Loan Mod Denied Because Family Saved Too Much, Now Heading To Foreclosure

This family sought a loan mod after the father had his hours cut at work, making it hard for them to make their regular monthly payments. They followed the advice of housing counselors, reducing expenses and saving up money. Finally, PNC Bank told them their loan was denied. The $7,160 they saved up, which included a $5,218 tax refund, meant they were too well off to qualify. Now their house heads towards foreclosure.

13 months of saving and waiting gets family’s home loan modification denied [Chicago Tribune] (Thanks to Michael!)

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  1. thelauhingsun says:

    Ew.

  2. areaman says:

    Might help them in the long run. They can probably buy a bigger better house for less money now. But it won’t be THEIR home. :(

  3. Blueskylaw says:

    PNC Bank will sell the house at a loss, collect the loss from the mortgage insurance company, charge the mortgage insurance company overinflated prices for the paperwork involved and profit handsomely.

    Now tell me again why they would want to work with the homeowner?

    • exit 10 says:

      My parents house went into foreclosure after they moved into an assisted living apartment. We got one offer for $5,000 less then what was owed on the reverse mortgage. That was the only offer. The house was on the market for a year. Wells Fargo wouldn’t take the short sale. Very hard to find someone who would even call us back. They basically ignored our repeated phone calls. My brother dealt with them so I don’t have all the details. The foreclosure notice appeared in the local paper. The house was worth around 60,000 at it’s highest. The only offer was for 20,000. The bank in the notice had it listed for $90,000. Really? They must be getting ready to sock it to the mortgage insurance company. It’s been sitting empty for two years now.

  4. frank64 says:

    There are so many instances when being responsible and being just above water can bite you in the ass. The money they have should mean they are more likely to be successful with the modification. No wonder they say the success rates are so low with them, you need to be nearly drown before you can get one.

    • Sneeje says:

      Yeah, this is one the things I’ve struggled hardest to accept about the real world we all live in, over the course of my life. The combination of people being hyper-sensitive to getting screwed (happens all too often) and a seemingly endless trend of people blaming others for everything negative that happens to them, has created an environment where it seems foolish to ever own up to your mistakes or make yourself vulnerable while trying to minimize impact on others.

  5. The cake is a lie! says:

    I’m telling ya… being responsible carries zero benefit. You are better off not paying your bills and just socking the money you save under your mattress. Being responsible and paying on your obligations means the government can feed on you like the vampire it is. I don’t know what happened, but it seems like the American Dream is now the American Nightmare.

    I work hard to keep afloat. I pay my mortgage on time every month. My credit cards have a zero balance on them. My cars are paid off and I’m not living like a rock star. I have savings in the bank to support me for 6 months if I lost my job. What does that mean? It means I can’t refinance my house to get the slightly lower interest rate than I already have unless I want to pay a couple thousand dollars in fees. I can’t get any grants or federal assistance for school because I actually have a job and make money. I guess that money is supposed to go towards school instead of my bills, but whatever. I don’t qualify for any family assistance for my family of 5 with my stay at home wife and two kids in school. I basically am entirely on my own. Now, if I blew off my mortgage for a few months, then it is possible the bank would readjust my interest rate so my payments would go down. If I quit my job and took a part time one then there would be all sorts of government programs to get me through school and take care of my family. In the end, I would actually live a more comfortable life. The price is merely a few hundred points of my credit score which I could build back up again in a few months.

    There is no reason to be responsible. The government rewards the flakes, the lazy, and the moronic. The responsible middle class white American two parent (legally married) family is now the most discriminated animal on the planet.

    • Thorin78 says:

      I don’t know where you are, but I’m doing my refi @ no cost. The broker is eating that up and that’s common around here.

      • frank64 says:

        He is making the money up by a higher rate. Hopefully you compared the rate you are getting with a bank, or the costs aren’t just getting rolled into the loan. The rate sheet the brokers get is a chart of rates and cash paid to the broker. The higher the rate, the more the broker gets. There is nothing wrong with this, some people don’t understand it, and many brokers don’t offer. It depends, but you may be better off with a lower rate and paying the fees or even rolling the costs in the loan. Especially if you are going to be in the house for around 10 years or so.

        I know this might not apply to you, just a general comment.

      • The cake is a lie! says:

        They told us we could do that when we refi’d a few years ago. They said if the interest rates dropped then they could ‘streamline’ and we wouldn’t have to go through all the closing costs. Then when we wanted to do it, they said it wasn’t an option anymore. Wells Fargo has our mortgage right now at a 5.25% rate and we want the lower one. We can’t get it without paying all the origination fees and tacking on another couple grand onto our already depreciating faster than we can pay it off house. It is really frustrating…

    • shadowboxer524 says:

      I completely agree. It doesn’t pay to be responsible. The middle-class, especially those just keeping afloat, as you stated, get royally screwed. They’re too “well off” to get help, but they’re too poor to actually manage to get ahead.

