Bank Reverses Erroneous Foreclosure On Family With Very Sick Child

After the Washington Post reported on their plight, a family with a gravely ill child that got foreclosed on a day after they were told their loan modification was approved, the bank investigated and found that they had screwed things up.

“Fannie is frustrated when we learn of individual cases where servicers do not properly process modification applications, and families . . . pay the price,” said a spokesperson for Fannie Mae, who owns the mortgage. “In this instance, the situation was not handled properly.”

While the family may not have qualified for a modification under the federal Making Home Affordable Program due to their high income, Fannie said their protocols for offering other modification options before foreclosure and short sale were not followed in this case.

Servicer Chase offered to reduce the family’s monthly payments and extend the term to 40 years, with a $100,000 sum due at the end.

The family said they will be having a lawyer check thoroughly check out the deal before agreeing to it.

Sometimes after you’ve exhausted other options, it’s worth turning to the media to get a company to move.

Bank reverses foreclosure for Va. family with very ill child [Washington Post] (Thanks to Scott!)

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  1. Loias supports harsher punishments against corporations says:

    Glad to see bank regulations are ensuring citizens get all options available to them.

    Wait, that took the media…

  2. backinpgh says:

    On the original post a lot of people said “What’s the sick kid have to do with anything?” Here’s what it has to do with this.

    Companies should generally be staffed by human beings with beating hearts. The paper pusher who received their paperwork and/or spoke to them should have said “Gee, these people have a really sick child, I should make sure their paperwork is mod is properly and quickly processed so they don’t end up on the street; it’s the right thing to do.”

    Not only that, but the company should be thinking, from the standpoint of their reputation and their bottom line, “Gee, we don’t want to be seen as the type of evil company that puts families with sick kids out on the street because we can’t process our paperwork in a timely fashion. We want people to think we care about our customers and the community!” After all, that’s why they put all those sappy commercials on TV about how sweet and caring they are.

    So when a company fails to do the next right thing, AND fails to understand the simple marketing concept of bad press, then they fail at everything.

    • Applekid ┬──┬ ノ( ã‚œ-゜ノ) says:

      Unfortunately, hiring guides usually don’t have anything about being a human being and have everything to do with hiring the cheapest breathing automatons they can get away with.

      Sometimes lowballing results in cultivating good employees. Most of the time it winds up as a corporate culture of mediocrity and apathy.

      • Bativac says:

        Yeah, you’re absolutely right. In my office, recently converted into a call center, the former humans have left for greener pastures (with a few of us lingering due to the pay and benefits). The new hires are lower-paid and care only about sticking to their posted schedule and taking the required number of phone calls.

        Of course they might consider treating customers like humans if they were given that directive by management, and if management treated employees like humans…

    • Aedilis says:

      I think the answer to the ‘what does the sick kid have to do with the bad mortgage’ should be, well a lot. If you have a borrower who has been making his payments on time all the time and then, due to a severe illness, you have a person who falls behind but is still making payments it becomes an issue.

      It would seem that in this case that this case was a prime example of what the loan modification program was set up to do. Regardless of how much money you make, if you’re behind but still attempting to make payments, why not modify the loan to allow them to continue to live in that house and make payments to you? It would seem that would keep the value of the neighborhood up, keep the people in their house, and more importantly to the lender, keep the money rolling in.

      You would think that payment history, past and present, would have just as much weight as the income coming in. Dude is on time with payments and even when hit with the higher interest is still making payments, it should show that they value this mortgage enough to try. Give them the loan modification. However if dude has a inconsistent record of payments and after higher interest sets in they just stop paying and then apply for a loan mod, you should have a good idea that they probably won’t complete the loan payment under any rate.

    • ablestmage says:

      The counterpoint to that is that every single homeowner that is foreclosed upon has some story to use to tug at the heart strings. Why should a sick kid get any special attention, when every. single. other. person. has a story also? So getting foreclosed upon now pivots upon how convincing you can be with your plight, rather than the actual terms of the agreement?

    • Happy13178 says:

      That’s not a bad argument, but it’s a moral one, and moral arguments aren’t legally binding. There’s another angle missing here…if the bank went and did an illegal foreclosure, and as a result of that the child was put into a situation where his/her health would deteriorate more quickly and pass away, is there a liability issue with the bank? I’d bet there is….if their illegal foreclosure contributed directly to the death of a child.

      • JamieS says:

        That’s right; moral arguments aren’t legally binding. So the day that banks and credit card companies stop making moral claims that everyone is honor-bound to pay their unsecured debts no matter what happens, and that if they walk away from bad loans the way that companies do all of the time that they’ll burn in Hell, we can all start treating these as business decisions. *nods*

        Funny how it only plays one way.

        • Happy13178 says:

          I agree. It sucks, but its true. In this case the sick child and the danger of liability worked in the family’s favour, and at least that’s good.

  3. mantari says:

    MY GOD. How much do they owe on that home? At the end of 40 years, they’ll still be $100,000 in debt! Why aren’t they walking away?

    • Loias supports harsher punishments against corporations says:

      My comment in the original article. Given their medical needs, it seems better for them to get out and find a cheaper place. Clearly, they are prepared for a very sick child and a $3,300 mortgage.

