Homeowner Says Bank Told Him To Skip Payments, Then Foreclosed

When MC lost his second job he had trouble affording his $3,000 mortgage payment. He called his mortgage holder, Flag Star Bank, asking for a break, but the bank told him there was nothing it could do for him unless he skipped payments and submitted a loan modification package.

Can you tell where this is going? MC went along with the scheme, then discovered the bank was foreclosing on him. He writes:

Back in November of last year I called my bank (Flag Star Bank) on several occasions and asked them to help me due to I was paying 3000.00 per month in mortgage and I couldn’t afford to continue that payment after loosing my second job. I was told on two separate calls that there was nothing they could due until I was late or my loan was delinquent. I told them that I didn’t want to have late payments reported to my credit and they informed me that there were several programs to help and all I had to do is miss some payments.

I proceeded to miss some payments (3 months) and I then contacted them and was told to submit a Loan Modification package. I submitted the package in June and was not called or contacted for for about 45 days. Then I got a letter asking for more documents. Pay check stubs for two months and bank statements for two months. I sent the new docs and was told that the process is in order and I will hear something in 7 to 10 days. I didn’t hear for a week or so and then got a letter in the mail saying my property had a sell date of Sept 15. I then got really scared and contact them several times asking why this was happening and what I needed to do. I spoke to several people over there and each of them told me the sell date would be postpone for 30 days while they reviewed the loan modification package. I confirmed with a second and third call and was told the same thing. I was even told the lady that I was talking to was sending an email to the attorney office right after the call telling them to postpone the sell date. After all this my property was sold on Sept 15th back to the bank. My family and I are now homeless and out on the street. I have been told since then that the case is being referred to the attorney office for eviction. I did everything they ask and I was treated like nothing. I have no house, I have to move and my family has to say goodbye to our house.

We are now looking for rentals but with the late mortgage payments my credit is screwed and things are not looking good. I paid 3024.00 on a mortgage for 2 years that I will never see again. I feel like an idiot but hopefully they will get what they got coming.

To compound a bad situation, now MC is having trouble finding a place that will rent to him since his credit is besmurged by the foreclosure. Granted, MC should have realized a foreclosure was possible if he read his mortgage contract, but it was within reason to trust the bank’s advice in these times, which are rife with skipped payments and easy loan modifications. Any advice for MC?

(Photo: austrini)
(Thanks, Raj!)

Comments

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  1. FatLynn says:

    Contact your congresscritter.

  2. katstermonster says:

    This loan modification stuff is just bad news. I don’t think I’ve heard of one story with a positive ending.

    • Karita says:

      @katstermonster: Oh they are out there, but they take a LOT of work. And you really have to keep on top of things. Nothing is set up to be borrower-friendly.

      In CT, the one firm that files the most foreclosures is relentless, and will march ahead no matter how many times you tell them the bank has modification or short sale paperwork and the homeowner has been told to sit tight. They don’t return calls, respond to requests for information, or do anything at all, really, besides file one motion after another.

      Most banks are MONTHS behind, and I really don’t see how someone without an attorney would be able to delay a foreclosure while the bank tries to catch up. It is hard even when you know what you are doing.

    • tripnman says:

      @katstermonster: Our modification is now 4 years and 10 months away from an “ending” but so far all is good. We were contacted directly by the holder of the note and offered a rate reduction for a term of 60 months. They said they were offering this program to their “tier one” clients that were in good standing, acknowledging that the economy is faltering and wanting to keep their good clients in good standing. Yada yada yada.

      Yes, I paid a fee up front. Thirty days later our rate had dropped by 3%, our monthly payments by $500. This will save $30,000 over the length of the loan. Crazier still – the servicer is Bank of America and even they didn’t screw anything up on this one.

    • jimv2000 says:

      @katstermonster: My friend was having difficulty paying his mortgage after starting up a coffee shop. He rented the house out and moved into an apartment in an attempt to pay the mortgage. Luckily, he was able to get the loan modified and it lowered his payments by $800, so now the house is out of danger and he’s getting a few hundred extra each month…though he’s going to keep renting until his wife finishes her nursing program.

  3. Fabuloso says:

    Should have gotten an attorney. Where has this guy been living? Under a rock?

    • cabjf says:

      @BB_User: If he was having money troubles, paying a lawyer might not have been possible.

      • cmac says:

        @cabjf: He’s been able to pay a $3000/month mortgage payment for 2 years. Despite loosing his job, most attorneys won’t charge more than a few thousand to handle the case. It unlikely that he could not afford the attorney fees. The initial consultation is usually free and they will often do payment plans. I have seen people DIY too often in Florida with less than optimum results. GET AN ATTORNEY. At a minimum, it puts you in the “I’m serious” category and out of the DIY cattle-call trap of loan modification that so many fall into. Worse case, an attorney can delay the process for a very long time while you are not making payments, allowing you to build up a healthy deposit on a rental, which can often overcome any credit issues in renting a place if the foreclosure happens.

        • mazzic1083 says:

          @cmac: I would like to point out that although it’s usually safe to assume that if someone is paying $3000 a month for a mortgage they SHOULD be rich enough to afford an attorney this is not always the case.

          Please see specifically recent homeowners over the past few years being suckered into mortgages they can’t afford by greedy banks.

        • Oranges w/ Cheese says:

          @cmac: Also see he lost his *SECOND* job and only then had issues.

          Though, when one has to take a second job to only afford one’s house I think there is something wrong.

    • Difdi says:

      @BB_User: Aside from Consumerist readers…yeah, most people do figuratively speaking, live under rocks. They don’t research what might go wrong until after it does, then panic.

    • thisistobehelpful says:

      @BB_User: I kind of agree but at the same time he called the lender, a supposedly legit one at that, and they told him to do this. I’m just thinking they did it because modifying the loan was a pain and probably cost them more in processing than it would just to foreclose on him.

  4. That's Consumer007 to you says:

    This is good evidence we need a federal law that landlords CANNOT consider nor turn people down because of a foreclosure. PERIOD.

    People have to be able to mother fricking live somewhere for PISS sake.

    I can only imagine what the OP faces next – the courts taking away the kids for being an unfit parent because he is homeless?

    I would sue and harass the bank for the rest of my life, and start moving into their lobby, with kids, furniture, etc. Make a fricking scene every day in front of a lot of other customers until they make it right.

    Get a big banner viewable from the street saying “look at our homeless family thank you Flag Star bank” and all sit together in their parking lot after they kick you out of the lobby.

    • That's Consumer007 to you says:

      @Areyouagoodlittleconsumer: CANNOT…consider the foreclosure as a reason to turn them down, that is…

    • CityGuySailing says:

      @Areyouagoodlittleconsumer: I’m sorry – landlords need tools to stop themselves from offering a lease to a ‘deadbeat’ tenant. Do any of you know how hard it is to evict a deadbeat tenant? No one will give the landlords a break from THEIR mounting bills while trying to evict a tenant who won’t or can not pay their monthly fees.

      • K-Bo says:

        @CityGuySailing: Exactly, tell landlords they can’t turn down people with foreclosures, a lot of them will get out of the business and find a new way to make money. That won’t help these people get a place, because the law of supply and demand will send rent sky high.

        • the Persistent Sound of Sensationalism says:

          @K-Bo: I call BS. I worked for a property management company for a time, and have witnessed the practices of other property managers. They have no problem renting to people who never had a house and who end up being horrible tenants. I’ve seen good neighborhoods go south — in fact, working for law enforcement, geocoding crime locations, it’s new developments, NEW apartment complexes and neighborhoods that have the highest crime rates.

          Property managers aren’t going broke renting to people who used to own homes. I would argue that they are much lower risk than others, having lost everything. Rent increases $10 – $50 per year on most rentals in my area. You can’t tell me there isn’t a HUGE profit margin on rental properties.

          • K-Bo says:

            @Persistence-Quick, post while the boss isn’t looking!: Some people are better risks when they have lost everything. I’ve seen others who figure out that you can live rent free for a few months at a time, who use that to game the system by doing it over and over. Just another case of the few ruining it for the many.

            As for huge profit margins, in the college towns where I have lived where people stay 6-9 months and leave it trashed and in need of $100′s more in work than the deposit will cover, I doubt it. Maybe in nicer areas where rents are $1000s a month, but not everywhere.

            And I know many rental tenants are horrible despite there being nothing in their history to indicate they will be, but why does that mean they should ignore someone’s payment history?

            • That's Consumer007 to you says:

              @K-Bo: Any decent human being who happens to also be a landlord will HELLO look at the news and realize it’s a bad economy – people are losing everything everywhere and not be credit nazis. If that means charging extra up front, no problem, just don’t lock them onto the streets. The OLD rules of screw the consumer 24/7 credit checking don’t apply any more – they have GOT to GO.

              • Covertghost says:

                @Areyouagoodlittleconsumer: Around here it’s like that.

                It really isn’t hard to get into a place with shitty credit, etc.

