"What Do I Do When My Lender Isn't Playing Fair With Loan Modification?"

Yesterday, the New York Times wrote about a judge in Arizona who forced Wells Fargo to explain why it keeps stalling and being uncooperative with a customer who has been trying to get a loan modification request approved. Sadly, in the past week we’ve gotten two separate emails from homeowners who are also having trouble with getting banks to approve their requests for the government-sponsored loan modifications. “Who can we contact to complain?” asks one frustrated customer.

First, here’s a story of Wells Fargo delaying the verdict on a loan modification approval until the last minute, then offering the homeowner an $11,000 loan, with interest, instead.

Our loan is currently held by Wells Fargo. When entering the loan we were perfectly capable of making payments but, like many Americans, when the economy was damaged by questionable financial practices we found that the income from my wife’s business lowered and maintaining payments became a struggle (I am employed by the government and therefore my income is static – fortunately). We are in a situation where we are making the decision to pay bills or buy food for ourselves and our child.

It was with a great deal of excitement that we entered into the loan modification process provided by the makinghomeaffordable.gov program. From our viewpoint we meet all the criteria for this relief program. Regrettably that excitement has turned into anger, disappointment, and despair. The relief program as implemented by Wells Fargo has been a parade of what is in my opinion incompetence and miscommunication. We never speak to the same person twice. Paperwork was lost by Wells Fargo twice, forcing us to resubmit the paperwork overnight via fed-ex at our expense. We would wait weeks to hear any news, then finally call to ask what the status is only to be told that they need us to fax additional information – this after being assured that Wells Fargo had all the information that they needed. One wonders why we had to initiate this communication, and why Wells Fargo did not call us to ask for this information. When we asked the Wells Fargo rep. if we could speak to the person handling our case we are told “no one handles your case, we all look at it”. When we ask to speak to a supervisor we find that none apparently exist. We come to the end of this process to be told that we do not qualify, but that they would like to offer us a “loan” for $11,000 and we are asked verbally (not in writing) not to pay or mortgage for three months to pay down other debt. I use quotes because the documents we received clearly indicate that this is a loan but there are none of the usual trappings of a loan like term, APR, etc – so we are not sure what we are looking at. After the three months, the money is to be repaid in accordance to the terms set forth in our agreement, but no terms have been set forth and none exist on the “contract” for the “loan” they sent us. They are clear that there are to be no grace periods on this additional loan and if we miss a payment there will be repercussions. Taking a family that is in financial distress from a loan soured by the economic situation…and offering them a loan seems like bad policy at best, profiteering at worst. In any event, it seems an unwise solution to our problem.

In closing I have three questions for you and those wise ones in your organization:

Who can we appeal this decision to?
Who can we contact to complain?
Who can we write to that has oversight of this specific branch of Wells Fargo?

TARP Oversight? Attorney General of our state? makehomeaffordable.gov?

Because I would like to keep my home.

This second story involves CitiMortgage, which approved a loan modification, but then 3 months later increased the monthly mortgage payment so that it’s actually $90 higher than the borrower’s original payment.

I am a mortgage holder of a CitiMortgage loan. My current 1st mortgage with Citi seemed to fit every criteria for the government home loan modification. It was a long process but I finally was able to get set me up with my 3 month trial payments for the government loan modification in June.

Effective July 1 my mortgage payment was lowered from $1727 to $1503 a month to reach the 31% of my gross family income. In early July we sent Citi all of our financial information needed to verify we were eligible for the modification. Just today we received a letter in the mail raising our mortgage from the initial $1727 to $1817, an increase of $90 from my initial mortgage payment!!! The $90 a month is to cover what they said was a low escrow account, for an increase to our homeowners insurance. I understand the increase for our insurance, but there was no explanation as to why we did not receive the loan modification. If we qualified for the modification there actually shouldn’t have even been an increase with the higher homeowners because taxes and insurance are included in the reduction percentage to 31%.

I spoke with a person in the loan modification division and they said that because we just filed bankruptcy (another story) that they don’t know if they can process our modification. I know in all the literature I’ve read about the modification I haven’t seen anything about bankruptcy making you ineligible, I would think that people going through a hard financial time should be more in need to be eligible. What concerns me is that one of the largest mortgage companies has no idea if I am eligible for this modification. Who can I contact, who can I reach out to? Lowering to $1500 made my house affordable again to us but if our mortgage does go back up to $1800 we’re surely headed to foreclosure. $325 is a big difference for a my family with 3 kids under the age of 5.

I am hoping beyond hope you could help me get this story out and get some attention to find me help.

We contacted one of the loan counselors at Making Home Affordable (the official government website for the program) and asked what these borrowers should do. The counselor told us that they hear complaints like these all the time from frustrated borrowers, and that if you’re having problems getting your bank to cooperate you should call one of their counselors at 888-995-HOPE. She says you can authorize them to act on your behalf and talk to the bank for you. It may not solve the problem, but it would at least give you a chance to have someone with more expertise on the program talk to the bank’s loan modification people.

Note that if when you call you’re given an option to speak to someone in your area or to a counselor, choose “counselor” to reach someone immediately.

Find a Counselor [Making Home Affordable]
“Judges’ Frustration Grows With Mortgage Servicers” [New York Times]
(Photo: 111 Emergency)