Mortgage Companies: Playing Loosely With the Rules of Foreclosure

Ninety years ago, Kafka took aim at government. Today, he surely would find equal targets in Chase, Wells Fargo, GMAC and Bank of America.
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In his 1920 novel, The Trial, Franz Kafka provided a dizzying look at the senseless complexity of a bureaucracy that seems to exist primarily to befuddle and punish its constituents. Ninety years ago, Kafka took aim at government. Today, he surely would find equal targets in Chase, Wells Fargo, GMAC and Bank of America.

It is a Kafkaesque process that thousands of homeowners in Illinois and millions across America navigate as they turn to their lenders in hopes of a lifeline but instead are thrown an anchor. They only get to catch that anchor and sink after being forced - almost sadistically - to tread water for months or even years before hearing their lender declare, "Sorry, you're denied. Pack your belongings and go."

If home ownership is the American dream, then foreclosure certainly is the American nightmare. It destroys more than credit. It destroys lives. And its effects are felt beyond the individual family that it devastates. It shakes our entire economy.

In recent weeks, we've learned that mortgage companies have been - at a minimum - playing loosely with the rules of foreclosure. Their employees have been tasked with literally rubber stamping thousands of foreclosures a day without ever examining - as is required by law - the underlying documents. This information led my office to demand a halt on these foreclosures until we can be assured they were based on accurate information and handled fairly.

As important as this disclosure is, it is more a symptom of the mortgage problem than the problem itself. As I travel across Illinois and talk with people and as others reach out to my office desperate for help, I am becoming convinced that, despite their rhetoric, many lenders have no interest in actually helping their customers.

For many, the loan modification process has been a giant sham. The process is infuriating. Homeowners dutifully send documents multiple times only to be told they are missing. If by chance all the documents are received, they are told they do not qualify because they either have too much or too little income. They are told to suspend making payments. Later they are penalized for following the lender's order. And in some cases, homeowners are on the phone with one representative supposedly working on their loan modification only to be transferred to another who informs the homeowner that, sorry, her house is already sold.

These lenders, who put millions of people into questionable loans, now simply want to make those loans, and those people, go away. Foreclosure is a fresh start for the lenders, who were way too eager to write high-risk, high-cost loans. It is a chance to bury evidence of their misdeeds and move on to a new buyer and new revenue.

Foreclosure is nothing new. And it certainly will always be a fact of life for some. Yet, today's situation is not the norm. Hundreds of billions of our tax dollars were used to rescue the banks that created this mortgage disaster. Yet, I discern almost no willingness for these lenders to truly work with homeowners to save the American dream.

The most compelling, and heartbreaking, evidence of this comes from the homeowners themselves. The following emails, all received within the past few weeks, are just a small sampling of the pleas my office receives daily for help.

As you read these stories, one theme will become apparent. These people want a way out, not a handout. They want to pay their mortgages, not default on them. We found a way to save the banks. We must now demand the banks show good faith and save their customers.


I am trying to keep my house. Bank of America is my lender. I have been working with them for a loan modification, which they told me I prequalified for. But they never sent the paper work. Now they are sending me a letter of foreclosure on my house.>


I have been working with America's Servicing Company (Wells Fargo) to maintain residence in my home. To shorten my long story, I was placed on a trial payment agreement after a previous notice of sale was rescinded. I made the payments during that trial period. When it ended in July, I was told that I had not been accepted because my income was too low. On August 11, I asked the servicer about being placed on a permanent Home Affordable Modification Agreement and told them there had been an addition to my income. I was told I would need to begin the process again and would be mailed a new document packet, which I did not receive. I contacted the servicer October 5 and again asked about the packet. I was transferred to another department, which was closed for the day and was told to try back the next day. I called the servicer on October 7 and was told by another representative of all the documents I needed to submit. No mention of a packet being sent to me. While still in this conversation, I was told that my home had been sold on September 8. Subsequent calls to various departments verified the sale, of which I was not notified. During my final conversation with ASC, that day, I was told I should begin making preparations to vacate the property before the sheriff executed an eviction notice. I have been following their instructions, believing they were working with me through all of this, only to learn, accidently, that my home of 16 years has been sold from under me. Is there any recourse for me? I am a black, female widow, 65 years old, who has struggled for several years with this servicer and who wants to remain in her home. Where do I go, now?


