Did you hear the one about the bank that refused to help the financially struggling homeowner unless he was delinquent in his mortgage payments?
So the homeowner gets behind on purpose and, sure enough, the bank reduces his payments — temporarily, while it decides whether he qualifies for more permanent help.
Later the bank abruptly decides not to make the lower payments permanent, and moves to foreclose on the struggling homeowner because he's behind on his mortgage payments.
No joke.
This is what Martin Galvan says happened to him when he tried to save the five-bedroom Hacienda Heights home he has shared with his wife and two children since 1999.
The bank, JPMorgan Chase, "told me they couldn't help me unless I was behind in my payments," Galvan recalls. "I said, 'Are you telling me I need to stop making payments?' They said, 'We can't tell you that, but listen very carefully. We can't help you unless you are behind.' "
Welcome to the murky, troubling and often inhumane world of mortgage loan modifications, where the federal government offers small incentive payments to encourage banks to work out more affordable mortgage payments so homeowners can keep their homes.
The Obama administration's efforts to help homeowners have been widely criticized as too little, too late for too many. "The loan servicers make more money foreclosing than they do in modifying someone's mortgage," says Martin Andelman, a Southern California–based, self-styled homeowner advocate who blogs at Mandelman Matters. "Last year we shoveled $12 trillion to the banks. We spent less than one one-thousandth of that dealing with foreclosures."
Earlier this month, the congressionally appointed oversight panel for the Troubled Asset Relief Program (TARP), aka the bailout, labeled the administration's foreclosure relief program ineffective, reporting that it would achieve less than one-third of its own original goal of how many people it would help.
When the administration created the Home Affordable Mortgage Program (HAMP) in 2008, officials said it would help 3 million to 4 million homeowners. In fact, the oversight panel says the program will prevent only 700,000 to 800,000 of the more than 8 million to 13 million foreclosures expected by 2012.
Galvan, a barber for 30 years who owns his own hair salon, never imagined he would be one of those foreclosures when he moved his family from Montebello to Hacienda Heights. "My wife and I thought we were pursuing the classic American dream, buying a home and moving our kids to a nicer neighborhood."
Ten years ago, Galvan, 49, opened his MG Hair Studio on Beverly Boulevard in Montebello's business district.
As a small businessman, Galvan says he was extra careful about taking on debt.
In 1999, he paid $284,000 for the house with a Countrywide mortgage. Then in 2005, at the height of Southern California's overheated housing bubble, he refinanced his suddenly far more valuable home in order to remodel, taking a $532,000 mortgage with Washington Mutual.
The huge new loan reflected the skyrocketing value of his property, along with the rest of Southern California real estate, but it also jacked up his mortgage payments.
Galvan insists he was always careful about his credit, although he acknowledges he wasn't a sophisticated businessman. "They [the loan broker] said sign here and sign here. I trusted them. Unfortunately, that's my background. I'm a trusting person."
When the economy collapsed, Galvan says, his business was hit hard. "My clients are attorneys and real estate people," he says. "If they came in every two weeks before, they stretched it out. Some said they couldn't afford the $20. So I lowered the price. It's more important to keep them as a client."
His wife was laid off from her accounts-receivable job for a construction company in October 2007. Eventually she was able to find a lower-paying job at a mortuary.
Meanwhile, JPMorgan Chase acquired Washington Mutual from the federal government after WaMu collapsed in 2008, in the largest bank bankruptcy in U.S. history. So Galvan approached JPMorgan Chase for a modification.
After he was unsuccessful on his own, he sought advice from a Diamond Bar attorney, Walter Hackett, a former banker who switched sides to represent homeowners. In the spring of 2009, with Hackett's assistance, Galvan applied for a mortgage modification.
Galvan says he followed JPMorgan Chase's guidance reluctantly, stopping his mortgage payments for three or four months in an effort to get the bank to reduce his payments from about $2,700 a month. "When I stopped paying my mortgage, I was crying," he says.
