Homeowner Tries To Get Mortgage Adjustment, Ends Up Owing $14,500 More On Her House

When a retired Michigan homeowner applied for a mortgage adjustment back in 2009, little did she know that it would result in years of ongoing legal wranglings, a sizable increase in the amount of her mortgage and possible eviction.

The Detroit News has the story of the woman, who just wanted to see if the federal Home Affordable Modification Program could help her trim a bit off her $969/month mortgage payment, especially since she had just finished adding a room for her mentally disabled son.

“I could keep making it, but I would have had to start pulling money out of my savings,” she tells the News. “I figured if I could just decrease it by $200, I would be fine.”

Just like the other homeowners seeking HAMP modifications, the retired nurse was initially put into a trial modification while her application was being run through the approval mill at Bank of America.

Her payments were reduced by a whopping $500 at first, but then BofA told her she didn’t make enough money to qualify. So she got a job as a cashier. Then she was told she made too much money. Then her application was reviewed yet another time.

She tells the News that BofA pulled the plug on her temporary modification in 2010 without providing a reason. At some point, she says the bank simply stopped sending her the statements for her loan. So she stopped paying.

“They said, just give us as much as you can, and I thought, I’m not going to do that if they’re going to foreclose,” she explains.

A rep for BofA tells the news that the bank had decided the homeowner was making sufficient income to pay the original mortgage.

A few months after denying her HAMP application, BofA began foreclosure actions. The homeowner received a request to meet with lawyers from Michigan’s largest foreclosure firm. They were representing Freddie Mac, which owns her loan, but she says they put themselves forward as foreclosure mediators.

“It made me believe they were going to work with the bank to see why I wasn’t getting the modification,” she recalls. “Apparently, they didn’t do anything.”

She eventually got her own lawyer, who was able to talk BofA into a monthly mortgage payment that was only $59/month higher than what she’d been paying before applying for the HAMP modification two years earlier.

Problem is, between all the fees, escrow and interest that had accumulated under the trial modification, the mortgage had swollen from $142,000 to $157,716.

As of now, the homeowner is still in her home while she awaits for a federal court to hear her case. Meanwhile the lawyers for Freddie Mac have offered her the princely sum of $4,500 to get out so they can move on with the foreclosure.

One attorney who reviewed the case says he believes that the homeowner should have qualified for HAMP back in 2009/2010 when she first applied.

“When I looked at [her] finances a modification made a lot of sense,” says the lawyer, who has handled thousands of modifications. “She’s a retiree, so her income is steady… This is one that should have never gone the way it did.”

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.