AP Photo/Nick Ut
California Attorney General Jerry Brown, speaks at news conference Wednesday Aug. 12, 2009 in Los Angeles. Brown is calling on loan rescuers to back up claims of high success rates in securing huge monthly savings for troubled borrowers. File photo.
Banks and financial institutions have received $75 billion in taxpayer money to offer more affordable mortgages to homeowners. Hundreds of thousands of families have tried to obtain loan modifications from those banks. Many property owners say they are getting the run around. They spend months giving banks paperwork and information, and they say the slow process takes a costly mental toll.
One Pasadena resident has been trying to save her home for the past year. “It’s been a nightmare. I can’t talk about it without starting to cry,” she says. She's negotiated with National City Mortgage for her loan.
“It’s just been like a hamster in a wheel for the last seven months.”
She has a big financial stake in her property. She and her fiancé built a two-bedroom home in the back of their lot for her mother. They also built a new four-car garage. They paid for all those additions outright, without loans. Then her employer laid her off. Now she has to rent the front house and live in the back with her mom and six-year-old son. Still, the bank gave notice and set an auction date to sell her house.
“I just felt like a toy. They were playing with me. The run around they kept giving us.” She says the lenders told her things like, “'We’ll have answers. Oh, we are going to delay this answer. Oh, we need one more document. Oh, now that’s April, we need your March documents.' It was being strung along to the very last minute.”
The ceaseless financial stress began to physically and emotionally overwhelm her and her family. She wasn’t able to sleep or eat for days. Her mother suffered as well.
“My mother’s blood pressure is completely out of control. She has had to be medicated recently.”
Stories like this are nothing new to lawyer Pat Pinto of Orange Country Legal Aid. Her job is to help families negotiate with banks for mortgages they can afford.
“They sit in my office and they cry, they vomit.” She says homeowners start to break down. “They’re so upset because they love their home. They want to stay in their neighborhood. They want their children to stay in their schools.”
In fact, she says she moved her trash can from behind her desk to in front, “because people sit in my chair and they are so upset they vomit all over the floor.” She describes the process families go through dealing with the banks to get better terms on their mortgage.
“This is an emotional upsetting experience for them. And I tell you because this loan modification process is taking so long, over a year, that we watch homeowners become mentally unstable. And as the process goes on, they sink deeper into depression.”
Senior citizens are particularly vulnerable during this process. They’ve been hit hard by the housing crisis and targeted by loan scams. And now many seniors are trying to get loan modifications.
“These are supposed to be my golden years,” says James R. Johnson. “But they’re not golden.” Johnson raised four children in the Garden Grove home he’s lived in for more than half a century.
Johnson’s house was paid off years ago, but he, like many other seniors, kept getting phone calls and mail solicitations from people selling loans. He finally accepted a loan to help a friend with a business. The business venture didn’t work out.The solicitations kept coming.
“The old terminology, robbing Peter to pay Paul. I made another loan when they were giving away money easily." So he took out one equity loan to pay off another. "I accepted it because they asked if I wanted to borrow money and I needed it.”
Now he owes $360,000 and has been trying to get the loan modified for the past year. Chase Bank kept Johnson on a trial loan for six months, but after faithfully paying each month, he was denied a permanent loan. Chase moved forward with the foreclosure. Still Johnson is trying again anyway, submitting another application for a loan modification.
Now, he is just hoping God or good fortune will step in.
“I can just pray that they will modify me and give me a break. Maybe I’ll win the Lotto,” he says. “But I don’t play the Lotto.” At this point he has a single lingering hope. “I hope I can get the loan modified so I can live in my house. I have a few more years to live and I would like to live in the house that I have lived in all these years. I would really like that.”
Back in Pasadena, one woman struggling to keep her home says she has given up on the whole loan modification process. She says the bank led her along all the way up to the day before her house was scheduled for auction on the courthouse steps. That's when she says she had no other choice left. She filed for bankruptcy. “We had to file an emergency chapter 13, which immediately stopped the auction,” she says. “Now we are going forward this way to save our property.”
Even though she doesn’t know exactly what’s ahead, she says she's been through so much that filing for bankruptcy actually comes as a relief.
“I always felt it was the worst thing that could ever happen to someone. And I think it saved my mental health. Just being able to go through a day without being physically ill and not being able to sleep and finally being able to eat something. It’s over. I can breathe again.”
An estimated 20 percent of the people who file for bankruptcy are trying to prevent foreclosures on their homes.