Why Won’t My Mortgage Company Help?

April 2, 2009

By Angie Moreschi:

With President Obama’s recently released Housing Rescue Plan, the pressure is on to stop the foreclosure crisis, but making that happen will require the cooperation of lenders, and Consumer Warning Network has learned that’s easier said than done.  We followed a Florida family trying to save their home, and it left us asking — “If they can’t get a loan modification, who can?”  Click the video above to see Angie Moreschi’s report or click read more below.

Marlene and Alex Mendoza were served with a foreclosure notice in February.  The family tried to be proactive and work something out with their lender, but Century 21/Wells Fargo, the servicer handling their mortgage, made it very difficult. That, despite the fact that the Mendozas seem to be the perfect candidate for a loan modification.

They did everything right.  When they bought their Valrico, Florida home for about $300,000 in 2005, they both had good incomes.  There was no zero percent down or skyrocketing, adjustable interest rate.  In fact, they put nearly 80-thousand dollars down, from the sale of their old house when they bought the new one.

The trouble started when the housing market crashed, and Marlene’s income, as a real estate agent, was wiped out. “We were struggling, but we were making the payment, and we were paying late fees, probably for 3 or 4 months,” Marlene said.

Mortgage Servicers Give the Run-around

She called the mortgage servicer, Century 21/Wells Fargo, hoping to get help through a loan modification, but they told her she had to be behind in her payments, before they would consider helping.

“I told them it doesn’t make sense that you want me to be late, for you to review my paperwork, and they said that’s how they operate,” she says.

As crazy as it sounds, that’s how most lenders operate. They won’t even talk to borrowers until they’re at least 3 months behind, which defeats the whole purpose of President Obama’s much ballyhooed housing rescue plan, to be proactive.  And by the way, the reason it’s three months behind is that usually puts a homeowner into foreclosure, which then lets the lender slap a hefty  foreclosure penalty fee, usually $3000 to $10,000 onto what you already owe.

The Foreclosure Trap

Not realizing that, the Mendozas, like so many others, stopped paying, as they were instructed, and applied for a hardship loan modification.

“They told me not to worry, ” she says, “‘cause they can stop that process once a modification goes into effect, and that I was a good candidate, I was told.”

The Mendozas had to wait 90 days to find out if they were approved and just recently got word-the lender said “no.”  They were devastated.

“So, we’ll file foreclosure.  So, huh, we’ll do bankruptcy,” Marlene said, fighting back tears.  “How’s that gonna look. How’s the kids gonna look at us.  I just don’t want my kids to feel the way I feel.”

Completely frustrated, Alex pointed out the whole thing defies logic. “I just wish you could knock some sense into them.  It just doesn’t make sense.  Why do you want to take my house when I’m willing to still pay for it.  I just need a little bit of help,” he said.

Not Giving Up

The Mendozas should be a perfect candidate for President Obama’s Housing Rescue Plan.  Her husband is working two jobs.  She is doing part-time, temp work, until the housing market picks up.  Even though they’ve lost a lot of equity, their home isn’t even underwater.  So, Marlene called Century 21/Wells Fargo back to plead with them to reconsider.

“My husband has been working at the same company for 12 years.  We are getting some income.  We can handle the mortgage.  It’s just that we can’t handle the high mortgage right now.  So if we can get some kind of assistance, some kind of modification, even with stipulations, what’s what we’re looking for.  We’re not looking for a handout,” she told them.

Much to her shock, the customer service representative told her Century 21/Wells Fargo is not participating in the President’s Housing Rescue plan.  She asked to speak to a supervisor, who confirmed they were not participating, but said “it depends on the day.”

“Why is the President signing all these stimulus packages, and no one is participating?” she  asked. “And why are they telling us the people, Americans, to apply and go and look and research, and yet when we do it, it’s not happening.”

Good question.

The Mendoza’s may be down, but they refuse to give up.  Marlene resubmitted her application for a loan modification and is now waiting and hoping for a different answer.

CWN Will be Watching

Meantime, CWN called the Mendoza’s servicer back to find out if and when they plan to take part in the President’s Housing Rescue Plan.  A customer service rep told us Century 21/ Wells Fargo is going to participate, they’re just waiting for additional requirements from the government– even though the plan went into effect in early March.  He said they plan to send out letters to homeowners in the next week or so.

We’ll be watching to see what happens.