      • Spaceman Bill Leah says:

        While that does make sense, it may be that they are better off in the same house which presumably has been built/modified to meet the needs of having two children with special medical needs i.e. lifts in the bathroom, ramps, wider passage ways to accommodate wheelchairs and hospital beds.

        Downsizing make actually make the quality of care they are able to provide suffer.

        • Me - now with more humidity says:

          Not to mention the emotional and mental disruption to the children, who probably need some sense of normalcy and don’t need to feel guilty about their illnesses putting their family in a financial quagmire. And the parents, who are stressed enough knowing they probably will have to bury their children.

    • Toffeemama is looking for a few good Otters says:

      No kidding, that’s almost as much as my house cost!

    • Megalomania says:

      This way their credit isn’t ruined, and they can find a new place. They can also try to sell it on their own and try to at least break even. I would hope for their sake that they manage to find somewhere else.

      • Clyde Barrow says:

        I agree. I just heard a piece on NPR yesterday after work about folks that lost their mortgages and with credit scores dropping from the mid-700s to the mid-400s, these people cannot even get an apartment. One woman is an attorney and is about 42 and she was saying that no one will rent her a place. So walking away seems to be the very last option.

        • Me - now with more humidity says:

          Or not. I know several folks in similar situations who had no problem renting. They rented primarily from individuals, were upfront about what happened, and had decent incomes. Foreclosure and bankruptcies are NOT death sentences. You can be back on your credit feet in two years.

          • MrEvil says:

            My credit’s in the crapper and I was able to rent an apartment in a fairly new complex in a nice part of Austin. I just had to pay a $700 deposit. As long as you can prove your income, which in my case I had my first check stub along with an offer letter from my employer declaring my salary, they were fine. I also had no rental history because I’d been living in a home my dad owned for the past several years.

            Then again, my rent is roughly 25% of my monthly gross income.

    • qbubbles says:

      Houses in Northern Virginia are ridiculous. I have a 3bdr 3bth townhouse and it cost me $310k. And that was dirt cheap! And I live on the outskirts!

      Prince William Co is notorious for overpriced homes that are now underwater. My brother’s house cost $400k in 1998. He refinanced in 2007 for $700k (because he’s a fucking moron) and now the house is worth $500/450k.

    • ablestmage says:

      They should move to North Texas. I bought my 2bdr,1bth,950sqft house for $45k. It’s like taking out a loan for a somewhat expensive car, and the mortgage payments reflect that.

      • goodfellow_puck says:

        They should move to the area with the best hospital for treating their sons, but who knows if the father’s job is transferable anywhere else. Not to mention, sale of home and job hunting are probably not their primary focus at the moment.

      • Me - now with more humidity says:

        But then you have to live in North Texas.

    • wickedpixel says:

      Because of inflation, 40 years from now $100k will be a fraction of what its is today.

  4. wonderkitty now has two dogs says:

    Now, if this option could be extended to all the families the banks lie to, giving them hope of staying in the home and then yanking it from them just because some miserable ass forgot to check the fax machine that morning, or any number of dumb things that can happen.

    I just wish that banks would just quit fucking up so much. Just be honest with folks- either it’s “yes” or “no”. I think banks should get more jingle mail these days, because so often they just take more money from broke people and still foreclose. Blah. Disconnected rant, I hope someone else sees what I’m saying here.

  5. oldwiz65 says:

    This just goes to show that the banks don’t really give a rats tushie about customers. The ONLY reason the bank changed their mind is because they got caught. If it hadn’t been for the newspaper the people would be out on the street.

    • Keavy_Rain says:

      I think the banks see themselves as a necessity, therefore they don’t need to do anything special for you. I hate how we’ve reached the point where we have to bitch to the media to get decent customer service.

      Then again, that’s what you get when you look for the cheapest employees as opposed to the best employees.

  6. MustWarnOthers says:

    Look at that, It turns out that Fannie/Chase did actually make a mistake and the situation will be resolved.

    I guess that means the large number of idiots playing Devil’s Advocate in the previous story will skip commenting on this one.

  7. Dave Farquhar says:

    I’m really starting to wonder, in light of continuous stories like this, if Consumerist’s annual “Worst Company in America” is enough. Maybe Consumerist ought to do a “Worst Bank in America” tourney.

  8. JamesBE says:

    Well, thank God no one who comments on this site works for Chase, or that poor family would be out on the street.

    If you thought they deserved to be foreclosed on you should be ashamed of yourself. Maybe you go do some volunteer work at a children’s hospital, you might find your humanity there while your at it.

  9. Hoss says:

    Based on the facts, the adjustment reduces annual payments about $13,000/year. Good for them

  10. Warren - aka The Piddler on the Roof says:

    Asshole bank without a soul tries to foreclose on family with sick kid (after approving loan mod).

    Story of asshole bank spreads through Internet, thanks (at least in part) to Consumerist.

    Realizing it’s busted, asshole bank reverses course.

    Mistake? Perhaps… But would they have changed course if the story hadn’t spread?

    I think NOT!