I want to make you aware of a problem I am currently having with my home lender. I am currently in the process of short selling my house. However, the lender CCO Mortgage for about a year now has managed to unsuccessfully process or approve the sale. Thus, the potential buyer no longer is interested in my home in Chicago. The latest scenario, the adjudicator for CCO Mortgage, in Glenn Allen, Virginia, has not returned phone calls or emails to the attorney representing me. We have a buyer, offering more than the last person's offer and within the value of the home currently. I must add the first potential buyer, backed out due the lack of response as the process took approximately four to six months to approve the sale. By then it was too late. The contract had expired. Currently, my attorney has left countless phone calls and emails with the lender. As you can imagine, this is a life-changing situation. I am unemployed and in debt badly. I don't have prospects for employment at this time. I don't know what to do.


I was laid off from my job in April of 2009. I applied for the Making Homes Affordable program. I was told that I had to accept a special forbearance plan to be eligible for the program. When I completed the trial period and continued making my normal payments, I was contacted by Chase and told I was screwing up the amount they were trying to modify and they were reinstating the forbearance plan. I told them I didn't want to get any farther behind on my mortgage and that I had saved the payments that were missed. The representative from the bank told me I had to pay off my credit cards to reduce my debt-to-equity ratio. He informed me that the bank would not be asking for the missed payments because they would be rolled into the modified mortgage payments. Three months later, they denied my request for modification based on "lack of income" and demanded what they now termed "late" payments.

I had just gotten a job offer and immediately reapplied for the modification the day after I was denied. I paid four months of the mortgage and requested a payment plan for the rest. I was told once again not to worry about the three months and that was below the threshold for foreclosure. I waited since April of 2010 for somebody to review the application and continued to pay off the outstanding balance and my regular monthly payments. I contacted Chase every week to determine if there were any documents needed. Every week I was told my case was being escalated and to call back in five to seven days. My case was finally forwarded to a relationship manager on September 9. September 10, I was served with papers saying the house was advanced to a foreclosure status. I called to ask why, and was told on two different occasions that it was a mistake and that the system had "accidentally" sent it to foreclosure when the case was left open for a day in the transition from loss mitigation to a relationship manager. I later found out that even though I thought I was paying extra every month and the reps from Chase were working with me weekly on what amounts to pay, my escrow was deemed lacking because of the forbearance and nobody informed me. I have spent the last three weeks trying to bring the account current, but the law firm in charge of the foreclosure tells me they cannot give me the payoff amount and Chase tells me that the law firm has to add their fees. In the mean time, I still do not have a relationship manager assigned to the account and nobody at Chase can help me get any of this settled. I just want to get my mortgage current and every day they are charging me more in attorney's fees. Please help.


I would really appreciate speaking to someone regarding the years Chase has kept us hanging on, in hopes of a modification. We have been denied two times for modification and have had to pay thousands of dollars to keep our home. We have made sacrifices to make the monthly payments. At one time, we were paying $2,500 per month. My husband is a Chicago firefighter and I am an engineer with Local 399. There is way too much to write here. Please help my family out. We have four children and work very hard but it is impossible to pay the fines and fees that they have tacked on. Please help us.


Hello, my husband and I are currently in the foreclosure process with Chase. We applied to have our loan modified because my husband is a union carpenter who has not worked in almost a year. Actually, they raised our monthly payment by $300 in January because they added a $2,500 insurance policy to our escrow account. We were making our normal payment but could not pay that much more. They refused to honor our $726 payment, saying it is a $1000, and that is it. We truly feel that they have stolen our home from us. We do not know where to turn. We have been in our home for 15 years. I am disabled.


Please help us cut through the red tape that the Wells Fargo Mortgage Company has encompassed itself in. After reading this, you will most certainly understand our horrifying dilemma.

We have been under review for the Home Modification Program with Wells Fargo Home Mortgage. We received a letter stating "we are unable to adjust the terms of your mortgage." After numerous calls to Wells Fargo attempting to gather information on why we were refused, we obtained it and promptly faxed in the missing document and were told several times that in these cases, the mortgage balance owed is put on the back of your mortgage and payments resume once again. Perfect, let the payments begin. Great, case re-opened.

Since this phone/fax conversation, our home of 16 years has been put into foreclosure, taken off. Added to the short sale list, taken off, placed back on, and taken off, all in a period of 24 hours! We have survived and overcome job loss, embezzlement from a trusted business partner, and an aggressive form of breast cancer. Now Wells Fargo wants to take our home knowing we can resume our mortgage payments and not willing to give us the opportunity to speak with someone of authority to come up with a plan conducive to doing so. We're in an abyss.

WE JUST WANT TO RESUME MORTGAGE PAYMENTS! We are running out of time, asking for your help and praying for an open ear. Please, please help us get Wells Fargo's ear to hear and work with us. With Kindest regards and much gratitude.

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