Frustrated borrowers seeking mortgage help
Realty Q&A is a weekly column in which Lew Sichelman, a nationally syndicated columnist who has been covering the housing market for more than 40 years, responds to readers' questions on real estate.
WASHINGTON (MarketWatch)--A column in January featuring a few horror stories from readers who have tried and tried again to work with their lenders in an effort to either save their homes, or at the very least gracefully walk away, generated more of the same from frustrated borrowers wanting to vent.
Here are several more terrifying tales from the dark side, plus one that has a different point of view:
Dear Lew: Today's letters on the mismanagement of mortgage restructuring compelled me to write. I lost my job four years ago, and while I have done freelance consulting work, have not found a full-time job yet. My credit score is 800, I have never been late on a payment in eight years of owning my house. I have depleted my savings and am living on a scant retirement account that soon will be gone. After endless paperwork and telephone calls, I was told I did not qualify for any assistance, because I am not working. Duh! If I had a job, I would not need the restructuring assistance.
What I find so dismaying is that a clerk could have told me that prior to my going through the long process of gathering and copying documents, sending them to the bank, following up to make sure they arrived (six calls later, I finally got someone to respond that the paperwork had arrived), and then another five weeks of elapsed time before they decided not to help me.
What passes for mortgage re-modification is a travesty of an already broken financial system. --M.S.
Drawn-out foreclosure process
Lew: And lenders are just plain dumb to boot. In May 2010, by brother died. He had a first and a second mortgage with a single lender. I was assigned to administer the estate. There was no one in the family who wanted/needed the house. At the time, it was not quite underwater, but there was no money to pay the mortgage. I tried to contact the lender to turn over the property, giving the company the deed to the property in lieu of an eventual foreclosure because there was no money to keep paying the mortgages.
First, it took about 30 phone calls over about 45 days to find someone who could do anything.
Then, I was told the house had to be on the market for 90 days before they could do a deed in lieu. So I listed it and paid for all the upkeep, utilities and homeowner association fees. As we neared the 90-day point, I contacted them and was told since one of the loans was owned by another lending institution, a deed in lieu could not be done. I told them that was fine, they could do what they wanted, but I was not paying another dime and notified everyone.
They moved to foreclosure. Around October, when the lender began catching flak for "robosigning" foreclosure documents without reading them or making sure they were accurate, the bank called to ask if I still wanted to do a deed in lieu. I agreed. But in January, the bank decided, contrary to the law in the state where the house is located, that signatures of all the heirs were needed. One of them was going through a separation and couldn't be bothered. So in March, the lender once again started foreclosure proceedings. Finally, in July, the bank foreclosed but notified me of the action.
In the end, they took a year longer than necessary, spent who knows what kind of money, went into foreclosure when they didn't need to--because why? I invested about 120 hours, numerous phone calls and many letters. I found that no one knew what anyone else was doing. I was given contradictory info. I even had one of their agents admit that the law firm the company was using had "made numerous mistakes" -- but they continued to use them.
For the record, I have bought and sold 16 houses. My wife and I own outright our current house, two rentals and a vacation home. I have a master's degree and I am a retired captain from the Navy. In other words, I'm no dummy. --G.B.
Launching a lawsuit
Lew: I just finished reading the article, "Readers vent gripes with mortgage lenders" (Realty Q&A, Jan. 20, 2012) and I can only add to the letter writers' agony. I am a Realtor in the Monterey, Calif. area and I could tell you a dozen stories off the top of my head about how the banks have treated some of my clients. I have been waiting 42 months to have my own home loan modified and was constantly told a decision was only a few weeks away.
I sent in my paperwork (profit and loss, wage statements, tax returns, etc.) more than 20 times with my property shown on the foreclosure list. I finally found an attorney who did not want to charge me an arm and a leg and we have launched a lawsuit. She informed me this is a pervasive technique used by the banks to wear people down and bring them to a point of mental and emotional exhaustion where they give up and let the house be foreclosed on. This country and our government is now owned lock, stock and barrel by the large financial corporations. Something has to give. --E.S.
Mountains of documentation
Dear Lew: The readers who are experiencing modification pain are absolutely correct: Banking is so far from reality that it essentially amounts to utter servitude. I am employed as a manager for a health-care institution and earn $70,000 per year, plus incentives. I have been attempting to obtain an $80,000 mortgage for two months with no success, while the bank makes repeated requests to explain every penny's history for the previous five years.
The time spent locating the records, scanning, calling, faxing, re-faxing, explaining, writing explanations and pursuing the status of each issue has been such a drain. These people actually expect that a person will drop everything to answer the most banal question or locate and transmit the most obscure and least pertinent record possible.
At this point, the investment of time and money are better walked away from rather than continuing with this absurd experience. The bilious animosity of everyone for banks is well-deserved. Personally, I have decided to wait to buy a home until I have the cash to do so. --B.J.
Lenders make money out of 'thin air'
Lew: How ridiculous to echo the plight of homeowners pushed out of "their" homes. These people didn't own homes, the lenders owned them. So let the lenders have them back and all the risks associated with their marked-down value. These people need to have some sense knocked into them, but it isn't going to come from your desk.
Lenders only have 10% of the mortgage amount at risk; the remaining 90% is pure profit for the lender. Via fractional banking, lenders are allowed to make money out of thin air. On a $300,000 home loan at 4%, the lender is made whole in 30 months, so the remaining 27.5 years of mortgage payments is pure profit to the lender.
These "homeowners" will end up paying 2.5 times more than the purchase price for their home over the life of the mortgage. They need to get out of these usurious loans which will impoverish them. And yet they come begging for more. It's insanity. --B.S., San Dimas, Calif.
Nationally syndicated columnist Lew Sichelman has been covering the housing market for more than 40 years. MarketWatch readers are encouraged to send their real estate questions to him at email@example.com. Answers will be presented in this column every Friday. However, because of the volume of email he receives, he cannot answer every reader's query.