      This reminds me of when I applied to colleges. I got a full ride scholarship to one school, and a mostly-full-ride to a different school, where I really wanted to go. However, my parents made too much money for me to get any FAFSA money but not enough to be able to afford to pay the difference out-of-pocket. So I didn’t end up going there.

      • obits3 says:

        I had a similar experience with college. My favorite memory:

        Friend: You should apply for the Gates Millenium Scholarship
        Me: *Looks at fine print on poster* Thanks, but I can’t apply.
        Friend: Why?
        Me: I’m white

        • MeCatLikesMeHamSanwich says:

          So true! I tried looking for grants or scholarships when i went back to school after the service. Being white, male, 3.6 GPA, and a Vet got me a whole crap load of nothing. But, if I were black, asian, latino, disabled, female or a welfare recipient…then I could have picked and chosen a wide variety of scholarships to apply for.

          • Verdant Pine Trees says:

            When did your experience take place, and where? Were you an officer (i.e. you had a bachelor’s already?) or enlisted?

            Presumably, you weren’t attending Texas A&M or another school with a long legacy of educating veterans. Texas also has its own grant system just for its veterans; other states have similar programs. There are also a plethora of private and public scholarships for vets and their families: http://staff.lib.msu.edu/harris23/grants/3veteran.htm has just a few.

            There are some great opportunities for veterans now, including the new GI Bill. And many schools have rolled out special programs and mentoring for veterans, particularly in the last five to ten years. The Yellow Ribbon program adds additional help for veterans.

            On the other hand, frankly, many of the people my husband enlisted with refused to take a small amount from their paycheck when they started, in order to qualify for the Montgomery GI Bill (the program existing before the new “9-11 bill”) and get support for school. You had to make that decision at the beginning of your enlistment; if you didn’t, you were SOL down the road. Fortunately, the new bill has changed that.

            Nonetheless, we and other family members have benefited tremendously from programs like the VA mortgage program, and the veterans health care program (which saved my father-in-law’s life). The two of us sat through a week of the TAP (Transition) program when my husband’s service ended, which included educational resources and assistance, which continued even after the program ended.

            I’m also acquainted with professors at at least three institutions who are themselves veterans and do whatever they can to provide mentoring to other vets. These are the folks who would be good resources for pointing out scholarships and other grant opportunities. It’s a long ways away from Senator Jim Webb’s experience in law school, where his classmates and instructors treated him as a demi-pariah.

            So I am very skeptical when I hear claims that veterans are not supported.

            • MeCatLikesMeHamSanwich says:

              Oh, no. I got great support via the schools VA office. It’s financial support that I needed. Even though I did get in with GI Bill Kicker program the total tuition wasn’t covered. So i needed a little help. But, I managed to graduate anyway so I guess it’s water under the bridge. But, I was really surprised at the number of scholarships out there that i couldn’t qualify for. I am just griping at how unfair it looks.

      • RadarOReally has got the Post-Vacation Blues says:

        Define “getting ahead”, though. If you have a nice house, cars, food, clothes, can go on a few vacations and afford gadgets like a new TV or toy once in a while (which I assume is where the OP of this thread is), what “ahead” are you looking for exactly?

    • DJSeanMac says:

      Please disemvowel the holier than thou conservative mouthpiece. This comment doesn’t address the post in any sensible manner.

      • LINIStittles says:

        Please learn to read. The comment does address the post and the commenter is right – it’s frustrating to see examples of the seemingly rare responsible person being failed by the system.

        • DJSeanMac says:

          No, it does not address the post – it’s simply giving an “I’m better than you rant” while incorrectly assigning blame to the *government* instead of properly assigning blame to the bank. Credit where credit is due (or denied, as the case may be).

          • jason in boston says:

            He said nothing false. The government funds HAMP, and the Treasury Dept is the agency that runs the program. Apparently, the government has no teeth to force PNC into actually doing their job with that money.

          • frank64 says:

            It doesn’t say he is better, it just says he is being responsible. Not being responsible does seem to get rewarded. Many of our problems are chocked up to luck, but often it is our choices more than anything. Even if bad things happen to responsible people they can weather to the storm much better. It is much better to be in that position. Chock it up to luck if you want, but you are making excuses for some.

          • HogwartsProfessor says:

            That’s not how it read to me at all. And he’s actually right.

