The mortgage settlement: Hoping for help

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LEWISTON — Mary Ann Brissette and her husband, Michael, knew modifying their mortgage probably wouldn’t be simple, but they believed it could be done.

After all, the couple had refinanced their Lewiston home in 2003 and hadn’t missed a payment until Mary Ann got hurt at work. Down to one income in 2006, the couple, in their 50s, blew through their savings and lived on credit cards for a time. They missed their first payment in 2008. She recovered enough to get a new job in 2009, but by then the damage had been done. The Brissettes were three months behind on their mortgage.

If they could modify their loan, maybe tack on a few payments at the end of their 30-year term, they figured they could catch up. They expected to have the whole thing taken care of within a couple of months.

Instead, the Brissettes say they spent the past three years feuding with their bank in a stressful, frustrating battle involving paperwork and loan documents lost by the lender, wrong information given by a cadre of ever-changing bank representatives, and a monthly mortgage payment that, instead of going down, doubled.

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The couple is now facing potential foreclosure.

“Just work with me. What is so hard about you working with me?” Mary Ann said of her lender, Bank of America. “How many people have fallen through the cracks?”

A lot, it turns out.

If a national deal reached Thursday goes as proponents say it will, nearly 2 million people who have been hurt by the mortgage crisis should get some financial help. Millions of others should benefit from better-behaved banks.

Three days ago, 49 state attorneys general announced a complex $25 billion settlement with the country’s five largest mortgage lenders: Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally Financial, formerly GMAC. It is the second-largest multistate settlement in American history. The largest was the tobacco settlement in 1998. 

The mortgage settlement’s aim: Hold banks accountable for illegal activities in the wake of the mortgage crisis and stop a slew of current wrongdoings, including foreclosure fraud, giving borrowers wrong or misleading information, and foreclosing on homes while homeowners are trying to get loan modifications.

Although the settlement is complicated and some questions remain, it is expected to help in-default homeowners by cutting their mortgage principal; homeowners who owe more than their home is worth by refinancing loans at a lower interest rate; and people who were foreclosed on between 2008 and 2011 by giving them up to $2,000 each.

That foreclosure check “has nothing to do (with whether) they were wrongfully foreclosed on,” noted Maine Assistant Attorney General Linda Conti. “It’s to compensate them for the hassle of dealing with the bank and the servicer that was so disorganized and gave people the runaround.”

In other words, despite the settlement, homeowners can still sue their lender if they feel they were treated illegally. Homeowners with loans owned or backed by Fannie Mae or Freddie Mac are ineligible for settlement money. 

The settlement also places greater oversight on banks and requires them to stop doing the things that got them investigated in the first place, such as hiring people to sign reams of legal foreclosure documents without reading or understanding them — a process that’s become known as “robo-signing.”

It is unclear how many people in Maine will qualify for help under the settlement, but the state as a whole will receive $21 million. Of that, $5.7 million will go to the state’s General Fund. The rest will help Mainers who lost their homes to foreclosure, homeowners who owe more than their homes are worth, and foreclosure prevention and legal assistance programs that work with homeowners.

It also will help borrowers who are in default, like the Brissettes, by getting banks to modify mortgages, forgive some of the loan’s principal and give borrowers a single bank representative to work with.

After learning about the settlement Thursday, Brissette said she was hopeful about the future for the first time in nearly three years.

“I’m actually kind of excited,” she said.

However, the settlement doesn’t please everyone. Both the conservative Heritage Foundation and the liberal Maine Peoples Alliance have said the settlement provides too little relief. Thomas Cox, the Portland lawyer who uncovered the robo-signing scandal, believes banks should have taken a much harder hit.

“It’s just a really light amount of money in terms of what the conduct is that’s being dealt with,” he said. 

Mortgage doubled

Although the nation’s five largest lenders will contribute to the settlement, Bank of America will put in the most — nearly $12 billion — largely because investigators found it was responsible for the largest number of abuses. 

In Maine, Bank of America is the biggest mortgage lender, made bigger by its 2008 acquisition of troubled Countrywide Financial Corp. It is responsible for about 25 percent of all mortgages in Maine.

It’s also responsible for a lot of borrower complaints.

