About Me 0052: foreclosure help

This is not a joke.

Various Philadelphia media outlets have told the tale of one Patrick Rogers, who was increasingly unhappy over his inability to get satisfaction from Wells Fargo over fees related to his mortgage, and initiated foreclosure proceedings as a way to get their attention.

Now how exactly could he do that? And is his action a possible template for other frustrated homeowners?

Rogers had a legitimate beef. The California bank had doubled his insurance costs, putting him in a policy that had him carrying $1 million of insurance on a property he bought for $180,000 in 2002. Note that this looks an awful lot like a forced place insurance scam; servicers find creative ways to overcharge for insurance and then get kickbacks.

When the bank refused to answer questions about the charges, including ones sent in writing, Rogers looked into ways to force the bank to respond. As the Consumerist explains:

Patrick boned up and learned about a law called the Real Estate Settlement Procedures Act (RESPA). The law was enacted to safeguard homebuyers from anti-competitive and collusive behavior among the companies and agents involved with buying and selling real estate. One of the protections involves the “Qualified Written Request,” or QWR.

The Qualified Written Request is a specific kind of letter that you can send to your mortgage servicer when you believe there is an error on your mortgage account. You have to make sure to follow the rules for formatting it, but the servicer is bound by federal law to respond within a certain period of time. If they don’t, you can go after them for actual damages, costs and attorneys fees, plus $1000 of additional damages if there is a pattern of noncompliance.

“Do your research,” says Patrick. When drafting it, besides getting tips on writing one from various consumer sites, he also went to banking sites and saw how bankers were talking about ways they had rejected various QWRs. He made sure to craft his so it couldn’t get disqualified. “Use the internet as your law library,” says Patrick. With a little Googling, he was quickly about to find official resources and templates that guided him, step by step.

More than any site, blog or message board, “Looking at the actual law was a big help,” he said. A lot of websites offered bits and pieces, or their (mis)-interpretation, of the law. The best resources came from going to the official US Government pages and looking at the actual statutes in full. “It took a little bit of time to sit and process the legalese,” but it was worth it.

Within 20 days, the company must say they got the QWR, and they have 60 to take action on it. That action must be to either correct the problem or to respond back with why they think they’re right. They must also give a name and phone number for the borrower to contact with questions about their account.

Wells Fargo did none of these, says Patrick. So he moved on to the next step provided by RESPA: statutory damages, aka, cash money.

Even though legal fees would be covered under RESPA, the amount at issue was too little to interest attorneys, so Rogers filed a claim against Wells in small claims court. Most cases in small claims courts are pro se, meaning the parties to the suit argue their own cases. No one from Wells appeared, so Rogers got a default judgment for $1,173. Even though Wells did send payment, they still refused to respond to his letters or reduce his premiums, as the statute required. Again per Consumerist:

So he filed for a sheriff’s levy. This directs the sheriff to seize and sell the debtor’s property to pay up. In this case, it was the local branch office of Wells Fargo mortgage, the ones who had been ignoring him all these years.

To get the levy, he presented the court clerk with his default judgment and got the Writ of Execution and the Instructions for Levy which he delivered to the sheriff’s office. He paid them a $50 deposit to cover their administrative costs. A local sheriff then went into the Wells Fargo branch office and took an inventory and posted notice that nothing could be removed. The court also gave him several posters which he was expected to xerox and post around town.

The article is a bit unclear, so I assume the default judgment included the requirement that Wells respond to the information request and lower the insurance premium.

The two parties appear finally to be working towards a resolution. And notice how he was shrewd enough to invest the time to draft a proper QWR; most people would have grabbed the first template they found on line and used that (and given that bank sites discuss how to reject QWRs, one has to wonder if at least some of these deficient models are bank plants).

So this route isn’t for everyone. But could it be? For instance, mortgage counselors work regularly with borrowers under stress. It would not take much effort for a the legal aid program of a local law school to come up with proper models for effective letters under RESPA. The school or the mortgage counselors could also give advice on follow-up steps on the course of action in the likely event that the bank did not reply.

If some groups got together to make these letters and strategies more accessible to ordinary borrowers, they could be used to enforce the law’s intent, namely, that banks treat borrowers fairly.