      • The cake is a lie! says:

        Holier than thou?? Just because I pay my bills means I’m holier than thou?? Thank you for proving my point. Being responsible has become such a rare thing that when you see someone who has lived that way he becomes a target for name calling.

    • Me - now with more humidity says:

      Aren’t you special!

      How’s that unicorn in your perfectly manicured back yard?

      • The cake is a lie! says:

        I’m not bragging. I’m not rich and haven’t done anything other than pay my bills. Everybody would have a perfect credit score if they stayed out of massive debt and paid their bills. I’m just saying that it doesn’t do you any good to be responsible. Cases like the story above prove it. You get responsible and save money and they take your house anyway. If I ever got to a point where I couldn’t make my mortgage payment, they would just say that I have a job and make money, so because I chose to stay out of a couple thousand worth of credit card debt every month, I now deserve to be penalized. If my credit was already maxed out and I had no other options for funds, they would work with me to save my house. It just isn’t fair or balanced.

    • econobiker says:

      “The responsible middle class white American two parent (legally married) family is now the most discriminated animal on the planet.”

      Because you are not in a protected class, don’t know how to game the system, or aren’t desired for being a “good customer” ie smart enough to keep a job but just dumb enough to be very profitable to companies.

      • The cake is a lie! says:

        Ain’t that the truth…. Someone once taught me it was wrong to screw companies by racking up debt that I never intended to repay, but that must have been those morals of the last century talking. This century has an entirely different moral and ethical code to it that I just haven’t figured out yet. I just hope my kids don’t follow my bad example and have the good sense to file bankruptcy a couple times when it is convenient for them. I just want them to have the best life possible, and that isn’t had by paying bills. Eat, drink, and be merry for tomorrow we die.

        • peebozi says:

          Profit has taken the place of ethics and morals.

          go to any publicly traded corporation and they can show you how it is better to break the law/ethics/morals, earn the profit and then pay a portion of that profit in fines. it’s the american way, as practiced by the corporations that own our political system. Tell me, why do you hate america?

    • fortymegafonzies says:

      So, the gist of your post is that people who do not need help (you) should get a piece of the money that goes to people who do need help.

      • The cake is a lie! says:

        No. I’m just saying that if I start to struggle then there is no program out there to assist me. If you have proven you can be responsible, then that is how you are expected to remain. They need people like me to fund all the programs for my neighbors who are on unemployment, welfare, government assistance of every kind, and are able to modify their mortgage payments easily just because Dad is too lazy to get a job. That is seriously the case too. He purposefully makes crap wages because if he got a better job he would get kicked off all the programs he is on.

    • MomInTraining says:

      I completely agree. And I am a fairly liberal Democrat. I firmly believe in offering opportunity to those that are truly disadvantaged. I think that we should offer free college to anyone with the high school grades and smarts to get through it for example. But what I have seen in this latest economic crisis is people who were living beyond their means and making poor choices get ahead of those who were responsible.

      We bought gas efficient (although they were older) vehicles. No cash for clunkers for us. We had the credit and savings to move into a bigger house before the move up credit and sold our old house at a low price to get a buyer. No extra savings for us. We paid our mortgage responsibly (even through a seven month period of unemployment), got a house well within our means to begin with, and didn’t spend ridiculous money on remodeling. So no refinancing at better terms and a reduction in principal for us.

      I do feel for people who have lost their jobs who have made the same choices I did and are still under water. I just think that there are people who cashed out equity and got to take lovely vacations and drive beautiful new cars who have to pay for it now. And they are dodging it.

      At some point, making the right choices has to pay off. Right now, I am just not seeing that. So I am with you OP. I think those like us who have made responsible financial decisions have something to gripe about. Maybe in a few years when the economy is better, anyone who didn’t take advantage of cash for clunkers, homeowners credits, or mortgage assistance should get a responsibility tax credit.

    • castlecraver says:

      Under your “responsibility” logic, why should you be able to refinance? You signed the papers; you agreed to the terms. Man up and take responsibility for the decision you made.

      • The cake is a lie! says:

        You are right… because interest rates never change and responsible people should never be allowed to take advantage of lower rates which save them money.

      • Nidoking says:

        Refinancing is entirely within the terms of the contract. Effectively, the refinance operation is taking a new loan, at the current lower interest rate, to pay off the existing loan. The bank just simplifies the process.

        • castlecraver says:

          Right. But there are fees involved and/or qualification criteria, as with any “new loan.”