In August 2009, Chase offered Galvan a temporary modification, reducing his payments by about $400 a month, to about $2,300.
Galvan and his family were incredibly relieved. He made the reduced payments for more than a year. Then in October 2010, the bank said he did not qualify for a permanent modification because he didn't have sufficient income. "But they told me to keep making the lower payments and they would work with me," he recalls.
In early December, Chase sent him a letter notifying him they would sell his home in foreclosure on Jan. 7.
Galvan estimates he paid Chase $30,000 in 14 months as part of the temporary modification.
Through a spokesman, Chase refused to discuss any aspect of Galvan's case.
How do I know if I will qualify for a loan modification? The number 1
criteria your lender is looking at is your ability to make the new
modified payment now and in the future. You need to supply the lender
with proof of your income, along with a complete and accurate financial
statement detailing your income and expenses to show them that if
granted the modification, you will be able to afford the new, lower
payment.
www.lalegal.ca
A group that was really helpful and was able to help me for a modification was Montgomery & King law. I hired them after I was consistently given the run around by my lender. I had been scammed before and was very skeptical at first to pay someone to help me but I had no choice, it was that or I lose my home to foreclosure because the lender refused to accept payments. I can truly say these guys were always there for me especially my case manager Miles, he was kind and always returned my calls when I needed him. I would recommend them to anyone. Call him and let him know Shannon Nelson of MA referred you and believe me it'll be the best decision you have made. They will do whatever it takes to keep you in your home and will always be honest with you. His direct line is 949-356-2671.
Iam glad someone has fight chase because this is exactly what they did to me but how do get help to fight them
B of A did the same to us. We will not leave. We are suing them. We will not leave our home. We have fought for three years. This shit is crazy.
Chase is doing the same thing in Colorado. Lowering the monthly payment while they review for a loan modification, and than a year later, when they deny the modification, they demand full payment for the total amount (all months of their review) of the difference betweem the original monthly payment and the amount of the lower payment! How do these people live with themselves?!! I say ALL homeowners making mortgage payments, BOYCOTT the lenders and stop making mortgage payments? What would the banks do then? If all payments stopped, what would they do? Boycott, boycott!!
However, the lender still has the option of filing for an exception from the automatic stay. If the relief is granted the lending company is authorized to proceed with the foreclosure action. Bankruptcies do not always prevent or delay foreclosure and it does not necessarily enable the homeowner to remain in possession of the home unless the pay the deficiency owed to the lending bank. However, in most cases a bankruptcy will delay the foreclosure.
Loan modifications are a joke. By all appearances, the banks appear to be in the business of "helping" struggling homeowners but the reality is much much different. The people who work in these "modification depts." are under gag order and the media is just now starting to shed a little light on the true story. I have it on good authority that something like 5% of trial mods are converted to permanent. The banks make more money if they foreclose! Find out more at http://www.stoporstallforeclos...