                I do and so does my roommate, and we easily got into a nice 3bdrm by paying them an extra 1.5 months for the security deposit.

          • harvey_birdman says:

            @Persistence: There isn’t a huge profit margin on rental properties. Remember, the landlords pay the mortgage, taxes, fees, and often many of the utilities. And if the tenant skips out and doesn’t pay the last three months rent or the last 6 months water bill, who do you think eats that cost?

        • bohemian says:

          @K-Bo: Everyone has to live somewhere. So if the banks own all the houses and the landlords dump their rentals or refuse to rent them to a big percentage of people then what? There are only so many fleabag motels people can live in. At some point this situation spirals out of control and we have people living on the streets while tons of homes sit empty.

          • K-Bo says:

            @bohemian: Exactly my point. That’s what could happen if we FORCE landlords to rent to people that they consider bad risks.

            • jimv2000 says:

              @K-Bo: “That’s what could happen if we FORCE landlords to rent to people that they consider bad risks.”

              No one ever said that they’d be forced to rent to people who are bad risks. But I think it’s reasonable to force them to ignore foreclosures on a credit report. Unless the guy in this story is trying to rent a house for $3000 a month, he’s not what I would call a “bad risk”.

          • That's Consumer007 to you says:

            @bohemian: THANK YOU! BINGO!

            To all the nasty HATERS that wrote in to attack me, you all need to wake the fuck up. Insurance companies are trying hard to make sure none of us can be healthy and die quickly. As this case PROVES, banks are LYING us right out of our homes.

            The reason I suggested legislation (not unlike the legislation Congress is about to slap on insurance companies) that foreclosures not be considerable when renting is HELLO most of the foreclosures ARE NOT deadbeats, they are banks committing fraud, or other corps laying everyone off so every man woman and child in India can sit in a cubicle.

            As Bohemian and Karita correctly pointed out, just because a bank screws you over for thousands does NOT make you a deadbeat. You need a fair chance to start over.

            The reason I posted the suggestions about the rest of it is the braindead drones screwing people out of their mortgages every day, day in, day out, need to be confronted, and woken up and made to hate their jobs until they leave the business in droves, and/or until legislation changes things.

            To all of you who were so nasty to me THERE ARE KIDS WHO ARE HOMELESS NOW thanks to this bank. Are you happy? What part of that is okay with you?

            In case you all can’t READ, the bank TOLD HIM repeatedly to skip the payments. If you are a consumer and you do as you are told, you should NOT be considered a deadbeat, you are a victim of fraud.

            The bank shouldn’t be allowed to collect on or at the house, therefore, as theives they should have a nasty horrible time confiscating that that doesn’t rightly belong to them.

            I am seeing more and more on this site that honest every day consumers are torn down by other consumers and it absolutely sickens me. Can’t you people who love corporations bending you over, don’t want any of us to have prosperity, health or futures (ever) instead go watch Fox news and hate people on the forums there?

            • the Persistent Sound of Sensationalism says:

              @Areyouagoodlittleconsumer: Your statement reminds me of my father view. (He would argue against your point and he drives me nuts that way.) I can’t understand his defense of corporations and how he’s afraid of the rich paying higher taxes, like we ever had any disposable income, let alone considered ourselves rich.

              Where in the world did people get the idea that rich and powerful corporations were looking out for anyone but themselves???

              When a corporation is treated as a person who makes millions or billions in profit, then manages to NOT pay taxes by use of loopholes that THEY LOBBIED FOR, why does anyone think that they’re any more than an annoying piece of human excrement to the corporation. Does my $100 savings account make my bank any money? Not really. So I don’t really expect them to have my back unless I have the potential to make them a significant amount of cash and neither should any of you. They’ll cut their losses and toss you under the next bus coming down the road.

              Ironically, the banks now own so many foreclosed houses that they don’t know what to do with them, and in at least one case have been sued when a child drowned in a pool on such a property.

              It’s so messed up I don’t think THEY even know what their game plan is anymore.

        • TechnoDestructo says:

          @K-Bo:

          The law of supply and demand would send the price of existing rental properties lower. Rent would not skyrocket unless renting populations did.

      • Karita says:

        @CityGuySailing: I would say that a majority of former homeowners are not deadbeats. There is a big difference between being tricked by a broker who sold you an option ARM, and just not bothering to pay your bills. I thought at this point in the financial crisis, with all the facts that have come out about mortgage fraud, unemployment, and drastic credit card interest rate increases, people would stop throwing around blame and nastiness.

        • K-Bo says:

          @Karita: They still shouldn’t be required to rent to them. If I were a landlord, I’d offer to allow them to send me documentation proving that it was something like this where the bank didn’t hold up to their end, and take it into consideration, but everything else would have to be perfect.

          Oh yeah, unless you don’t read what you sign, they can’t lie to you ( or at least can’t get you to agree to something that isn’t what they told you you were agreeing to )

        • CityGuySailing says:

          @Karita: How, pray tell, can a landlord tell the difference between an honest renter, and a dishonest one? Is there a magic touchstone? You seem to forget that the overwhelming majority of landlords have bills to pay, too.

          • Karita says:

            @CityGuySailing: Landlords can pull credit reports and see payment histories. They can verify employment. They can check criminal records. They can check eviction filings. It’s really quite easy.

            • K-Bo says:

              @Karita: He was saying if you make laws saying they can’t not rent to people because of this, how will they protect themselves.

              • Karita says:

                @K-Bo: Right, I get it. And I just pointed out a number of ways a landlord can protect themselves. It’s easy.

                Landlords are definitely in it to make money, but the ones who know what they are doing understand there will always be people that don’t pay their rent. Going through a foreclosure doesn’t mean a person is irresponsible. Yes, there are irresponsible people out there, but a single foreclosure isn’t a good predictor. You may be willing to sleep in the bed you made, but many people are now sleeping in a bed that was made for them by someone else.

                Also, my suggestion that protections be based on current housing protections was off the cuff, but I suggest you read up a bit on civil rights law so you get an understanding of discrimination and protected classes. It doesn’t work the way you explained it.

        • K-Bo says:

          @Karita: Also, there is a difference between blaming someone for something on their credit report, and just trying to protect your livelyhood/family. Wether something is their fault or not, my family and the ability to support them will always come first in my head. That means if my income depends on them paying on time, I pay attention to EVERYTHING on their credit report. Why? Because if I don’t I risk not being able to pay my mortgage.

      • bohemian says:

        @CityGuySailing: The problem is that foreclosures are rampant even on people who were trying to do the right thing. There are plenty of stories of people who made their payments but had something bad happen to them or had their ARM adjust and double the loan payments. Too many people ended up over their heads or duped into taking out a horrible loan product. This doesn’t mean they won’t pay their rent.

        • CityGuySailing says:

          @bohemian: And my point STILL is, how does a landlord tell an earnest tenant from someone who won’t or can’t pay monthly rent? All that is available are reports from the credit agencies. Seriously, landlords who NEED the rent money can’t afford to gamble with THEIR families, and shouldn’t be forced to.

          • That's Consumer007 to you says:

            @CityGuySailing: And I would suggest to you sir, that this isn’t the Landlordist blog. This is the consumerist blog, or maybe you were unclear on that.

            There are well known formulas including first and last months rent, deposit and insurance to cover your posted “concerns”, but if you were a landlord, you’d know that.

    • K-Bo says:

      @Areyouagoodlittleconsumer: Never going to happen, you can’t force a landlord to take on that risk unless the law also says the gov will make it right if that person doesn’t pay their rent. Most people in this situation end up moving in with family or low class motels.

    • tbax929 says:

      @Areyouagoodlittleconsumer:
      If there were such a law, I wouldn’t want to live in this country. You can’t force me to rent to someone who has a history of not paying their bills, regardless of the reason. Landlords usually are paying a mortgage, too.

    • Karita says:

      @Areyouagoodlittleconsumer: Here’s a suggestion. Base it on anti-discrimination laws that already exist to protect people with disabilities, minorities etc. I believe the recession has had a greater impact on already-protected classes. Why can’t this type of protection be added to current housing laws?

      There is a HUGE FUCKING DIFFERENCE between someone who lost their home due to a bad loan, or a job loss, or a medical emergency and someone who just opens credit cards and then decides not to pay. @K-Bo Are you saying that millions of people should be stuck on couches or nasty motels for seven years, until their misfortune drops off their credit report? I represent lawyers, doctors, accountants, furniture salesmen, scientists, utility workers and customer service agents in their foreclosures. Every one of them has a set of circumstances that label them as anything but deadbeats. Not one of them deserves a complete lack of compassion or understanding. I don’t have one client who isn’t working full time and earning decent money.

      Landlords aren’t going to get out of the business. Maybe the ones who bought a two-family home with dreams of huge profits, but there is a lot of money in being a landlord. Why do you think Section 8 project owners are so wealthy? You can repeat snippets you’ve heard on the news, or read on the internet, but actual research and understanding would be a lot more useful.