Now this may seem funny, but it is actually pathetic that someone had to go to this length for a bank to straighten out an “error” that may in fact be an institutionalized abuse.

In April 2009, a Kootenai County homeowner struggling to pay the mortgage got a letter encouraging enrollment in a federal program meant to help people avoid foreclosure.

The homeowner called the mortgage company, gave them information, and awaited an application for the Making Homes Affordable program – one of the “Main Street” pieces of the federal stimulus plan, intended to help homeowners stave off foreclosure with lower payments. Her anonymous story is included in a new report from the Idaho attorney general.

The homeowner waited. And waited.

Called back. Was told the packet was on the way. Was told to keep making those loan payments – or as much of them as she could .

Waited. Called back. Was told the MHA program would not work, but another program would.

This was September.

“I expressed my concern that I was scared we could lose our home,” the homeowner said in a complaint filed with the AG’s office. “She told me not to worry, that would not happen because I was doing everything they asked me to and the loan was up for modification. In December, we received a foreclosure notice …”

That story is one of several documented in the report from Idaho Attorney General Lawrence Wasden – and one of the “legion” of similar complaints nationwide, federal watchdogs say. The Wasden report details, among other things, a pile of complaints about mortgage servicers giving shoddy, confusing service to people desperate to keep their homes.

The biggest source of complaints deal with a federal stimulus program meant to help at-risk homeowners renegotiate lower payments. The “loan mods” are a big piece of the stimulus plan’s “Main Street” wing, and the program has been an utter flop.

Some $46 billion was budgeted to help 3 million to 4 million homeowners.

Fewer than 240,000 have gotten that help under government programs, according to the Special Inspector General for the Troubled Asset Relief Program. More than three times that many applications have been “cancelled,” and thousands have found themselves snared in a bureaucratic insanity loop, dying for clear answers and sometimes leaving a months-long process even worse off than they were before.

Wasden’s report includes a wealth of personal stories about hardship made worse by the incompetence of banks and mortgage servicers. Or maybe incompetence isn’t the right word. You get the feeling that these organizations – Bank of America, Chase, Citibank – can be competent when their hearts are in it.

“Homeowners described dozens of frustrating, oftentimes heartbreaking, scenarios in their complaints – stories of never-ending modification negotiations, lost paperwork, misleading representations, unaffordable modification offers, and communication difficulties,” the report states. “Essentially, consumers’ complaints showed that America’s mortgage servicers were demonstrating the quintessence of customer disservice.”

Meanwhile – as foreclosures rise, with estimates of another 20 percent increase this year – the federal government does nothing.

Literally nothing.

“Despite nearly daily accounts of errors and more serious misconduct, Treasury reports that it has yet to impose a financial penalty on, or claw back incentives from, a single servicer for any reason other than failure to provide data,” according to the latest report by the Special Inspector General of the TARP program. “(G)iven the current pace of foreclosures, (the loan-modification program’s) achievements look remarkably modest, and hope that this program can ever meet its original expectations is slipping away.”

That’s the big picture. Here’s Main Street:

Michael Hicks is three months behind on the mortgage for his Nampa, Idaho, home – and 20 months behind on an answer to his application for a loan modification. A married father of two who’s out of work with a back injury, he has spent his savings and his retirement on keeping up with the mortgage since May 2009.

He missed the first payment in November.

Now he’s more than $5,000 behind and out of reserves.

He’s on his fourth application – he was told they lost his first one, then asked to “update” his application with a couple of brand-new ones, etc. After he complained to Wasden’s office about the delays and runaround, a Bank of America official responded that he needed to apply once again, that there were missing documents in his application.

“I was calling once a week to ask if there were additional forms they needed and they said no,” he said.

Nevertheless, he called to start the process a fifth time – only to be told that no, he didn’t need to apply again after all. His application was in the pipeline. It was going to be pushed through.

He’s waiting to hear, as the foreclosure clock ticks.

“It’s probably lost again,” he said.

Shawn Vestal can be reached at (509) 459-5431 or shawnv@spokesman.com.

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About Me 0052

Saturday 5 March 2011

foreclosure help

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