The Great American Foreclosure Story: The Struggle for Justice and a Place to Call Home
The story of how one woman went from a three-bedroom home to a tent is the story of how America ended up in a foreclosure crisis that still drags down the economy.
But instead of helping Sanderson avoid foreclosure, Chase pushed him into it. A bank employee told him to make payments on a HAMP "trial" modification, but when the lower payments made him fall even further behind, Chase launched a foreclosure suit. In the end, it took almost two years and more than 200 conversations with Chase employees, he says, before he finally won an elusive modification. He has pages of notes detailing his talks with Eric, Dustin, Cathy, Leanne, Lucille, Angela, and on and on. He was successful, he says, only because he played hardball.
After Chase's lawyers filed suit against him, an assignment was executed transferring his mortgage from his original lender to the 2004 security into which his loan had been bundled. It was signed by a notary and two employees of Lender Processing Services purporting to be vice presidents of MERS.
Through a listserv for borrowers facing foreclosure, he found others with the same signatories who were investigating their paperwork. One man had sent off to get the notary's application from the state of Minnesota, and offered to share it with Sanderson. When Sanderson put the application, which bore the notary's signature, side by side with his assignment, he found the signatures bore no resemblance to one another, raising the question of whether the notary's signature had been forged. That all three signatories were employees of Lender Processing Services, the parent company of DocX, only increased his suspicions.
A spokeswoman for Lender Processing Services declined to comment on the documents.
Nevada's attorney general recently filed suit against Lender Processing Services, alleging widespread document fraud, among other things. The company says the charges are untrue but is in settlement talks with the attorney general.
In the 20th month of his quest for a loan modification, and after yet another denial, Sanderson finally lost his patience. For most of that time, he'd been making payments, though sometimes Chase had rejected them. He'd also been paying his second mortgage, a smaller monthly sum that was also with Chase. He threatened to stop paying both, he recalls. He told a Chase employee he'd fight it out in court.
"I was like, ‘Screw you guys. I'll stop paying and drag this out forever and live for free,'" he says. He mentioned the suspicious mortgage assignment and problems with the note. "Boom! Right after that, they sent me a permanent modification."
The modification, which he signed and has been paying since, set his payments to about what he'd been paying before he fell behind. Like the overwhelming majority of modifications since the launch of HAMP, his was achieved outside the program.
Christine Holevas, a spokeswoman for Chase, didn't respond to Sanderson's experience other than to say the company was "pleased we were able to provide the borrower with a modification" and that recently Chase had significantly reduced its backlog of customer complaints.
HAMP's false hopes
Under HAMP regulations, Ramos should have been automatically considered for the program. And of course, Wilshire's attorneys had pledged she'd be reviewed. But Ramos and Varnell, her attorney, heard nothing from the company. Meanwhile, Varnell wasn't optimistic about her prospects for a modification even if she was reviewed.
Since the summer when Wilshire had first launched foreclosure proceedings, Ramos' brother had passed away, leaving the family with less income. That and Ramos' past dealings with Wilshire didn't give much reason for hope.
Indeed, in Ramos' security, very few homeowners had won modifications. Every month since the security was issued in 2007, its trustee, Deutsche Bank, has issued reports for the investors. Those reports do not show a single modification until September 2010. By that time, a year and a half after HAMP's launch, more than a third of the loans in the security had already been foreclosed on.
Foreclosures and Modifications
in the Security that Includes Ramos' Mortgage
Simon, the spokesman for Bank of America, argues that the reports were likely inaccurate. "Wilshire was very active in modifications and other workout programs from the start of the economic crisis and well before the introduction of HAMP," he says. "The apparent lack of modifications in the securitization pool may be a reflection of how they were reported [to Deutsche Bank]," he said. "Wilshire may not have specifically flagged them as ‘modifications.'"
(Bank of America acquired Wilshire when it bought Merrill Lynch in late 2008. In early 2010, it sold Wilshire to IBM but retained servicing for all the loans that Wilshire had been handling.)
There's not much evidence that Wilshire really was "very active in modifications." A recent analysis by Amherst Securities, a firm that provides research on mortgage-backed securities, showed that Wilshire had been the stingiest of all the major subprime servicers on granting modifications. The analysis found a similar tendency at Bank of America's other subsidiaries, which all ranked at the bottom of a list of 19 servicers. Bank of America declined to respond to questions about its servicers' low rate of modifications.
Some homeowners have sued Wilshire, alleging it ignored HAMP's rules. In Florida, a married couple in the same security as Ramos endured a similar ordeal. Wilshire had led the couple to believe they were being evaluated for HAMP but pursued foreclosure anyway, according to their appeal of the foreclosure judgment. They also allege that Bank of America, which assumed servicing for the security in 2010 from Wilshire, was no better and sought to sell the house while they were still waiting for an answer to their modification application.
Banks and the government have fallen short in helping homeowners in danger of foreclosure.
The Story So Far
Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.
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