      God forbid you never lose your job, go through a divorce or get sick.

      • K-Bo says:

        @Karita: I’m saying that they shouldn’t be allowed to drag others down with them, and if that means one day I live in that situation, so be it, I made my bed, I’ll sleep in it. I don’t lack compassion for them, I just have compassion for the people trying to make a living by being landlords, and more than that, I understand they do it to make money, and if it gets to where they can’t because they HAVE to take bad risks, they will get out, leaving no rental places to be rented out, therefor leaving the people you are worried about in the same bad position. Also, if you forgive something like this for someone because they are a protected class, then don’t forgive it for the non protected class, you are discriminating against the non- protected class. Should be just as illegal. It’s illegal to discriminate because of race or disabilities, even when the one you are discriminating against is not in the class that is traditionally discriminated against.

        • acasto says:

          @K-Bo: “I’m saying that they shouldn’t be allowed to drag others down with them, and if that means one day I live in that situation, so be it, I made my bed, I’ll sleep in it.”

          Sounds exactly like something a young healthy person would say. However, being a young healthy person myself and realizing I have the power to “make my bed” through a path of responsible or irresponsible choices, I am not foolish enough to think I have a choice when it comes to something like cancer or job loss. When so many bankruptcies in this country are a result of things outside of anyone’s control, I am inclined to believe those who flaunt the “I made my bed, I’ll sleep in it” attitude are currently either in a fortunate life situation or very naive.

        • jimv2000 says:

          @K-Bo: “I don’t lack compassion for them”

          Actually, you do.

    • srh says:

      @Areyouagoodlittleconsumer:

      I suspect you don’t know any landlords who have gotten stuck with a deadbeat tenant. That they aren’t legally allowed to evict.

      I know people who have. One of the tenants eventually left after doing about $10K worth of damage to the house.

      Landlords are people just like you, or your parents, or your kids. They have bills to pay and mouths to feed.

    • craptastico says:

      @Areyouagoodlittleconsumer: and i guess the landlord should just suck it up if the deadbeat doesnt pay him rent? you’d spend the rest of your life harassing a bank, instead of actually trying to better yourself? you’re the reason we shouldn’t have welfare and gov’t giveaways. some people use them to lift themselves up, most just take a handout and complain that the world isn’t doing for them. its not the banks fault this guy was greedy and lived beyond his means.

      • That's Consumer007 to you says:

        @craptastico: And you are several words I wouldn’t repeat in front of my mother.

        Let’s see – from the top, you think victims of bank fraud are deadbeats, that their kids deserve therefore be homeless, and because of a few people you don’t like and misunderstand to be entitled, you feel none of the handicapped, elderly or disabled should be helped either.

        So what part of corporations butt raping consumers do you find entertaining? I think you’re reading the wrong blog.

    • Hogan1 says:

      @Areyouagoodlittleconsumer:
      You obviously didn’t consider reality prior to posting.

      Believe it or not there exist habitually negligent “consumers” who rent apartments and homes with no intent on paying rent beyond the first month or so as the process to evict them can often allow them to stay put for a few months rent free. Being able to screen potential tenants is every landlords god given right. Your arguments are flawed and seem to discount any notable level of common sense.

      Apparently you also believe that consumers are always innocent but the cold hard fact is that most people got themselves into a foreclosure situation without assistance from the evil banks. Either they didn’t bother to read their mortage paperwork or investigate different loan types thouroughly or they simply spent beyond their means. For god’s sake I know people that had assesors artificially inflate home values so they could get another 50,000 on their mortgage so they could buy a truck and a boat. While the banks sure as hell utilized some shady business factors and lent to people that had no business buying homes at the value they did, the consumers ultimetly bear the brunt of the blame. Unfortunately most people can’t accept the truth and use every opportunity to blame anyone/anything else they can.

      Welcome to reality.

    • Hogan1 says:

      @Areyouagoodlittleconsumer:
      Yes, please continue encouraging illegal activity…

      I have sympathy for the OP as he made an effort to resolve the issue but youa re simply polluting the thread with your hate and utterly stupid “call to action” comments.

    • marsneedsrabbits says:

      @Areyouagoodlittleconsumer:

      This is good evidence we need a federal law that landlords CANNOT consider nor turn people down because of a foreclosure. PERIOD.

      So, landlords should be forced to rent to people who will not pay their rent?

      Until that happens, why don’t you start the ball rolling and volunteer to co-sign a lease for someone who has been foreclosed on?

      And let us know how that works out.

  5. Tim says:

    Yeah, this really sucks. He needed help, and the bank told him a route to take to get that help, then the help never came. Yes, his mortgage said they could foreclose. Yes, mortgage help is never guaranteed. This guy was trying to take the only option he had, and it turns out he didn’t even have that option.

    I hope someone can help him out.

    • bohemian says:

      @TCama: The problem is that banks are more of an enemy than a friend. They may have looked at his financial details and determined he would not be able to keep up with payments even with a modification. So they could have used that modification documentation as cause to actually foreclose on him instead.

      The real problem is the mortgage industry is not regulated enough. There needs to be a set of rules everyone must play by as far as late payments, rewriting loans, repayment plans and foreclosure. Right now banks can do whatever they want. The problem is that this has larger consequences than most other consumer transactions and the scope of this is causing a problem for the whole country.

  6. Costner says:

    I’m sorry, but I fail to have sympathy for someone who has a $3000 house payment based upon having a second job. Talk about budgeting yourself to every last dime.

    And then he thinks missing some house payments is a good idea because some phone rep at the bank said so? What form of logic is this exactly? If life has taught us anything is that we need statements in writing if we want to actually rely upon them. Somehow I doubt you will ever get a bank to send you a letter suggesting you miss a few payments.

    • tbax929 says:

      @Costner:
      Well, this is America. We’ve had this “American Dream” foisted upon us that in order to be a success in this country, you have to own a nice house. It’s bullshit.

    • LadySiren is murdering her kids with HFCS and processed cheese says:

      @Costner: Have you ever considered that maybe he had an ARM that reset on him and he took that second job just so he wouldn’t lose his home? Stories like the OP’s are bountiful in the news and on the Interweb at the moment.

      Since we don’t know how he ended up with a $3K monthly mortgage, a rush to judgment might not be warranted.

      • bohemian says:

        @LadySiren: It could have easily been one of those where the payment was $1500 and he was sold an ARM loan under the line that he could refinance it before it adjusted too high. I heard that line used as a sales tactic on ARM loans all the time. People never stop and think that they might not be able to refinance for some reason. Everyone always assumes their situation down the road will be better and reality says otherwise.

        • smiling1809 says:

          @bohemian: Well, then, they shouldn’t delude themselves. People need to be more realistic and live below their means. If things get better, great, save the money and buy up later when the boat comes in and you have the cash to buy up.

          I would never have taken an ARM. I was very young when buying my first home and knew to get fixed rate. I also spent far less than what we were approved for. It’s common sense.

      • Costner says:

        @LadySiren: If he had an ARM loan that reset… who is responsible for that exactly?

        He agreed to the terms knowing full well what it meant. Again, I fail to have any sympathy for people who make their own bed and then complain about the pillows.

        • LadySiren is murdering her kids with HFCS and processed cheese says:

          @Costner: I do see your point, however, it may not be all of the OP’s fault (playing devil’s advocate here).

          There are plenty of tales out there of borrowers, dazzled by the initial low interest rate without understanding that the loan rate would reset, signing for loans that they could never hope to afford once the reset occurred. More often than not, these same stories mention that the broker(s) didn’t explain the reset to the borrower. So who is at fault? I’d say both parties – the borrowers for living outside their means and the brokers for their shady make-a-buck-at-any-cost attitudes.

          I was just pointing out that while it’s not sound financial principle to sign for a loan that will require you to take a second job, the OP might’ve been bamboozled by a shady loan broker. We simply don’t know the circumstances, so blaming the OP based on the facts at hand is premature.

        • nsv says:

          @Costner: When I got my mortgage earlier this year, my mortgage guy told me a lot of crap I knew couldn’t possibly be true. I caught about half of the BS he told me by digging through stacks and stacks of legal documents printed in a six point font. I missed about half.

          And I used to be a Realtor.

        • smiling1809 says:

          @Costner: Oh, but he was fooled, he was a victim. Cry me a river.

      • snarkysnack says:

        @LadySiren: If he did sign a mortgage that happened to be an ARM, he agreed to those terms and no one put a gun to his head. Everyone knows that ARMs are riskier than fixed rate mortgages…they take that chance when they roll the dice.

    • CompyPaq says:

      @Costner: Yes lets blame the guy who has to now live on the streets because he lost his job and made an effort to make things right with the bank. And we’ll blame you when you lose your job and also have to live on the streets too.

      • Costner says:

        @CompyPaq: The difference is I don’t buy a house based upon me working two jobs in order to keep my head above water. I also bought a house based upon a huge down payment with a huge reserve fund in case something goes wrong.