          10-2Graphics’ lender made a good business decision in loaning to him while rates and home values were high. Surely the loan papers do not state that the lender will adjust his interest rate accordingly whenever the prime rate drops significantly. This would prevent the lender profiting from that good business decision. 10-2Graphics, on the other hand, made a bad business decision, and unfortunately, must pay the consequences.

          Look, I’m not a fan of this mess either and in one way, I agree with 10-2Graphics. What he fails to acknowledge, even though he dances around it, is that the rules are indeed the same for everyone. Neither the responsible middle-class consumer without debt problems nor the irresponsible individual receiving entitlements and modifications are really making out like bandits. He clearly values his ethics, pride, and credit score more than the additional money he might have by defaulting, flaking out, and sucking on the government teat. That’s extremely admirable — I’m just pointing out that you could easily look at it as a “responsibility” issue from the lender’s perspective as well.

          • catastrophegirl chooses not to fly says:

            actually, that does exist. i have a mortgage through a credit union. it’s a 30 year ARM with potential for interest rate adjustment every two years. not more than one percentage point change in two years and it can go up or down, depending on prime rate at that time. it also has a maximum rate cap of 8.75%

    • Nigerian prince looking for business partner says:

      I don’t agree with all of your points but I do agree with your sentiment.

      We recently ran the numbers and discovered that our family income would actually go up if my wife quit her job because we’d suddenly be eligible for a laundry list of government freebies. We’d do even better if we got a divorce and still cohabitated.

      Especially in terms of health care, being middle class truly sucks. I pay close to $10,000/year to cover my family with a high deductible. Between prenatal care, my wife’s deductible, and the baby’s deductible, it cost us over $7,000 to pay for medical bills last year.

      If my wife was an unwed teen mother, the total cost would have been $0 thanks to Medicaid. Instead, we paid over $17,000 in insurance and medical bills last year because we were responsible. What an awesome system we have in place in the USA!

      • The cake is a lie! says:

        I’m glad someone else has done the math to see what I’m saying. It is just sad that ‘working the system’ rewards people so much. This is why the unemployment numbers don’t scare me. If unemployment were 10%, that still means that 90% of the people who want a job have one. The other 10% are either chronically out of work, or have found that being out of work is more to their advantage than working a 9 to 5 grind.

      • retailriter says:

        This is so true. I worked in a department store, and worked with many unwed young mothers who did not pay a dime to have their babies, and did not pay a dime for their babies subsequent health care. Some had several babies (most were working part-time because they were forced to in order to keep their food stamps coming.)

        The one young mother who was MARRIED had to pay over $5,000 out of pocket to have her baby (her husband was self-employed.). Wrong, wrong, wrong, but the way it is.

    • Verdant Pine Trees says:

      You had me until the last two sentences.

      One of my best friends has also done everything right. He socked away most of his income for several years, and never abused his credit. Despite a more than ample amount for his down payment, he was rewarded by having a hard time getting a mortgage loan, because he didn’t have a big enough credit history! He was also turned down, despite a stellar background and GRE, from the grad school he wanted to attend – I suspect because he had enough money to go free and clear, without borrowing a cent (which makes him less likely to take shit from his faculty advisors). My friend is black. This is not a racial issue of “protected groups”. It’s a class issue.

    • smo0 says:

      I agree. You’re getting hosed by being a goody-two-shoes.
      I love down the street from the welfare office.
      The dregs I see heading into that building (save one or two) look like they should be drug tested before they receive a dime…

      and before I get flamed with racist remarks about crackheads.. No, I mean, everything… even alcohol.
      A friend of mine opened his door to a single mother of 3 who was using her food stamps to sell to get money for liquor.

    • retailriter says:

      You are exactly, I mean EXACTLY right. I have come to exactly the same comclusions you have, you just put it into words. Scary, isn’t it?

      Those that are getting hand-outs, qualify for more and more hand-outs! Those of us trying to make it through our own hard work and sense of self-accountablity are getting screwed.

      Something is seriously messed up.

  6. AllanG54 says:

    Dumb ass bank’s logic is beyond reason. Glad I never dealt with them when I lived in New Jersey.

  7. obits3 says:

    Maybe they should ask the Bank what type of person would get a mod. I’ve found that the best way to beat a bureaucracy is to shape your life to look the way they want it. Maybe you have some car repairs that you can put some of that money into.

  8. ArcanaJ says:

    After nearly a year of jumping through hoops, PNC denied our mortgage mod because we “made too much money” due to the overtime my husband worked for a couple months. Ironic, considering no financial institution will let you claim overtime as regular income when applying for a mortgage in the first place.

  9. fsnuffer says:

    They could take some of the $7 grand and get their home loan up to date?

    • obits3 says:

      That’s a good thought. I wonder how much their payment is each month?

