Continued
The government has pressured mortgage companies to move faster. Still, it argues that trial modifications are themselves a considerable help.
âAlmost three-quarters of a million Americans now are benefiting from modification programs that reduce their monthly payments dramatically, on average $550 a month,â Treasury Secretary Timothy F. Geithner said last month at a hearing before the Congressional Oversight Panel. âThat is a meaningful amount of support.â
But mortgage experts and lawyers who represent borrowers facing foreclosure argue that recipients of trial loan modifications often wind up worse off.
In Lakeland, Fla., Jaimie S. Smith, 29, called her mortgage company, then Washington Mutual, in October 2008, when she realized she would get a smaller bonus from her employer, a furniture company, threatening her ability to continue the $1,250 monthly mortgage payments on her three-bedroom house.
In April, Chase, which had taken over Washington Mutual, lowered her payment to $1,033.62 in a trial that was supposed to last three months.
Ms. Smith made all three payments on time and submitted required documents, Chase confirms.She called the bank almost weekly to inquire about a permanent loan modification.
Each time, she says, Chase told her to continue making trial payments and await word on a permanent modification. Then, in October, a startling legal notice arrived in the mail: Chase had foreclosed on her house and sold it at auction for $100.
The purchaser? Chase.
âI cried,â she said.âI was hysterical. I bawled my eyes out.â
Later that week came another letter from Chase: âCongratulations on qualifying for a Making Home Affordable loan modification!â
When Ms. Smith frantically called the bank to try to overturn the sale, she was told that the house was no longer hers. Chase would not tell her how long she could remain there, she says.
She feared the sheriff would show up at her door with eviction papers, or that she would return home to find her belongings piled on the curb. So Ms. Smith anxiously set about looking for a new place to live.
She had been planning to continue an online graduate school program in supply chain management, and she had about $4,000 in borrowed funds to pay tuition.
She scrapped her studies and used the money to pay the security deposit and first monthâs rent on an apartment.
Later, she hired a lawyer, who is seeking compensation from Chase. A judge later vacated the sale.
Chase is still offering to make her loan modification permanent, but Ms. Smith has already moved out and is conflicted about what to do.
âI could have just walked away,â said Ms. Smith. âIf they had said, âWe canât work with you,â Iâd have said: âWhat are my options? Short sale?â None of this would have happened. God knows, I never would have wanted to go through this. Iâd still be in grad school. I would not have paid all that money to them. I could have saved that money.â
A Chase spokeswoman, Christine Holevas, confirmed that the bank mistakenly foreclosed on Ms. Smithâs house and sold it at the same time it was extending the loan modification offer.
âThere was a systems glitch,â Ms. Holevas said. âWe are sorry that an error happened. Weâre trying very hard to do what we can to keep folks in their homes. We are dealing with many, many individuals.â
The government has pressured mortgage companies to move faster. Still, it argues that trial modifications are themselves a considerable help.
âAlmost three-quarters of a million Americans now are benefiting from modification programs that reduce their monthly payments dramatically, on average $550 a month,â Treasury Secretary Timothy F. Geithner said last month at a hearing before the Congressional Oversight Panel. âThat is a meaningful amount of support.â
But mortgage experts and lawyers who represent borrowers facing foreclosure argue that recipients of trial loan modifications often wind up worse off.
In Lakeland, Fla., Jaimie S. Smith, 29, called her mortgage company, then Washington Mutual, in October 2008, when she realized she would get a smaller bonus from her employer, a furniture company, threatening her ability to continue the $1,250 monthly mortgage payments on her three-bedroom house.
In April, Chase, which had taken over Washington Mutual, lowered her payment to $1,033.62 in a trial that was supposed to last three months.
Ms. Smith made all three payments on time and submitted required documents, Chase confirms.She called the bank almost weekly to inquire about a permanent loan modification.
Each time, she says, Chase told her to continue making trial payments and await word on a permanent modification. Then, in October, a startling legal notice arrived in the mail: Chase had foreclosed on her house and sold it at auction for $100.
The purchaser? Chase.
âI cried,â she said.âI was hysterical. I bawled my eyes out.â
Later that week came another letter from Chase: âCongratulations on qualifying for a Making Home Affordable loan modification!â
When Ms. Smith frantically called the bank to try to overturn the sale, she was told that the house was no longer hers. Chase would not tell her how long she could remain there, she says.
She feared the sheriff would show up at her door with eviction papers, or that she would return home to find her belongings piled on the curb. So Ms. Smith anxiously set about looking for a new place to live.
She had been planning to continue an online graduate school program in supply chain management, and she had about $4,000 in borrowed funds to pay tuition.
She scrapped her studies and used the money to pay the security deposit and first monthâs rent on an apartment.
Later, she hired a lawyer, who is seeking compensation from Chase. A judge later vacated the sale.
Chase is still offering to make her loan modification permanent, but Ms. Smith has already moved out and is conflicted about what to do.
âI could have just walked away,â said Ms. Smith. âIf they had said, âWe canât work with you,â Iâd have said: âWhat are my options? Short sale?â None of this would have happened. God knows, I never would have wanted to go through this. Iâd still be in grad school. I would not have paid all that money to them. I could have saved that money.â
A Chase spokeswoman, Christine Holevas, confirmed that the bank mistakenly foreclosed on Ms. Smithâs house and sold it at the same time it was extending the loan modification offer.
âThere was a systems glitch,â Ms. Holevas said. âWe are sorry that an error happened. Weâre trying very hard to do what we can to keep folks in their homes. We are dealing with many, many individuals.â
