Debra Dahlmer has never missed a mortgage payment. But her lender, Bank of America, still threatened to foreclose on her. After a saga that has lasted for more than a year and a half, there might finally be light at the end of the tunnel.
If anyone is a poster child for people who should not be facing foreclosure, it's Debra Dahlmer.
Dahlmer, who is retired and legally blind, has never missed a mortgage payment on her home. She lives in Gloucester, Mass., in a modest house with her 80-year-old mother and several small, well-fed dogs.
But Dahlmer says that for a year and a half, her lender — Bank of America — has been losing her documents and dragging out a loan modification she qualified for. And lately, the bank has been threatening to foreclose.
"Are they going to take my house even though I've always made the payments?" she asks.
The nation's largest banks are under investigation in all 50 states. Prosecutors are looking into allegations that banks are improperly foreclosing on thousands of American homeowners. The banks acknowledge some paperwork problems but deny that they are foreclosing on people without justification.
A Tough Two Years
With her long white hair and easy smile, Dahlmer is the quintessential nice lady next-door.
NPR first reported on Dahlmer's case in December. After her husband died, she couldn't afford her mortgage. But she has guaranteed disability income that could cover her payments if she had a lower interest rate. She should qualify for a rate reduction through President Obama's foreclosure-prevention effort, the Home Affordable Modification Program (HAMP).
A Broken Payment Program
Bank of America enrolled Dahlmer in a temporary plan for making reduced payments. And even though she is following the bank's instructions and has never missed a payment, the bank told her it considers her to be delinquent.
The bank told her that's because Dahlmer has been making smaller payments through the government-sponsored foreclosure-prevention program. And Bank of America told her that if she doesn't pay the difference by the end of July, it would start foreclosure proceedings.
Dahlmer says all of this scared her.
"I kind of dread waking up," she says. "I know that sounds awful. But I know my mind's going to start thinking of this and thinking of this."
And she says she doesn't know what she would do if she lost this home that has housed her family for nearly 50 years.
"What would I do? Where would I go? What would I do with my mom?" she says. "It just terrifies me."
When NPR first reported on Dahlmer's situation, Bank of America said it would review Dahlmer's case and that it hoped to resolve it within several weeks.
But three months later, her case still hadn't been resolved.
The bank did enroll Dahlmer in another temporary loan modification. But in what appears to be a mix-up, Bank of America also threatened to foreclose on her house.
The foreclosure letter from the bank is sitting on her coffee table.
"And I'm disabled," she says. "I stay in the house most of the time. ... I had to walk out of here the other day just to clear my head."
The Quest For A Lawyer
Despite the stress, Dahlmer hasn't just spent her time worrying. She searched for a housing advocate or a lawyer who could help her.
That led her to a prominent consumer rights lawyer, Gary Klein, who is suing Bank of America on behalf of homeowners like her.
"There's every reason to believe that there are tens of thousands or hundreds of thousands of affected families," he says.
Klein is suing Wells Fargo, JP Morgan Chase, CitiMortgage and others. He says the banks are required to approve a qualified homeowner for a loan modification within three months of an application.
"People are getting the runaround, people aren't getting access to a decision-maker, they're told their documents are lost, and in many cases what they're getting is a decision that makes no sense in light of their personal circumstances," Klein says.
He says he's hearing from people at all stages of the foreclosure process. "People are being foreclosed on when they shouldn't be," he adds.
A Permanent Loan Modification
All of the major banks deny this. Meanwhile, state prosecutors are negotiating a settlement that would change the banks' foreclosure practices. Federal regulators could come out with their own new foreclosure regulations as soon as this week.
And for Dahlmer, there might just be a happy ending: When NPR contacted Bank of America this time around, the bank said it has approved a permanent loan modification for her — and that her new paperwork was sent out over the weekend.
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