    • ArcanaJ says:

      Not if it didn’t cover the entire amount they owed. PNC has a strict policy against what it calls “partial payments”. Whether you owe them two months mortgage or ten, you have to pay it all in one lump sum, period. Of course, you’d never get to ten. They start with the phone calls and dire warnings the first time you’re late.

      • HogwartsProfessor says:

        Wow. I’d just hang onto it then and keep adding to it as much as they can. They might need it if they have to relocate.

        • ArcanaJ says:

          Exactly, especially since the Dad’s hours were cut rather than losing his job entirely. At least they have a shot at getting a new place.

    • Nigerian prince looking for business partner says:

      That was my first thought.

      $7,000 would cover my mortgage for 1 1/2 years.

      • ArcanaJ says:

        Your mortgage is less than $400 per month? Where the hell do you live?

        • AnthonyC says:

          In many parts of the country, you can buy a house for

          This came as a surprise to me, since I grew up in the Northeast, but it is true.

        • Nigerian prince looking for business partner says:

          In an area with a low cost of living. We bought our house for $95,000 a few years ago with a 20% down payment. We just refinanced the remaining $60,000 on a 20 year mortgage for around $390/month.

          The low cost of living is the primary reason I’m still working at my current job. It just doesn’t make sense for me to take a job that pays $20,000 more if I have to spend $250,000 for a house.

  10. diagoro says:

    Does anyone know the statistics on how many modifications have been approved? I would bet that number is extremely low, regardless of how people qualified.

    I went through this with EMC, four time! Each time they created some reason to deny me (like stating I had refused to cooperate when It was merely impossible to reach reps via phone. They didn’t have direct numbers, so it was a matter of leavings messages all the time), offering to give me another chance with more difficult terms. From experience, they have no interest in doing so, especially any plan related to the government’s directed suggestions (Making Home’s affordable).

    I had three times where I followed their directives and should have been approved. Denied each time, and now I’m in the final weeks of a short-sale. I supposed it’s easier to write off the loss than make an effort……

    • ArcanaJ says:

      I don’t have wide ranging stats, but I can tell you that when we were denied, the PNC rep told us that in the seven months they had been dealing with the investor that currently owned our mortgage, that investor had not approved a single mod.

    • frank64 says:

      My brother got one – finally. It took him well over a year to get it approved. Many times he got different answers, told he didn’t send in the paperwork when he did. He was told he didn’t qualify and a denial was coming. Then later…. a different story. Then after the formal approval they lost his notarized forms in time. It finally worked.

      The thing is, his loan should have been one of the easiest to do. All they had to do was spread out his term and reduce his rate. They didn’t have to write off any principal. In a year or so his rate will not be any lower than what the market rates are. All they really had to do is give him a f refi and he would have been fine. They would have been better off too.

  11. Duke_Newcombe-Making children and adults as fat as pigs says:

    Oh well. They should have pulled themselves up by their bootstraps. He irresponsibly got his hours cut at work. Our banking overlords know best, so I’m sure it’s all for the good–why anyone would want government to regulate banks is beyond me. /sarcasm

    • peebozi says:

      i could have kicked the OP in the nuts and only taken his dignity. i guess that’s why i’m not a publicly traded person capable of buying elections and politicians.

  12. ClaudeKabobbing says:

    Instead of saving money they should have been making mortgage payments. I really dont feel sorry for most (not all) of these people.

  13. meg99 says:

    7 thousand must at LEAST cover 3-5 months of mortgage payments? Why weren’t they able to get caught up that way?

  14. you-toe-pee-an says:

    This is why the housing market is dead. Because good homeowners have opted to rent when landlords fuck them gentler than the banks.

    Congratulations PNC Bank, for contributing to the hell the rest of the nation is in.

  15. hansolo247 says:

    So they had a home they could afford and they want to have the payments reduced?

    Am I the only one who is happy they got denied???

    People need to take responsibility for what they’ve decided to do. They have one legal option if they don’t like the terms…GTFO of the house.

  16. retailriter says:

    I recently wised up a little bit and went form working full-time to working part-time. I’ve been working for 30 years and have hardly anything to show for it, except my good credit rating, but what does that really do for me?

    I have a dead-beat ex-husband and a son to support, but when I tried to get food assistance, I was told I’m not qualified because I work “too much” to qualify. At less than $20,000 a year? Meanwhile, I witnessed many a “qualified” recipient there in the social services office talking on cell-phones I could never afford, and getting into cars worth thousands of dollars more than mine. I guess that’s what they get for not “working too much”.

    something is really, really, wrong.

    Desperate times call for desperate measures.