants in the homes. Got a better interest rate then...getting thoroughly reamed now.
I think that anyone who is trying to talk to their lender and getting the menu shuffle, should gather their documents , and also keep track of all dates and converstions (or attempts!), and file a formal complaint with their state's division of commerce...whichever entity oversees lenders. ALSO write letters to your representatives, and elected officials at all levels, local, state, federal. Send them certified mail return receipt. Email and phone. Keep a record of everything! Scream loud and long.
As my colleagues have pointed out to me...all my writing and ranting isn't paying my bills. But I just can't NOT keep hammering this issue.
"...But I just can't NOT keep hammering this issue."
Amen. Otherwise, why even live in America?
Hi , faaa w , :D
monitor 4 years ago
But is it deliberate on the part of the lenders? Horrifying thought. These words just jump off the page at me.
Thanks for your efforts here, a real eye opener. Please keep writing. I am one of your fans and will be waiting for your next article.
Mon.