        Thus, I could lose my one and only source of income and still be able to make my house payments for a year.

        Since when is personal responsibility a bad thing? Continuing to push this idea that everything is the fault of a bank or a mortgage company or the government will never help anyone.

        • rocketbear79 says:

          @Costner:
          I can easily afford to pay my mortgage as it stands right now, if I am living in my house.

          I bought my house on the down-slope of housing prices but not at the bottom. I made a nice downpayment by exercising about 1000 shares of stock in my company before Wall Street tanked. Due to the lending practices of the banks in my neighborhood and shady appraisals, despite a lot of self installed upgrades, my house is now worth ~65% of what my loan was for. My job, which I love, is (unexpectedly) moving 2500 miles across the country before the end of the year. I can’t afford both my mortgage and whatever living situation I need to get squared away out there.

          What about my situation? Am I to blame? Who is to blame? If my story got posted on here, how many of you would blame the OP?

          • Bob Lu says:

            @rocketbear79: In short, you bought something way overpriced and went in debt for it.

            While I do agree that whoever convinced you that the thing you bought really worth the price should take a large portion of responsibility, as long as they didn’t lie on any fact, ultimately you are responsible for the bad decision you made.

            • rocketbear79 says:

              @Bob Lu: Thanks for boiling down my issue into such nonsense, Mr. Helper.

              Bad decision? Nobody convinced me of anything. Lets run down the facts:
              I needed a house of the size that I bought.
              I bought one that I got a good deal on because of cosmetic issues that I knew I could fix.
              I got a reasonable mortgage that I could afford.
              I put money down.
              I didn’t cause 5 houses within 100 meters of mine to fall into forclosure causing my home to lose value.
              I had no expectation when buying the house that my job would move 2500 miles away.
              I don’t own a crystal ball.

              What part of that is a bad decision on my part? I’m not looking for sympathy in any way, I’m just NOT a person who should be shouldering any blame for the current situation.

              It’s commenters like you that pass judgment without enough life experience or reasoning skills who should be banned from this site.

              • smiling1809 says:

                @rocketbear79: I think what is important to think about is that one person’s needs seem way more like wants to others. My aunt and uncle raised 4 kids in a tiny 3 bedroom house that was 1000 square feet and they did just fine. We manage well with a family of 3 in 1000 square feet. “Needs” can be open to interpretation.

                I am sorry about your house though, that stinks. Sounds like you made a responsible choice and are a victim of a bad housing market overall. Can you find a new job where you live or rent your house out???

                • rocketbear79 says:

                  @smiling1809:
                  I’ve made that needs/wants arguments many times to people, you get a heart click for that. Need was too strong of a word earlier. More like want + value added.
                  Nothing locally without taking a huge salary hit nor with the job security of sticking with my current employer. My job is pretty specialized and I’m getting good visibility in my company up to the CEO level which bodes well for my career.

                  Renting was a consideration until I priced out the going rates for rentals here plus the costs of a rental management company (its near college and therefore renters are transient and would be too difficult to manage from 2500 miles away) its just too little to offset the mortgage. Plus, based on my calculations it would be 8-9 years before I could get back to the break even stage based on a conservative assumption of increasing home prices. That could be another 2-3 major moves if this new “moving people like chess pieces” aspect of my chosen profession keeps up.

                  Had I any inkling that the job would have turned out like this (which I don’t really mind) I would not have bought the house and we wouldn’t be having this conversation. But even if I had to move every three years I should have been able to break even on the house based on the same conservative assumptions of value trends (increase in value similar to inflation).

          • Costner says:

            @rocketbear79: There are alternatives although without knowing your specifics I’m not sure I can really be too detailed.

            One option is to simply rent your current home until housing values (and the market) recover – and then sell it. Or maybe you can find a job locally instaed of moving – the job market isn’t bad everywhere or in every industry. Maybe you can sell some more investments or take a loan against your retirement in order to keep making payments until you can sell. They might not all be good options, but there are almost always options.

            However if you started missing payments on your existing house and it was forclosed upon… would you blame your bank? That is the difference here – if you accept responsiblity for your situation (and based upon your post it would appear you do) and if you don’t try to shift the blame to the bank or pretend it is their fault that you can’t make the payments, I doubt anyone would be pulling the personal responsibility card on you.

            That being said, if you follow the advice of someone like Dave Ramsey, you would have an emergency fund to make your house payments for at least six months to a year as well as your mortgage being no more than 15 years max. In that case you might be able to refinance the balance to a 30 year which in turn could lower your payment significantly until you can sell the place. Again… maybe not a good option, but an option.

            • rocketbear79 says:

              @Costner: It is my responsibility to make my payments, agreed. I also agree that it is not the banks responsibility if I miss them.

              But as for blame, the banks in their greed and poor lending choices took the best and historically most used option for people like me off the table, and that is to just sell the house normally (not a short) and either break even or possibly only lose out on commissions. That is the basis of my argument, that through no action (i.e. fault) of my own, my house is unsellable by normal means.

              I would have been perfectly happy even if it meant losing the down-payment to sell the house for what I paid for it + my upgrades (which were done by me for the sole purpose of increasing the home’s worth to offset selling commissions.)

        • smiling1809 says:

          @Costner: But if you save up a down payment and a reserve fund, you have to WAIT. You can’t have it right this minute. You’ll have to live in an apartment or something horrific like that. You can’t imagine the horror of delayed gratification. People should have the right to get what they want, when they want, whether or not they can afford it.

      • smiling1809 says:

        @CompyPaq: No, let’s blame him because he has a $3000 housepayment that he can’t afford. He over bought and strteched himself so that there was no leeway if a disaster happened. His fault 100%. Then, the mortgage complany has to bend over backward for his mistake?? Bad financial decisions are no reason to feel sorry for people. You can get a nice house or condo for far less than $3000 a month. If he didn’t have to have a second job to afford his pricey home and wasn’t living month to month trying to impress everyone, then he would not have had such an issue happen.

        Plenty of apartments aorund here will rent to people who have foreclosures. He probably thinks he is too good for an apartment since he is coming out of a house with $3000 a month payments.

        Maybe this will teach him to live below his means and save some $$$.

    • oblivious87 says:

      @Costner: I want to agree with you because as I figured out, assuming the mortgage rate was between 5% and 7% this guy was living in a half million dollar home.

      The problem I have with your statement, is anyone living in that expensive of a home probably isn’t working 2 jobs at a time, but rather lost one job, exhausted emergency funds looking for another, and then found another which he lost as well. That’s my understanding of losing his 2nd job.

      The guy was an idiot for not doing his own research and being on the banks ass daily while he was missing payments because the though of being foreclosed on should have been fresh in his mind. Plus he had lots of time since he was unemployed!

      I feel bad for him though because in the end, he trusted someone who was supposed to be an expert and they screwed him. Last time I checked, if I paid anyone for a service and their fix or advice sucked, I’d be able to sue them.

      Oh and just an FYI to the OP, its pretty easy to find places to live without having them perform a background and credit check. I’m yet to have a landlord actually perform one on me and I’ve rented 5-6 different places in the past 4 years. Look for families renting their houses or people who want you to take over their leases.

      • Karita says:

        @oblivious87: Just wanted to mention that when he says mortgage payment, it most likely includes taxes and insurance escrows. At least in CT taxes are high, and I’m sure they are in many other states too. I bought my house for $50,000. (Yes it’s a hellhole, but I wanted to make sure I could afford it, and I am fixing it up.) My taxes are still almost $3,000 a year. Insurance is another $1,000 a year. So the escrows more than double the payment each month.

        I worked out a modification for a client with monthly payments of $3,500 on a house that cost $185,000. That’s on the very low end of the price scale for the town he lives in. The ARM had reset to 14.9%, and before he got into trouble with that he had perfect credit. He was in the worst loan I have ever seen (for many reasons other than the high rate), and he had no clue that he had been duped. Why did he get it? I have no idea, except I noticed when reviewing his closing documents that his broker got a monster yield spread premium. He read everything, and his mortgage broker supposedly explained it to him, but he’s not the brightest guy and he didn’t realize that the loan was offensively bad. He believed what the “professional” told him, and didn’t have the knowledge to understand the docs on his own. Not his fault – it took me a long time to understand loan documents, even while working with them every day.

    • lannister80 says:

      @Costner: If the bank I have a mortgage with is giving me specific instructions on what to do, why would I think they were lying? What kind of crazy world do you live in? Should he have called the CEO himself to confirm? lol

      • Costner says:

        @lannister80: I’m not assuming they were lying, but I know enough about phone agents to know that they might not always be accurate (whether that is their fault or not).

        Above all else – common sense should tell a person it isn’t a good idea to miss payments just because a phone rep said so.

      • smiling1809 says:

        @lannister80: I wouldn’t trust anything that wasn’t in writing, period. A measly phone rep is a nobody. they have no power. A written agreement does.

  7. ArcanaJ says:

    “… rife with skipped payments and easy loan modifications.”

