Claudia and Mark Torres' dream went down the drain a few weeks ago. Unbeknownst to them, their house was sold while they were trying to get a loan modification — for the fifth time — with GMAC.
The Torreses found out their house had been sold from a friend who is in the real estate market and recognized the name of their street on an auction list just minutes before the property was sold.
GMAC had yet to inform them of the sale, as of this writing.
For the better part of two and half years, the Torreses (not their real name) had tried unsuccessfully to refinance their $410,000 mortgage or get a loan modification. Despite paying $2,500 a month at the start, and nearly $4,000 a month more recently, they saw the balance of their note balloon to more than $530,000 as a result of added fees, interest and penalties that they had no way of controlling.
Their home sold for less than $330,000.
Like thousands of other homeowners in their situation, the Torreses ran into one wall after another as they tried to save their home. They were buried in stacks of confusing paperwork, subjected to apparent misdirection and "lies and cover ups and generally crappy treatment from anonymous people hidden away in some call center," according to Mark.
We won't go into all the ins and outs of Claudia and Mark's story here — we think you get the gist of their woes, and, frankly, there just isn't enough space in this newspaper.
But after looking at their mountain of paperwork, pages of notarized documents, and folders of notes on conversations, we can't help but agree with them when they conclude that President Barack Obama's HOPE for Homeowners mortgage rescue program has killed — not saved — their American Dream. And GMAC hammered the nails in their coffin.
That's the same GMAC that received billions in federal bailout money from taxpayers like Claudia and Mark. The couple's story indicates that GMAC is shamelessly running amok without any real oversight because they are not a federally regulated bank — and that's not to say that banks are doing any better.
Before you shout that the couple should have gone to one of those Obama-approved 'HOPE' loan modification expert helpers, we must tell that they did.
The result? Their mortgage payment went up $1,000 and they were thrown on the fast track to ruin.
All of this while new rules from the Obama Administration are supposed to keep lenders from selling a person's home while they are in the modification process.
The Torres' story begs the question of who is enforcing the rules?
A survey released in July found evidence of banks foreclosing in error.
"More than a year since it began, the nation's primary foreclosure prevention policy is riddled with mortgage servicer mistakes and noncompliance along with continuing incidents of homeowners who were foreclosed on while in the middle of applying for loan workouts or paying trial modifications," according to the non-profit California Reinvestment Coalition's survey or mortgage counselors.
The survey also found that 60 percent of counselors reported that they have had clients who suffered foreclosure while in the middle of negotiating with their servicer. The counselors represent 40 agencies that provide foreclosure prevention services throughout California. There are more than 80 nonprofit mortgage-counseling agencies, approved by the U.S. Department of Housing and Urban Development, in the state. The counselors, who are supposed to be the experts assisting stressed homeowners, reported that the majority of their clients were stuck in the loan modification process, and that the Home Affordable Modification Program (HAMP), a plan by the federal government that was supposed to help them, "has consistently reported very low conversion rates of trials to permanent modifications, so many borrowers in trial modifications may still lose their homes."
GMAC participates in HAMP.
This week, according to a recent report by ProPublica, the state of New York "crafted new laws to give the state authority to punish mortgage servicers — something the Treasury Department, in administering its struggling mortgage modification program, has so far failed to do."
It is time for California to do the same.
Our economy is still in a death spiral, and the misdeeds of mortgage lenders such as GMAC are making the situation worse, not better. Californians are seeing their home values dive. They are also seeing their ability to stabilize mortgage payments disappear without ever really knowing why.
To help prevent unnecessary foreclosures in California, State Senate President pro Tem Darrell Steinberg and Senator Mark Leno have introduced SB 1275, which provides rights and remedies for consumers working their way through the loan modification process. The bill might be just a start — surely what is really needed are laws with teeth in them. We also need state officials who are willing to sink those teeth into any mortgage lender or loan servicer that fails to obey the law.
There are thousands of Claudias and Marks out there, and it's time for legislators to step in and protect them from the failures of outfits like GMAC.
Image courtesy of respres on flickr.com.
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