This same thing kinda happened to my family too now i don't know what to do.A year ago from last month, we moved out of our home. We stopped making payments and we kept up on the lawn, to make the house look nice to try and do a short sale. just like the banks told us to do. They kept having us re-submitting all documents over and over again, and we did. Then as soon as we had an offer on the house they said no we don't qualified for the short sale terms and hardship anymore etc. Now they have ruined our credit and left us with no home since we have to move out of the temporally house we have been renting and will probably be facing foreclose soon on our original house, so we can't move back there neither, just to turn around and move right back out again. We did what they said to do and we get screwed but yet they have all the money and i bet there children have a place to call home. if it was just me i wouldn't care but i am a mother of two very small children that i have to think about. And now Bank of America wont return any of my calls or they will say there having computer problems or they will just hang up on me all the time i can't ever get a straight answer and i was never behind on a payment before in my life and still till this day all of my other bills including my rent that i have been paying on are all up to date and most of the time payed early. i owe $78,000.00 before all these extra fees now, and when i tried to short sell it i got an offer of only $25,000.00 cash but after sewer and water hook up was paid the bank would have only got like $6,000.00. I felt like crap since the roof alone cost that much that i just had put on not even a year prier. But well anyways does anyone have a house for us to live in please, and i am for real to i need a 3br home in the Muskegon, MI area Thanks a lot Bank of America for making what nothing because your not gonna sell the house and your not getting another payment out of me now since you wont work with me and wont fix my credit that you ruined. anyways i will stop running my mouth now thanks for listening... any ideas please send me an email at samgrenell@gmail.com
Great article. It's incredibly true that Wall Street bankrupted this country and we are ALL paying the price. Sub-prime loans were insured so that when the borrower defaults the lender can in many cases recoup their losses. It's no wonder they don't want to modify, they make more off of foreclosures! All these HAMP programs and verbiage that the lenders spout out about helping unemployed or distressed homeowners is a total smoke screen. They will string homeowners along until it's advantegous to foreclose and the borrower has exhausted all monetary resources. My best recommendation to homeowners is to stop paying your mortgage and hire a lawyer. If you absolutely cannot hire a lawyer, do the work yourself and research. You can fight these guys as SO many of the loans out there are dirty...you just have to commit to speaking out and doing your homework. http://www.stoporstallforeclos...
secured loans are the loans in which we took money from lender by giving him our something . so that if we are not able to pay our installment then our that thing will not be ours more
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Do the math. He bought the house for $284k. He refinanced for $532k. Where did the $150,000 go? A lot of people that had perfectly reasonable mortgages refinanced when the value of the house went up and spent the cash. That's a LOT of money. The banks were stupid to loan 100% of value when prices were so obviously artificially inflated, but I don't feel sorry for someone losing their home that took a bunch of cash out and spent it. At the peak of the housing bubble, housing values were at an all time high, equity and savings were at an all time low. S
Well Mr. Presdident you did it again, you lied to the poor home owner saying the government will help you. B.S. I know of 5 home owners or previous homeowner that have had this so called help and all have had the same issues and lies during their socalled loan modifications. Each one was told on 5 or mors occasions to send in all of their financial information only to be notefied within 3 weeks from another agent in another state that a document was missing and it was nec. to resubmit all information again. This was done while the home owner was working under a reduced livable payment, then after a year or more the home owner was told to make no more payments to the loan modification people and the bank or lender would adjust the mortgage. Then the homeowner was told by a lender that they did not qualify for an adjusted loan or the adjustment was reduced by so little it made no difference, and the loan went from 30 years to 40 years. Note the people I know are in Orange County , Riverside County, Colorado< San Bernardino County, Lake Havasu City Az. Thank you Fannie May and Freddie Mac and most of all Barney (GOOGLE) Franks with the creative financingand everybody should own a house, some people should not own a tent!