    What are these *easy* loan modification of which you speak? Where might I find one? We’ve been struggling to get ours since April.

  8. pinkbunnyslippers says:

    Congressman definitely needs to be contacted.

    BofA told me the same thing. I refused to “just skip some payments” per their directive until I had a legally binding forebearance agreement in place.

    People have got to stop relying on what banks/mortgage brokers/bums on the street tell them to do, thinking they’ve got their best interests at heart.

    I feel for this guy, I really do. But he’s dug his own grave without this advice in writing from his bank.. :(

  9. That's Consumer007 to you says:

    Oh and be sure you make a bloody mess out of your former home too and make it a museum to what they did to you. Make it HELL for whatever bank person has to deal with it. Make it ugly, nasty and personal. They fricking lied to you now make them fricking pay.

    I might even visit the family of whoever sent it to foreclosure while they are at work saying “look what your husband / wife” did to us and start screaming and crying on their doorstep.

    They interfered with and ruined your life – only fair.

    • pinkbunnyslippers says:

      @Areyouagoodlittleconsumer: All you’re doing by destroying your home is making it a PITA for the next person who buys it – the bank will just sell it as a forelosure, and put it on the market to someone to buy – sight unseen.

      Two wrongs don’t make a right. I hope you were being sarcastic.

      • bhr says:

        @pinkbunnyslippers: Plus at this point the bank owns it. They can charge you with vandalism or sue you for damages. Plus if you harass some random (and lets be honest, innocent) employee who happened to process the foreclosure then you are probably going to jail.

        • mazzic1083 says:

          @bhr: Correction, the bank doesn’t just own it at this point. People sometimes forget that technically the bank owns the house until the mortgage is COMPLETELY paid off.

          • thisistobehelpful says:

            @mazzic1083: Yes, but you are allowed to do “renovations” while paying off the mortgage. If the foreclosure/default process isn’t complete, he can still do quite a bit without technically vandalizing someone else’s property.

        • thisistobehelpful says:

          @bhr: Actually they don’t own it until the foreclosure process is complete. It’s kind of in limbo. They could trash the house until it’s official.

      • That's Consumer007 to you says:

        @pinkbunnyslippers: Nope – the bank and the realtor will have to clean it up to sell it, costing the bank money to fix the black karma hole THEY created.

    • Schildkrote says:

      @Areyouagoodlittleconsumer:

      So, wait. You want him to harass someone else as punishment because he chose to live beyond his means?

      Relying on a second job to pay your mortgage is pretty risky, and not making payments on a mortgage is even riskier. The bank was at fault here, but MC isn’t innocent.

    • Costner says:

      @Areyouagoodlittleconsumer:

      So you are the type of person who feels it is the banks fault that someone can’t afford the mortgage they agreed to? That makes perfect sense.

      Vandalism can lead to criminal charges, so I fail to see the merit in that. Plus – if the value of the property is vastly diminished, the soon to be ex-homeowner can actually be held responsible for the difference even after their foreclosure.

      Taking the path you suggest is akin to throwing a tempur tantrum. There should be legislation in place that dictates if a person does that type of thing that they can never get another home loan until they have paid for the damages they incurred on the first one.

      Way to suggest the high road buddy.

    • CFinWV says:

      @Areyouagoodlittleconsumer: That’s some stellar logic there, chief.

    • wgrune says:

      @Areyouagoodlittleconsumer:

      You are everything that is wrong with this country.

    • madog says:

      @Areyouagoodlittleconsumer: I had a family friend go to a house he owned (on the side) that was being foreclosed, and in the middle of the night went to paint it hot pink. Of course some people in our little neighborhood were “outraged”, but I thought it was hilarious. He also told me it’s impossible to find poison oak seeds to buy.

      Anything beyond that (even the poison oak, but that’s easily deniable) and you could get in trouble I’m sure.

      OH! An anonymous ad on Craigslist stating that “everything is free! Even the kitchen sink”. It’s happened before.

    • srh says:

      @Areyouagoodlittleconsumer:

      Wow.

      Within a very short period of time, you first post that people should not be allowed to refuse to rent to someone based on their past behavior.

      And then you encourage renter’s to destroy the home prior to moving out.

      Wow. Just wow.

    • craptastico says:

      @Areyouagoodlittleconsumer: if you ruin the house, and the bank gets less money, that directly effects your debt and credit report. how can you be so spiteful that you’ll ruin your own life, just to “get even” with some bank that’ll barely be inconveninced by your actions? it’s like a bee giving it’s own life just to inconvenience a human.

      • That's Consumer007 to you says:

        @craptastico: Just being defrauded out of your own home that’s all. Gee, do you defend your home against burglars or does that make you a deadbeat too?

    • smiling1809 says:

      @Areyouagoodlittleconsumer: Nice, and we expect our future generations to be responsible, law abiding citizens? Taking revenge becasue one decided to live beyond their means and have no savings? Real mature.

  10. SacraBos says:

    Again, this is a case where individuals need to record these phone calls. Being evicted for following your banks advice in getting a loan modification, and end up getting foreclosed on should be considered fraud.

    • Costner says:

      @SacraBos: I don’t beleive it is legal to record phone calls unless you tell the party on the other end of the line that you are doing so.

      Therefore such recordings cannot be used in court and are essentially worthless. Most companies have policies in place that dictate they won’t even talk to someone who says they are recording for fear of their comments being used against them in court proceedings.

      With our increasingly litigeious society…. I don’t really blame them.

      • phillipe says:

        @Costner: It depends on the state – 12 states are two party states where you have to tell the other party, but most are one party states where you don’t. Here’s a list: [en.wikipedia.org]

      • bohemian says:

        @Costner: This is why businesses want to talk on the phone and will do anything to avoid putting anything at all in a letter. They want to absolve themselves of responsibility for whatever they tell someone.

        This is why you never agree to anything you can’t get in writing.

        • Costner says:

          @bohemian: Honestly the primary reason is because when you have thousands of phone agents, chances are one of them is an idiot who will say something that goes against company policy. They might simply be a new employee, they might be ignorant, or they might just be bitter…but for whatever reason the customer on the phone will accept this as gospel.

          With letters, the company has a lot more control over the content, thus why everyone should always trust their letters and printed materials rather than an agent who might be making $8 an hour to tell you what you want to hear.

      • Alessar says:

        @Costner: So, tell them. “I want to record this call so I can be sure I’m properly following your instructions.” If they balk then the question is, “Why would you not want this to be recorded as it’s simply your directions on how to proceed in this matter?”

    • marsneedsrabbits says:

      @SacraBos:

      Here’s the problem, and I mean this in the most charitable way possible: people who are in a stressful situation, like the poster is, have a tendency to hear what they want/need to hear. We all do it, we’re all human.

      Maybe the bank told him to get an attorney. Maybe the bank said “foreclosure is still a possibility” and he didn’t hear it. Maybe the person at the bank assumed that someone with a $3,000.00/month mortgage is sophisticated enough to know what they’re supposed to do without being told.

      Maybe they didn’t.

      Either way, at the absolute minimum, he had a signed contract and he should have read it to see what the bank “could” do. He didn’t need an attorney to read the document.

      Banks are not your friend, confidant or attorney. It is unwise to treat them as though they are.

  11. Trai_Dep says:

    Binding and torture seems to be the trend…

  12. Coyote says:

    If he has letters instructing him to delay payments whats the problem? Honestly the OP was way to trusting, for one most people in service postions don’t care about anything but themselves, they aren’t to blame, mgmt drills them that money and time are all that matter.

    Always get signed documents and statements for everything. Especially if they tell you not to worry about your house being sold next week.

  13. GMFish says:

    I’m a lawyer in Flint Michigan, the rustiest part of the rust belt, and this sort of crap has been going on for about ten years here.

  14. bhr says:

    Get shit in writing. Always. Get an agreement for a forebearance before you start skipping payments.

    What happened to the money MC didn’t send the bank for three months? If he was banking it I’m surprised he couldnt get a postponement on the foreclosure by paying it to the bank.

    If you ever do skip payments for something like this, or a refinance always bank that money in case it comes back to bite you. you may still be out late fees but spending that money is just dumb (not saying he did this).

    • pinkbunnyslippers says:

      @bhr: I don’t think he *had* the money for the 3 months to send to the bank, hence not sending it… >.>

      • bhr says:

        @pinkbunnyslippers: If he couldnt send anything then why would they modify the loan. Loan modifications do not make loans go away, they just either lock in a rate or lower payments, but not by much.

        Personally, when I saw myself unable to afford my home loan (extended unemployment plus a high payment) I negotiated a short sale rather then stay in a home that even modified was going to be tough to pay.

        • pinkbunnyslippers says:

          @bhr: To each their own – every situation is different, and just because you would do X, doesn’t mean everyone in that position is able/willing to do the same.

          Every little dollar helps until one is back up on his or her feet, so a modification is at least a step in the right direction, do you not agree?