That’s partly because Bank of America inherited a large number of problem loans from Countrywide and partly because Bank of America is so big. When a lender does more business than anyone else, experts say, it’s also likely to receive more complaints, warranted or not. But experts say Bank of America has had very real problems in recent years. In Maine, it’s become known among lawyers for losing paperwork, breaking promises made in mediation and employing representatives who don’t know what they’re doing.

“When I have a client call or a file come to me and it’s Bank of America, I roll my eyes and (say), ‘Oh, no, here we go again,'” said Cox, a retired bank lawyer who serves as volunteer program coordinator for the Maine Attorneys Saving Homes program.

Brissette’s problems with Bank of America started when she and her husband fell behind on their $870-a-month payment and asked the bank to modify their loan in 2008. They said they were told by the bank to wait, and asked again in 2009.

The couple sent in paperwork, they said, only to have the bank lose it — repeatedly. They rarely talked to the same representative twice and hardly ever got any meaningful help. Brissette said one representative said they qualified for a loan modification — the bank would add those three missed payments to the end of the loan — but the promised modification paperwork never arrived and the Brissettes learned he’d left the job. Another representative, Brissette said, told her they qualified for a modification and their monthly payment would be $250 less. Instead, their monthly payment nearly doubled to more than $1,600. 

Another representative, Brissette said, recommended she save her house by getting a second job. 

“I said, ‘I have a second job!'” Brissette said.

The couple asked U.S. Sen. Susan Collins for help last month. At the behest of the senator’s office, a Bank of America representative agreed to review the couple’s situation personally.

He sent the couple a letter (see image) asking for more than a dozen pieces of information, most of which Brissette said she’d already sent to the bank several times. The request itself spelled the couple’s first and last names wrong, showed an incomplete ZIP code for their home and vaguely asked for “letter” as one of the required documents.

Given less than two business days to send the information, Brissette took a day off work to gather everything. She dropped it off for FedEx about five minutes before a scheduled pick up. Sent overnight, it normally would have gotten to Bank of America in time to meet the bank’s deadline the next day. But FedEx didn’t deliver the paperwork until the morning after the deadline. Because it was a day late, Brissette said, the representative refused to look at it.

“I was so pissed I could hardly even talk,” she said.

‘Something’s got to happen here’

In a statement Friday, Bank of America said the Brissettes have missed nearly three years of mortgage payments. It’s a claim the couple denies. The couple’s checking account and Bank of America statements back them up.

Brissette acknowledges she missed three months originally, then missed another three months at one point when a Bank of America representative advised her to stop paying. She said she’s paid the mortgage regularly since, but did stop in frustration last month because the bank couldn’t tell her how much she owed or where the money went that she had been sending them.

A recent Bank of America statement shows the couple has more than $12,000 in payments in their escrow account; for some reason that money hasn’t been credited to their mortgage. 

The Brissettes had $77,000 left on their mortgage when they asked the bank for a modification.

On Friday, Bank of America said it once offered the couple a government-sponsored trial modification that would have set their mortgage payments to 31 percent of their gross income and would have rolled their property taxes and insurance into their monthly payment, but the couple declined. Brissette believes Bank of America is talking about the modification that would have nearly doubled their monthly payment.

The bank said it is now reviewing the couple for a proprietary modification, a modification done in-house and not sponsored by the government. That’s news to Brissette. The last modification review she knew about was the one that was canceled because the documents sent by FedEx arrived too late. In the past week, Brissette said the bank has told her to sell her house and go through a short sale or it’s going to start foreclosure proceedings. She has gotten a lawyer.

The ordeal has taken its toll on Brissette and her husband. He has a seizure disorder that’s been aggravated by the stress of the situation, so Brissette has taken it upon herself to deal with the bank. She checks the mail incessantly, stays awake nights worrying about foreclosure and fears the bank is going to change the locks on the house while she’s at work.  

“I’m just waiting for the ball to drop,” she said.

The settlement pleases her, not only because she might finally be able to modify her loan, but also because it’s a kind of vindication.

“They just think they can railroad people,” she said of the bank. “There are some people they’ve really hurt out there.”

Cox agreed that banks, particularly Bank of America, have hurt homeowners with their tactics. That’s why he’s one of the people who feels the settlement doesn’t go far enough.

He would like to have seen bank employees, and bank leaders, prosecuted for misconduct in the “robo-signing” scandal. With that pressure on the banks, he said, any settlement would have been much bigger. 

“I think there would have been much more urgency on the part of the servicers to settle these claims and I think the amount of money on the table would have been significantly greater,” Cox said.