This same thing kinda happened to my family too now i don't know what to do.A year ago from last month, we moved out of our home. We stopped making payments and we kept up on the lawn, to make the house look nice to try and do a short sale. just like the banks told us to do. They kept having us re-submitting all documents over and over again, and we did. Then as soon as we had an offer on the house they said no we don't qualified for the short sale terms and hardship anymore etc. Now they have ruined our credit and left us with no home since we have to move out of the temporally house we have been renting and will probably be facing foreclose soon on our original house, so we can't move back there neither, just to turn around and move right back out again. We did what they said to do and we get screwed but yet they have all the money and i bet there children have a place to call home. if it was just me i wouldn't care but i am a mother of two very small children that i have to think about. And now Bank of America wont return any of my calls or they will say there having computer problems or they will just hang up on me all the time i can't ever get a straight answer and i was never behind on a payment before in my life and still till this day all of my other bills including my rent that i have been paying on are all up to date and most of the time payed early. i owe $78,000.00 before all these extra fees now, and when i tried to short sell it i got an offer of only $25,000.00 cash but after sewer and water hook up was paid the bank would have only got like $6,000.00. I felt like crap since the roof alone cost that much that i just had put on not even a year prier. But well anyways does anyone have a house for us to live in please, and i am for real to i need a 3br home in the Muskegon, MI area Thanks a lot Bank of America for making what nothing because your not gonna sell the house and your not getting another payment out of me now since you wont work with me and wont fix my credit that you ruined. anyways i will stop running my mouth now thanks for listening... any ideas please send me an email at samgrenell@gmail.com
As a former employee at Chase, I use to run part of the loss mitigation dept. I can honestly tell you that a lot of what you see is really disorganization and not deception. When the mortgage mess hit the economy in 2007, the banks were not prepared for the flood of foreclosures. In order to staff up, we started hiring a bunch of 22 year old kids who were put through a one week training program. Think about it, a 22 year old kid with one week of training is helping to make a decision on YOUR home! To make a long story short, since I have left, I am 100% anti loan mod. In 99% of the case, a loan mod is a bad idea and not in the homeowners interest. Why do you think the banks are only giving temporary loan mods or loan mods for 5 years that surpass the Mortgage Debt Relief Act that expires 2012? Every move by the bank is strategic. Remember this, YOU are not the banks customer. The bank doesn't care about you. The bank's customer is the note holder or investor who holds your mortgage. I have since dedicated my life to helping people avoid loan mods. If anyone needs my help, email me at peter@realtyescrowco.com. My advice and help is totally free
The banks are sounding Extremely fishy here!!! I'm sure they're being low life scoundrels!! but 2 greeds don't make a right!! the Galvans needed a $200K remodel???!!! or maybe a remodel and a couple of Escalades in the garage??!!! you've got 2 kids and you need a 5 brm house Why??!! you cut hair for a living!! you're not a Dr!! I think there's fault/greed on Both sides and it's Not pretty!!! learn the lessons folks!!! or be prepared to repeat them... over and over again!!!
Banks are so stupid thats why they had to be pailed out by the federal government. Give home owners a break, give them a lower interest rate, extend their 30 year mortgage to a 40.Banks will still make out better giving these favorable terms to home owners than foreclosing on them.Statistics show banks will do better dollar wise by allowing home owners to do a short sale their rather than foreclosing,but it seems like they don't even care. Get info on loan mod and short sales on my blog http://philadelphiashortsalebl... . I hope I can help!
I had a mortgage with WAMU - which ended up being Chase. They told us the same thing. Quit paying and we can help. So we did. We waited until we were 120 days behind as told we had to be by the bank. We sent in the loan mod papers and waited, and waited, and waited. I'd call and they'd say "we're trying to assign this to an adjuster. Wait." Finally I start getting calls that they didn't receive my profit and loss statement in the packet. I sent it again, and again, and again. I faxed it. I mailed it. After months I finally got a woman on the phone who told me she had everything and was sending it to the mod dept. A couple weeks later I get calls and letters that they still didn't have my profit and loss statement. Then I get a letter that my house is going up for auction in a week because I was behind on my payments. I called and they said they had no knowledge that I was trying to do a modification. They claimed the loam mod people never notified the foreclosure people. So on the day my house was to go up for auction I was able to stop it. I continued to send my papers to people who claimed they never got them. I did this for months. I called multiple times and demanded to be put in direct contact with the person responsible for my loan modification. They refused to let me talk to anyone in that office. Eventually I got a nimrod on the phone who told me this "I doubt' we'll be able to do anything for you." I had asked that my principle be reduced as well as my payment because some banks were doing that. I asked that they reduce my mortgage from 560K to 460k and I'd make the payments on it no problem. He said no way - and this is a guy who is a peon - not the person in charge of modifications. A week later I received notice that my mod was being rejected and I was told to reapply. It took me a couple of weeks to get everything together and was about to send the packet off when I found a note on my front door. The note was from the new owner asking me and my family (one month old son, toddler, 18 yr old and wife) to leave our home. We received nothing that out home was going up for auction. NOTHING. Chase insists that they mailed us several notices and posted the notice of sale. We never received anything. They say the notice they posted six months earlier when I was in a mod and they were illegally trying to sell my house counted. The new owner told me he bought my house for just over $300K.