  15. plj says:

    At the very beginning did he get his instructions in writing to quit paying? I can’t think there is anyone in this country that doesn’t know if you quit paying for something, that sooner or later the lien holder is going to come.

    If it ain’t in writing it ain’t no good.

    • Karita says:

      @plj: Should have been in writing, but agreements are binding regardless of whether they are written down.

      His issue will be proving it. I can’t imagine he’d have a tough time doing that, as lots of banks up until very recently were saying that you had to be behind in payments before they would even talk to you.

    • econobiker says:

      @plj: Definitely echo the need for everything in writing or record all the calls and have them transcribed so you can provide proof of what was said.

  16. tbax929 says:

    We need to get beyond this mentality that if someone is willing to extend you credit it means you can afford to pay back the loan. Maybe then we’ll all stop living so far beyond our means.

    • bohemian says:

      @tbax929 is rooting for a Phillies repeat: I was embarrassed by the amount of money the bank approved us for on our last two home purchases. There would have been no way on earth we could have afforded those payments. Just because your approved for it doesn’t mean you need to spend that much or that you can afford it.

      The cost of housing though is insane. Homes in our area almost doubled between 2000 and 2006.

    • econobiker says:

      @tbax929 is rooting for a Phillies repeat: And that was the problem that the banks extended too much to people who could not afford it.

      Then, of course, your friendly real estate agent or Realator(tm) never wanted you to purchase anything less than costing the max for which you qualified…

  17. jvanbrecht says:

    This is not new.. in fact Aurora Loan Services told me the exact same thing (They of course have their own history of being problamatic to their customers). I of course can afford my mortgage at the moment, but when it resets, I might have an issue as my house is currently worth about 100k less then what I paid for it and no company wants to touch me to refi. But that is not the point here..

    Aurora basically told my wife and I, that for us to receive any assistance at all, we have to stop paying our mortgage. I of course balked at that as did my wife.. So we are plodding along for now, we will see what happens next year…

    Oh, and if I ever got into the situation where I know the lender is screwing me and about to take ownership of the house.. I will not so much vandalize it, as much as I would reinvest the time and materials I put into the house.. ie I will strip every single thing I can from the house and sell it to recoup some of my costs and help me move on, not to be malicious, but since it seems the banks are only looking out for themselves, I will do the same..

    • cmac says:

      @jvanbrecht: In Florida, selling anything attached to the property (ie, A/C, kitchen cabinets) or pouring concrete down the toilets is what leads to rare deficiency judgements against the former owner.

      • Dondegroovily says:

        @cmac: Not before the house is sold back to the bank. If it’s still your property, you can take whatever you want.

      • jvanbrecht says:

        @cmac: Who said anything about concrete in the toilets etc.. thats malicious.

        I am talking about appliances (not the AC unit, its old and dieing anyways), fixtures, we have some really nice faucets and what not, I will of course turn off the water first. The wiring is not worth it since its still aluminum, if it was copper, that would be another story. Hell, if I could sell the drywall I would, but thats garbage too (house is old, but bought at the peak of the market, so way overpaid for it).

    • rdm says:

      @jvanbrecht: I was told this too over a year ago from Chase. I stopped paying in January of this year. I have a short sale offer, but Chase won’t bother to respond to it (or a modification attempt) – nothing. We simply cannot get anyone on the phone over there.

    • That's Consumer007 to you says:

      @jvanbrecht: I’m so glad you brought ALS up. I just want everyone to know a friend of mine there was a top collector with them, and then they decided they didn’t like the fact he was epileptic and they fired him, violating the ADA. When he tried to call HR they HUNG UP on him, wouldn’t even talk to him at all.

      My friend just wanted to move on, but they also didn’t give him his last check when walking him out (illegal) and he had to have an attorney threaten them just to get his last check.

      Further, a month later they had the nerve to try and sue him to give back his unemployment money (they lost BIG time).

      Now, if ALS treats their own employees this way – do you really want to sign a contract with them and give them coverage over your home?

    • jimv2000 says:

      @jvanbrecht: “I MADE A POOR DECISION AND IT’S THE BANKS FAULT! WAAAAAAH” Grow up and take some responsibility. You’re going to strip a house of all it’s valuables to “recoup” your costs, while you owe a bank (hundreds of?) thousands of dollars for that house? Disgusting. Just leave with dignity.

  18. yzerman says:

    attorneys cost money so its not a easy answer.

  19. Forkboy2 says:

    What’s the big deal? He said he couldn’t afford his mortgage payments, so the end result would have been foreclosure one way or the other.

    Or maybe he really COULD afford his mortgage, and was just trying to pressure the bank into a modification, in which case he rolled the dice and lost.

    Either way, not much sympathy from me.

  20. nnj says:

    My sympathy for being on the street, but why did you buy a house with a $3k monthly payment if it was only possible via a second job? You could have just rented for probably 1/3 your mortgage and would still be fine today. You would have a roof over your family’s heads.

    I don’t understand the motivation with people and their houses. I could believe that 9 out of 10 people would give up their first born to keep their house in the event of financial trouble.

    A 3K per month mortgage? I hope his annual income is at least 200K. Now any down payment, mortgage, tax, insurance, repairs and upgrade money is gone forever. Your credit is shot and you are on the street. Chalk one up to being a homeowner…or former homeowner.

    • Schildkrote says:

      @nnj:

      I’m seriously not seeing what the problem is with living in an apartment for awhile if need be. You can find a place with lower rent that will accommodate a small family for quite some time while you get your finances in order. You don’t need to ruin your house, shoot yourself, or write tear-fueled blogs about it – just give up the house and live within your means for a change.

      I realize it’s not the American dream, but look how far that’s gotten us. Maybe we need to adjust the dream a little.

      • smiling1809 says:

        @Schildkrote: No kidding. We found a nice, family friendly apartment after selling our home so I could be a SAHM and go back to school. We will buy again one day, but we love our apartment. We have painted it and fixed it up very nice. It is no maintenance. People make apartment living out to be such an awful thing and it isn’t if you find the right place.

    • [DFX] Deimos says:

      @nnj: Definately what I was thinking. It is really too bad for MC and his family, but why would they have such a massive house payment if, as you said, it could only be afforded through a second job?

      For $3,000 / month, he likely had a $500,000 – $700,000 house, right?

    • jvanbrecht says:

      @nnj: 3k is not that outrageous.. I pay around 2600 a month. Thats with a 2 income family (wife and I). I of course live in an area with a high cost of living (Washington DC Suburbs, MD side). My house was also only $350k, not out of the question for someone who earns a 6 figure income.. you would think. My mistake was past debts that I am still paying off, no excuse, but still an issue. Having a crappy mortgage did not help either, Interest only 5 year ARM that resets next year. One of the larger differences is of course I knew what I was getting into, and knew I would have to refi, and while I knew the market would not keep going up, I did not think it would tank either. It was a gamble, in my case, depending on how things go, possibly a bad one….

  21. fantomesq says:

    Wasn’t he delinquent after he missed the first payment? I seriously doubt ANYONE told him to miss three consecutive payments in total… Good example of why we don’t farm our important legal problems out to customer service reps.

    • mac-phisto says:

      @fantomesq: i guess the bank’s story is that they are refusing to work with someone who is merely delinquent – they will only modify a loan for someone that has defaulted. reasons for default are spelled out in your mortgage docs, but typically 3 missed payments is considered default.

      • fantomesq says:

        @mac-phisto: I think he misunderstood the bank rep’s advice that there was “nothing they could due until I was late or my loan was delinquent”… they never instructed him to default. He could have made a partial payment each month and still been delinquent but not nearly defaulted.

        • jvanbrecht says:

          @fantomesq: No, he followed the instructions perfectly, read my previous statement on the first page, my lender said the exact same thing…. Its a load of crap, and I suspect its being used as a trap by lenders to offload potential bad debt, take a loss in foreclosing and reselling the house to get rid of it, or keep it with a risky client…

    • Karita says:

      @fantomesq: Actually, I’ve heard a lot of lenders say that. Missing one payment isn’t enough to send the file to the right department. Banks apparently aren’t interested in being proactive.

  22. Schmeeky says:

    Let’s ignore the fact he had a 3k mortgage payment. It gets even better if you do the math with a calendar. He didn’t submit a payment for 3 months, THEN IN JUNE he started the modification process. He lost the house in September. I don’t know how much money that second job was contributing, but he didn’t make approximately 18k in mortgage payments during that period.

    You put first and last month’s rent down and a security deposit and a landlord will rent to Satan’s spawn himself. That would’ve been about 1/6th of the amount he didn’t pay the bank. If he didn’t manage to save that much while living rent free for half a year, then I have no sympathy for his current circumstance.

  23. emilymarion333 says:

    I have a friend in particular that is a single mother, 3 children and does not have a high paying job – she does get a very limited amount of SS for her children (something around $50/each)and she did have to go into bankruptcy after her kids father passed away.