He also doesn’t like the fact that the settlement, which was a year in the making, was largely crafted out of the public eye and with little input, at least in Maine, from the experts who work with troubled homeowners every day.

“To me, that’s upsetting,” he said.

Though Cox doesn’t like how the settlement came to be and doesn’t think it provided enough money, he holds out hope that the new loan-servicing standards, which prohibit “robo-signing,” among other things, will help. 

“Then the real key question is, what enforcement mechanism of those standards will there be?” he said.

States get enforcement powers

Conti, with the Maine Attorney General’s Office, believes enforcement will be strict and swift. In addition to a committee created to oversee the settlement, state attorneys general will have the power for the first time to deal with the interstate banks. That means Maine can enforce the rules on its own, if need be.

Conti believes that will make a difference.

“I sure hope so, because something’s got to happen here,” she said.

Conti acknowledges the settlement is complicated and states might have gotten more money had they gone to court, but she said attorneys general wanted to do something “sooner rather than later for the people who are actually struggling with the foreclosures.

“I think this strikes a good balance,” she said. “It gets a payment of some kind for people who lost their home. It gets a better system, hopefully, for people who might lose their home to have a better chance at qualifying to get their loan modified. And it has this pile of money for people who are current on their loans but are upside down in their loans.”

Under the settlement, banks are required to notify anyone who might be eligible to participate. They have up to nine months to do that. Borrowers also can call their banks to inquire.

Banks have up to three years to fulfill the settlement, though the agreement gives them incentives for refinancing and completing loan modifications in the first year.

“It’s complicated and it’s going to take a while to implement and people should be patient,” Conti said. “People can call and we will try to shepherd them through this.”

The final settlement documents are expected to be filed in court in the coming days. Once approved by a judge, the settlement will become effective and banks will begin to implement it.

ltice@sunjournal.com

More info

For more information or to find out if you qualify for part of the mortgage settlement:

* National settlement website: www.nationalforeclosuresettlement.com

* Maine Attorney General’s Office:

Go to: www.maine.gov/ag

Call the consumer protection division at 1-800-436-2131, or 626-8849 Monday through Friday 9 a.m. to noon or 626-8861 to leave a message.

Email consumer.mediation@maine.gov or mail Maine Attorney General, Consumer Protection Division, 6 State House Station, Augusta, Maine 04333 and include your name, former address, loan servicer, current address, phone number or email address, and date of foreclosure.

Mainers who went through foreclosure and believe they might be eligible for that settlement money in particular can call the Maine AG’s consumer protection line at 1-800-436-2131 or email consumer.mediation@maine.gov to ensure they’re on their bank’s contact list.

* Your mortgage servicer:

Ally/GMAC: 1-800-766-4622

Bank of America: 1-877-488-7814

Citi: 1-866-272-4749

Chase: 1-866-372-6901

Wells Fargo: 1-800-288-3212

New loan servicing standards:

* Stop many past foreclosure abuses, such as “robo-signing,” improper documentation and lost paperwork.

 * Require strict oversight of foreclosure processing, including third-party vendors.

 * Impose new standards to ensure the accuracy of information provided in federal bankruptcy court, including pre-filing reviews of certain documents.

 * Make foreclosure a last resort by requiring servicers to evaluate homeowners for other loan mitigation options first.

 * Restrict banks from foreclosing while the homeowner is being considered for a loan modification.

 * Set procedures and time lines for reviewing loan modification applications, and give homeowners the right to appeal denials.

 * Create a single point of contact for borrowers seeking information about their loans and provide adequate staff to handle calls.

Maine’s share

Maine’s estimated share of the settlement is $21 million. What the settlement means for Mainers:

 * Homeowners who are in default on their mortgages will receive an estimated total of $7 million in direct borrower relief through principal reduction, short sales and other means.

* Borrowers who lost their homes to foreclosure from Jan. 1, 2008, through Dec. 31, 2011, qualify for a cash payment from a $1.9 million fund set aside for this purpose.

* Borrowers who are current on their loans but owe more than their homes are worth will be able to refinance.

* The state will receive a direct payment of $8.2 million. Of that, $2 million will go to state foreclosure prevention programs, $500,000 will go to Pine Tree Legal Assistance to pay for legal assistance to homeowners and $5.7 million will go to the General Fund.

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