I have this very similar story, I am with Wachovia, wells fargo, and have been in my house for over ten years..,The did This same thing to me, and now keep turning me down for a modification, and as per their instructions I am now way behind. I cannot afford an attorney, but have spoken to many throught this 15 month process, all agree I MORE THAN qaulify for a modification. It has been absolute Hell. I know many with Wachovia who have experienced this same situation. Now I stand to lose my house. The bank is no help, admittedly contridictory, and you can get three different stories from three different reps of the bank in one phone call. I have 15 months worth of notes, phone calls three times a day at least three days a week, numerous faxes, to no avail. I have never experienced a prob with my loan until now. This all happened as a result of trying to get the loan modificatiion THEY reccomended. The economy hit me hard, and the modification seemed to be a much needed relief, I too was relunctant to follow the advice of the bank, they assured me it would be no problem, and here we are, I wake up everyday wondering how long it will be befor I no longer have my home. I just keep re applying for the modification. I would not have gone through this if I had known I couldnt make the payments, but I can. Their promise failed! I have done everything to the letter that they have instructed me to do, and now I am losing my home. I am more than ready to make my mortgage payment, and write a check today, but they have created such a debt for me and will not modify my loan even thought I completely qualify. There always seems to be some reason on their end. This is no way to live.
Say you got a loan that was fixed for 5 years and after five years it would "reset" meaning the terms are now adjustable. But you had put a 20% down payment so you figure no matter what you will have equity but then the market crashes in historic proportions. But you can afford your house in current terms but want to lock your rates in before the "reset", well, too bad. The banks will not work with you. They will let it reset, which will likely lead to the house being unaffordable and evenutal foreclosure. That is what is happening to myself and many others. Why? Well my loan was with countrywide, then sold to BofA in a "bundle" of loans. Loans BofA bought for pennies on the dollar. So if I forclose they will make a profit on the resale because they have equity on the loan. AND then FDIC insurance will also cut the bank a check. And oh yeah, my note says Bof A owns my loan but they have no record of me. Instead I deal with a shamless and evil entity known as a "loan servicer", in this case IndyMac. So, in short, many of us are not "irresponsible" homeowners. We are instead stuck with ruthless banks who profit from our demise. I can afford my house, I would like to continue to own it but instead I am being railroaded into higher payments. Ask yourself, why is it in the banks interest to see people lose their homes and default on loans? Answer, they profit from foreclosure greater than and more immeadiately than from someone paying off their home over 30 years.
This guy borrowed $532K from a bank (on basically a $284K house, btw), failed to make his payments and now you write that the "bank is wrongly snatching their home". How about this: don't buy stuff you can't afford! He needs to grow up be a responsible adult and own up to his obligation. I am sure the bank didn't force that refinance down his throat.
This story is as about unusual as dirt. I have no reason to believe it is not true. This runaround only to foreclose in the end is the same thing I and thousands of others have experienced. The middle class means nothing.
But I agree with the previous poster. Watch out for Walter Hackett. Watch out. Promises made are not always kept.
Beware of Walter Hackett. Google his name, call the California State Bar Association and do your homework before you retain him or any lawyer to help you.
Great job Marty. The worst part is that working now in legal aid I'm seeing more and more cases like Martin's and expect we will see many more in months to come.
Well I had similar story with former Countrywide. I called for loan modification because my wife lost her job and was told I have to be late in order to be qualified for modification. To my question what will happen if I stop making payments and bank employee bluntly told me they will foreclose my house. Is this a jock or what
@Hyegrandpa Countrywide (Bank of America now) is so easy to work with. You just need the right numbers to qualify. This is the mystery question: "How much income do I need to qualify for a 2% interest rate?" ... We are the only place that offers the exact income and expenses. If you still need help, please call me at: 855-9MODIFY or 855-966-3439.
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