    She has been able to find some great landlords through CL that have been willing to work with her even in her situation of bad credit. She is at least able to have a strong rental history even with bad credit. Sometimes you can find landlords who will give you the benefit of the doubt even if you have a foreclosure or bankruptcy.

  24. nsv says:

    I’ve got a friend who is in the last stages of the loan modification package. It took about a year to get this far.

    Wells Fargo told her the same thing throughout the process, but she never missed a payment. Just before they put her into a “trial loan modification” for five months, they offered her the chance to skip her mortgage payments for three months, and use that money to pay down other bills. They wouldn’t send her the terms of that scheme because “they wouldn’t be generated until she skipped her first payment, signaling her intent to participate in that program.”

    She questioned several people about it until she finally found one person who casually let slip something about a balloon payment at the end.

    Yep, you skip three payments so you can pay down other bills and make yourself more financially stable, then you pay three payments all at once. Brilliant.

  25. bobloblawsblog says:

    ok, well guess what we had to do in order to get our (Obama /federal) mortgage modification for consumers who owe more than the vale of their houses? We also had to ruin our credit by stopping payments. Our lawyer advised us that we would NOT get it unless we did. Our credit counselor agreed. It was submitted in MARCH. they said 6 – 8 weeks. its now almost NOVEMBER. NOTHING. the bank send us a notice that they would foreclose, and would we like to consider their mortgage modification program? WTF. this makes me so angry.

  26. riroon says:

    I have a mortgage with Flagstar. When I fell behind in my mortgage payments, their ‘Loan Modification’ package asked for everything but a semen sample from my great great grandfather. It was ridiculous.

    Instead of allowing my family and interest only payment or some other quick fix that would help us get on our feet, they claimed the only way they could help was if I jumped through all the hoops twice backwards.

    (By comparison, I have a car loan through CitiFinancial. When we ran into trouble, Citi had several programs they offered to us while we were getting over our temporary setback. None required more than verbal permission or a quick signed fax).

  27. jeffred says:

    I would never say that the bank told me to stop making my mortgage payments. I will say that while going through the ‘Short Sale’ process with my bank, the employees told that I was a low priority because I was up-to-date on payments. This was during a phone conversation to confirm they had all the documents they needed to move forward on my ‘Short Sale’. Two weeks later, I received a letter saying they had dropped my application out of their system, due to a lack of information.

  28. mrlogical says:

    I’m an attorney and I’ve been working on pro bono cases dealing with people’s mortgage issues, and it has certainly been an education. The OP’s experience is a common one. He should see if he can get free legal advice from a legal aid organization and attempt to get the foreclosure reversed. If he was told that the bank was canceling the foreclosure sale and then they went through with it anyway, that would probably be a way to establish that the foreclosure was invalid; however, without that promise in writing, it might be difficult to prove it was made. Hopefully he at least has the name and phone number of whoever he spoke with that told him that.

  29. RalphyNader says:

    Can someone please explain to me why a bank would want to do this. The way I see it is the bank has two options in this situation. 1st option: forclose on a high end home (I’m assuming so becuase of the monthly payment of $3,000). I doubt these houses move very fast once the bank takes them back, unless they are severly discounted. So one can only assume that the bank will lose grips of money on a high end home forclosure in this market. 2nd option: work with the resident. Charge them fees, add them to the life of the loan, extend from a 15yr or 30yr to a 40 yr. Just do something to lower the monthly payment. I really don’t see how a bank would lose at all if they just work with the homeowner. At the very least they would salvage something as opposed to losing $100,000 from the original value of the loan plus the cost of the forclosure process.

  30. _NARC_ says:

    He should have filed for Bankruptcy. At least then he could have stayed in the house while he worked his financial issues out.

  31. steveliv says:

    even at best a loan modification program is not going to magically turn a $3000 mortgage payment into a $1000 one. what do people expect out of such a program. if it is obvious you can’t afford your mortgage payments, put the house on market.. speak with your mortgage company for a short sale if needed.

  32. PLATTWORX says:

    Can the Consumerist staff start adding a paragraph to these stories pointing out when the CONSUMER is at fault?

    1. If you need two jobs to pay your mortgage, you bought a house you can’t afford. YOUR MISTAKE.

    2. You don’t call the bank and start skipping payments. You visit the bank and ask for something in writing.

    3. You consult an attorney for advise.

    Come on, Consumerist, I love this site but if the consumer can’t afford the house, doesn’t get anything in writing, never talks to an attorney and their credit is messed up because they foolishly just did not pay their mortgage for three months, posting this as if his bank is at fault it just silly.

    • henneko says:

      @PLATTWORX: “1. If you need two jobs to pay your mortgage, you bought a house you can’t afford. YOUR MISTAKE.”

      How is that different from “1. If you need one job to pay your mortgage, you bought a house you can’t afford. YOUR MISTAKE.”

      Either way losing a job is what screws you over.

    • coren says:

      @PLATTWORX: With an ARM, he might not have needed a second job until it adjusted. Still his fault, but it’s a situation many are in due to shady lending practices.

    • That's Consumer007 to you says:

      @PLATTWORX: And you are a cruel armchair quarterbacking jerk. He probably did have a great job when he got the mortgage. I want you to tell me how the HELL he is supposed to know what is going to happen every single year of the 30 years in his mortgage?

      By your standards, nobody should ever by mortgages or have kids, because no job these days last forever.

      Did it OCCUR to you he might have gotten laid off or unfairly fired? Do you really think he can control that?

      And finally I want you to address what the bank did and how what they did (swindling him out of his home) is good or correct or his fault.

      Phil didn’t add that paragraph because it’s well known cretins like you will write in and unfairly attack.

      Again, this website is pro-consumer, you are anti-consumer, I’m sure there are thousands of other blogs for you. YOUR MISTAKE.

  33. savdavid says:

    Yes, contact your congressperson! Call! They will help you.

  34. srh says:

    I’ll admit that I’m a cynic. And this story doesn’t sound entirely right to me.

    The poster claims that the bank *told him* to skip payments? Sorry but this really doesn’t pass the snicker test. I suspect it’s quite possible that the bank told him that the loan modification programs were only available to people who missed a couple payments, and that he decided to ‘work the system’.

    I have a tough time having sympathy for someone with a $3K per month mortgage payment, who must work 2 jobs to pay for the mortgage. In my experience, that’s a person who exhibits poor judgement and does not like to take responsibility for the consequences of his actions.

    And from such a person, I would not be surprised to hear a story only loosely based in fact about how the bank made him stop paying the mortgage.

    • coren says:

      @srh: Banks are frequently telling people to skip payments. Just…not in writing. I’m a cynic to, and to me it sounds like that’s an easy way to get a lot more foreclosures…

    • mrlogical says:

      @srh: I’m a cynic too, srh, but I have absolutely seen this happen all the time. It’s not that the bank is telling the customers to miss payments per se. It’s that their modification programs sometimes cannot be applied for by customers who are not delinquent on their mortgage payments. So the customer service reps say well, if you want to apply for a modification, we’ll talk about that after you’ve missed some payments. There is definitely a fairly wide range of how clearly this is explained to customers by bank reps–some would lay that out as a fact, but also note the credit problems associated with failing to make payments and the fact that a modification cannot be guaranteed, but there are others who would much more casually say “oh yeah, just miss a few payments then we can talk about a modification.”

  35. samandiriel says:

    I’m in shock that he just sat for 45 days without talking to his bank at all. I’m thinking he wasn’t proactive enough, and definitely didn’t research his options very well on his own. Relying on his bank to baby him through it was just dumb.

  36. H3ion says:

    I had a client in a similar situation who had bought a large home when times were good and was now having a problem. We went to the bank (which was servicing the loan but had already sold it) and negotiated first an abatement agreement where we reduced the monthly payment to interest only. We then negotiated a long term loan modification agreement. Almost everything was in writing and even when we agreed to something by phone, an e-mail and a confirming letter were sent. The client is still in the house and is current on the revised payment schedule.

    The problem here is that an oral promise in a real estate context isn’t worth very much. The OP relied, to his detriment, on statements made by bank employees which they were free to disavow. It stinks to have to deal with everyone as if they’re out to screw you, but in the banking context, that’s what someone has to do.

    At this point, the OP’s house has gone through the foreclosure and is owned by the bank. An imaginative lawyer could probably find a way to make the bank see reason, particularly since the foreclosure was based on promises unkept by the bank. It would also be helpful to get local media involved since the OP has a sympathetic story to tell. Unfortunately, hiring a lawyer is going to cost money (or barter). I wish him luck. It’s a tough case.

  37. Lee Jones says:

    Same thing happened to me. We had the place for two years, then my wife became unemployed. I contacted my lender and asked for help and they gave me the same advice. We avoided foreclosure with a short sale, but still had to move.

  38. Covertghost says:

    Ok, I do feel bad for the situation, with your family being thrown on the street.

    But people, please stop trying to live that far past your means!

    If you have to take a second job to afford a mortgage, you can’t afford that house.

