Homeowners jump through hoops to avoid forclosure, but face more lender hurdles

(source: ForeclosureWarehouse.com)

LANSING — The time is ticking for Melody Stratton and she knows it. The 51-year-old Lansing resident has been battling almost daily since May 2008 to save her home from the foreclosure crisis chewing up the nation’s housing market. On April 30, barring a Hail Mary save from one of the advocacy groups she is working with, the Ingham County sheriff will put her house on the auction block.

At this point, all the paper work is finished. The telephone is silent. And all she can do is wait for her counselor at ACORN to call her and tell her where his negotiation with her lender has landed them.

“It’s real hard to put faith in somebody else when you have had to put it in someone else’s hands only to find out you had to do it yourself,” she said, discussing her frustration over a year-long battle to save her home.

“There’s no way we can prevent the sleepless nights we know the home owner is experiencing,” said Carrie Guzman, financial justice director of ACORN in Lansing. The social justice group is working with Stratton to help her save her home.

Carrie Guzman of ACORN

Both women, Guzman and Stratton, said they are on pins and needles. Guzman added that the tension is not only high because the livelihood of one mortgage borrower is at stake, but because the whole system is waiting to see how reforms and programs passed in the federal stimulus legislative package will help, if at all.

Homeowner wants to pay, but gets silent treatment from lender

Stratton’s story dates back to the summer of 2007, when she nearly lost her house in an earlier foreclosure. It was August 2007 and she and her husband were able to come up with the money to pay off the past due balance of nearly $18,000 which included legal fees for Farmington Hills-based Trott & Trott, the state’s largest foreclosure law firm. And just as she and her husband took a big deep sigh of relief, they got a notice that while they had paid of the past-due amount, it did not include a payment for August and they were now behind in payments again.

Stratton called the mortgage company, Washington Mutual and sent them paperwork and was finally able to work out a payment arrangement to pay off her past due amount, while keeping current. She agreed to make nearly $300 in additional monthly payments until March 2008. Then she would be back to her nearly $800 a month house payment.

The pay-off date came and went and while she was making the payments, while juggling utility payments to prevent their shut offs, but the Washington Mutual paperwork did not show Stratton current on her payments. In fact, it showed her in arrears again. Thus began a new round of phone calls and pleadings and hours on the phone with different customer services representatives. In September 2008, a customer service representative and a collections department agent in a conference call with Stratton said they had identified the problem. The calculations for the pay off were wrong, she should have paid one more month of higher payments, but the other payments had not been properly credited to her account. A resolution seemed at hand.

But when she had heard nothing by a couple of days later, she called back and the mysterious representatives from customer service and collections had vanished from the system, and there were no notes of where the situation was at. She was told to file paperwork for loss mitigation. She did, faxing it and mailing it nearly a half dozen times.

Then there was silence.

In December, at the end of the 60 days she was told it would take to make a determination she started calling to find out where things were. She reached someone in collections who emailed that the loss mitigation personnel to inquire on a status of Stratton’s request. Loss mitigation departments work with borrowers to prevent foreclosures and can modify loans, change when payments are made, add back payments to the end of a loan period and other actions to alleviate situations for borrowers. Stratton received a letter in the mail acknowledging receipt of the loss mitigation paperwork nearly four months after it was originally sent in.

And then there was silence again, until March when she received a letter from Washington Mutual saying the couple’s request for loss mitigation had been declined because the information was not current. Shortly after receiving that letter in the mail, the Strattons arrived home on a Saturday to find a first-class postage mailing from Trott & Trott announcing that Washington Mutual, which was in the process of merging with Chase, had referred their mortgage for foreclosure proceedings. The letter demanded a payment of nearly $9,000, including legal fees for Trott & Trott.

The letter said the couple had 30 days to respond.

But five days later, again by first-class postage, the notice of sheriff sale arrived in the Stratton’s mail. The house, the letter informed them, would be put on the auction block on April 30.

Guzman, and a source familiar with Trott & Trott’s foreclosure operations, said the use of first-class mail was highly unusual for sheriff sale notifications.

“Usually, in Ingham County, they put the notice on the property,” she said. “At the least they send it certified mail.”

Lawmakers concerned, but hands are tied

The situation the Strattons face frustrates State Rep. Andy Coulouris.

“This is the type of situation we intended to address,” the Saginaw Democrat said, referring to the Home Foreclosure Prevention Act which passed the Democratic-controlled state House months ago. “This is the archetype situation.”

Under the legislation, borrowers would be notified that they have 60 days to sit down with a housing counselor who could then bring the lender to the table to negotiate a settlement. If the borrower met certain criteria for loan modification, but the lender refused to re-work the loan, then the foreclosure would have to proceed with a judge reviewing everything. That makes a foreclosure more time intensive and costly.

The House version was changed in the Republican-lead Senate. There, critics argue, the legislation continues to favor lenders. The provision requiring judicial foreclosure in some cases was stripped from the bill, with Republicans arguing it would add costs to the foreclosure process costing consumers more money in the end.

As senators debated the bill on the floor April 2, one lawmaker, Democrat Hansen Clarke of Detroit, blasted the bill.

“You see what these bills are. It’s typical Lansing legislation. We offer it because it sounds good to the public, when in fact we aren’t doing anything,” Clarke said. “These bills are damaging. They are shams. They provide a false hope of relief from foreclosure when none exists.”

He told Michigan Messenger that the bills — even as passed by the Democratic-controlled House — would not have helped the Strattons.

But Guzman of ACORN, argues that the House version “certainly” would have helped the Lansing family, but “I’m not sure the Senate version would.”

Regardless, Guzman said, had the two versions been reconciled and passed before the legislature convened for a two-week spring recess, it could have helped the Strattons.

“I think it would have upped her odds” at saving their home, Guzman said.

Stratton is not ready to give up. As frustrated as she is with the process, she said wants to make good on her promise to pay the loan back for her home. She said if the house is sold at sheriff sale and her family cannot come up with the funds to redeem the property in the six months they will have, she said she is ready to stay in the property.

Guzman said she believes ACORN volunteers will be willing to help the Strattons in civil disobedience if that is what it comes down to. “Our Homestayers program is willing to do civil disobedience after an eviction,” Guzman said, referring to acts of civil disobedience that the group has used successfully in other states.

But Stratton hopes it won’t come down to barricading herself in her home when deputies from the Ingham County sheriff’s office come knocking. “I just want someone to use some common sense here. I want to pay this.”

Coulouris said stories like the Stratton’s are wearing on him.

“I’m absolutely frustrated. It’s extremely short-sighted for a lender to not want to modify a loan with a borrower who wants to pay,” the lawmaker said.

As for Stratton: “I won’t be a victim, but I feel victimized. I feel targeted,” she said of her plight. “I feel like I’ve been made into a commodity.”