    Also, why did it take you 45 days to contact the bank after you submitted this package?

    I would think that you would have a very pertinent interest in the issue!

  39. nsv says:

    Two comments:

    1) For the doubters, yes, banks really are instructing their customers to skip payments. I know someone who was told several times to skip payments in order to be considered for the loan modification program. This was not “if you had missed payments” but “We won’t consider you for the program until you stop making payments. Skip this month’s payment then call again next month.”

    2) What the hell is “besmurged”?

  40. That's Consumer007 to you says:

    I’m just going to extrapolate a little more on this because there are some things people are posting on here that are just REALLY messed up and go right to the HEART of what this blog is about – being American and being a consumer. And thirdly, the American dream of owning a home.

    A guy with two jobs loses a home because a bank swindles him – tells him not to make payments, promises a new deal, lies in the process, then forecloses on him for doing PRECISELY what he is told to do.

    Many of you proceed with attacking and blaming him, calling him a deadbeat.

    Now let me go into just how wrong that is on multiple levels:

    1. He is a consumer, and a homeowner just like you.

    2. He has two jobs, showing that he seriously cares about paying his bills and taking care of his family, and he is a victim of this stupid economy / outsourcing. Like MOST of us in this bad economy he probably had a decent job when he got the mortgage, lost it, then got two jobs to compensate, or had to add a job when job 1 cut back hours or benefits.

    3. He is a victim of a corporation, thus appropriately his story is on consumerist.

    4. Phil posted his story, the consumerist editors aren’t dumb, they usually sort through these things before posting, i.e., they don’t post them if they are without merit / without reality checking.

    Despite the facts above, and ENDLESS news stories about corrupt banks WRECKING our economy, BUSTED for frauds galore, EXTORTING TARP and bailout money they didn’t deserve and then FURTHER not making any new loans, or changing loans for people obviously deserving who can’t control the FREEFALL job market crash, you immediately assume the OP is an irresponsible bad guy, and pretty viciously attack me for sympathizing with him and suggesting he fight back.

    Well, now, I get to set you straight.

    You people REALLY need to see the movie the Corporation. I mean REALLY. You have no clue how corporations work, and the fact they are specifically designed these days to make sure all of us don’t get our money’s worth, can’t have prosperous futures, and end up with nothing at the end. All the evidence is in there, I don’t have to prove that here.

    You further need to LISTEN to what you hear on the news and then put that together with what you SEE happening to people around you, neighbors and OP’s on these blogs and other sites. IT COULD BE YOU NEXT.

    Finally, where the hell is your compassion for your fellow consumers and your outrage that you SHOULD feel at these corporate bastages? I mean really isn’t it enough for you to read a story like this about how a hard working man and his family’s lives and economic futures have just been crushed and thrown away? No, you have to kick him when he’s down and malign him?

    For you to have taken this position really does mean you don’t think hard working people deserve the American Dream, deserve to keep their money, deserve to keep their family fed and kids warm and safe, and that you applaud the banks for lying, committing fraud and violating all of us willy nilly.

    You really think he should just take his lumps and live in a shelter while you snicker at him for having his credit ruined too?

    Someone on here said I was what is wrong with America – NO all of you people that live sarcastically in a falsely superior denial-land of “bad things only happen to losers who deserve it” – you really need to have the same thing happen to you. You are no better than the OP, no smarter, just as vulnerable, no matter what you say on here, and YOU are what is wrong with America.

    People like YOU make the rest of us consumers prey to corporations breaking the rules and breaking our lives – because you think this economy and this nation is just a big game of economic dodgeball. Nothing is wrong, everything is fine, even though 45 million people don’t have insurance, and more people JUST LIKE YOU are losing their homes than ever. Nope that doesn’t matter because YOU personally are not evicted.

    Shallow, stupid, selfish and disgusting. Take a look in the damn mirror and start being human already, or please please do me a favor and get your passports ready and use them because I don’t want you in MY country.

    • thompson says:

      @Areyouagoodlittleconsumer: Look, you’ve had some… well, choice words with other commenters, so I realize that by responding I’ll probably open myself up to being called a cretin or whatnot… but here goes:

      Okay, so even if we assume that the bank instructed him not to pay for three months and foreclosed — yeah, that’s a pretty crappy thing to do. But what if the bank hadn’t said that, and merely said “sorry, deal with it”. Would the bank have been in the wrong to ask for their counter-party in the contract to live up to his obligations? The bank and the guy entered into an agreement — they gave him $xxx,xxx and in exchange he agreed to pay $3k/month.

      It’s a terrible situation, but in this case foreclosure was appropriate. There’s a reason why most (read: not the worst scummiest subprime) loans aren’t the same interest rate as credit cards. That reason is that it is a SECURED debt, secured by the property so that the bank has less risk and can therefore tolerate a lower interest rate.

      As an aside, I think the most valuable quotation for those who rail against “corporations” is by Robert Hanlon: “Never attribute to malice that which is adequately explained by stupidity.”

  41. JGKojak says:

    Hey bank- good luck getting money out of his house.

  42. StanTheManDean says:

    Was this a written policy/advice program from the bank?

    Nope? Thought not. Next time remember verbal advice is absolutely worthless, especially from an entry level customer service employee.

  43. Mr.Duke says:

    Did the bank put that advice in writing? Uh, doubtful. Common sense lacking.

  44. PsiCop says:

    “… his credit is besmurged by the foreclosure.”

    Hmm. Besmurged? Is that a new word? ;)

  45. Bruce Bayliss says:

    Document EVERY conversation with a financial institution in writing.

    As in: In confirmation of my phone call with xxx, we agreed the following points.

    If they don’t challenge the content, that’s what was agreed.

  46. zzxx says:

    My house sucked up every dime that I had. My last payment was 3/2009 with a perfect payment record until then. The only tipoff that the bank could have had was that I got off the auto bill payment. The mortgage was four years old then at a lousy variable interest only rate.

    Walk away from your house. It is not everything. Everyone around me noticed that I am less stressed, nicer, and happier since that date. Though nobody other than my parents / wife / in-laws knows what is going on.

    My wife and I will be moving into a rented condo for less than what I pay on real estate taxes on this house. The day I wake up in a condo with nothing to do will be a happy day. Call the landlord and have him fix the toilet. Watch the people cut the lawn for me. Quit complaining about property taxes.

    Also, I am now empowered to move anywhere in the country. My new rent will probably be 1200 / month. To achieve real savings I need to earn only half of what I do now. I will have plenty of gravy and I will have tons fewer problems than I have with the house.

    Sure it was nice having the house. I could show off. But really on the inside I was watching every penny and it wasn’t pretty. I can no longer afford the house because of increasing taxes, a mortgage that will vary, and no salary increases.

    Sure I signed a contract that I would pay off the house and I knew what was going on. However, I was told that I could refinance in a few years and get a much better loan. Society made a contract with me that I could always sell the house for my purchase price plus my improvements plus a few percent profit for myself. That was true for 60 years. No more. I got caught.

    I will be living in this house until they take it. Let them paint it. Let them fix the problems that I have despite over 200K in renovations. Heck, let them rake the leaves that are out there. Let them cut the lawn in the summer and perfectly weed whack and edge the flower beds. Let them pay for the property taxes.

    I will be living in a condo where I can walk to anywhere in town (as opposed to a 9 mile drive). I can walk to the commuter bus to NYC. I will never have to worry about money again. For the first time since 1998 I will actually save real money. I am keeping my credit cards up to date with the hopes of once rebuilding my credit and buying a very realistic house. This venture into this house that is more than I can afford cost me about 400K. I am walking away. Let the bleeding stop.

  47. zzxx says:

    As I said earlier, this is a topic near and dear to me. I came to the conclusion that I should just get this house and its month to month losses out of my system. Let them foreclose. Who cares? So my credit will be crap for a few years. Big deal.

    Once I lose this house I will be a free man. My rent will be less than the property taxes that I paid. I will not have to take on the role of professional gardener and home handy man on every weekend. My wife will not have to clean 5 empty rooms (we only use 4).

    After paying over 1 million in buying an renovating this house we still have problems!!! The contractor is long gone. Fixing the unresolved issues would cost much more money. The house needs a paint job. The maintenance is too money and time intensive.

    The only benefit that i get from this house versus a rental condo is a private pool and the fact that I live in a tiptop neighborhood.

    Having a rented condo means that I can finally save money. I will never have to worry about money. I can walk to my town and my commuter bus. I will have money to take my wife out to eat every Saturday and take a trip every once in a while. I will never be restricted to being in the NY area. I can move anywhere in the country where I can find work if necessary and even to find opportunity. With the house I am tied to my lousy job and have to live life without missing a paycheck.

    When I bought the house I was proud of my ‘achievement’. It lost me everything. The bank can have it. In three years my credit will be fine. If I every buy again I will be much more realistic than I was.

  48. Tony Cartman says:

    Go for a lawyer, look after your rights to turn the page!