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Profiles: Shoddy Bank Practices Continue Even After Mortgage Mods

Many homeowners have received a mortgage modification only to find themselves once again at risk of foreclosure because of errors by their mortgage company. ProPublica investigated six of these cases.

As we reported today, many homeowners have received a mortgage modification only to find themselves once again at risk of foreclosure because of errors by their mortgage company. An informal survey of legal-aid organizations suggests this is a frequent problem.

ProPublica investigated six homeowner cases. The cases involved four different mortgage servicers and a range of problems. All are among the largest servicers: Bank of America, JPMorgan Chase, Citibank and PHH Mortgage.

JPMorgan Chase

Chanel Rosario of Staten Island, N.Y., finally got her modification last year after years of trying. The offer came after a New York judge told Chase's attorneys they "should be ashamed" of their conduct and threatened to hold them in contempt of court. But after months of making payments, Rosario called up Chase and discovered that something was wrong. The payments weren't going toward her mortgage, and Chase was still reporting her as delinquent.

Another Chase homeowner had a similar problem: Her modification had somehow disappeared in the company's computers. The Oregon homeowner, who preferred to remain anonymous, signed and began a modification last July. But she received a letter months later telling her that she'd been rejected for a modification. One month after that, she received a foreclosure notice.

After months of trying to figure out what was happening, she was offered a new modification, the terms of which were identical to the one she'd signed -- except for the addition of over $8,000 to the balance of her loan. Understandably, she turned it down. But after having made every payment on her modification for nearly a year, the foreclosure notices continue to arrive.

Contacted by ProPublica, a spokesperson for Chase said that the bank would honor the modification and had "changed her status to current."

As for Rosario's situation, the spokesperson said the bank would reach out to her and her husband "to discuss their situation."


Michael Skadeland of Chicago, Ill., was among the first homeowners to receive a modification through the government's Home Affordable Modification Program (HAMP) way back in November 2009. After making payments for more than a year, he was puzzled when his account wasn't credited $1,000. One of the main benefits of HAMP for borrowers is up to $5,000 in incentive payments toward the mortgage, applied yearly.

After months of phone calls trying to figure out what was going on, he was recently told by a CitiMortgage employee that he wasn't in fact in a HAMP mod, despite his signed contract. He'd been put into a different modification plan and was never told about it.

Mark Rodgers, a spokesman for Citi, said the bank was looking into the case and hoped "to resolve it promptly."

Skadeland said that he'd spoken to a Citi employee Wednesday who said that the bank had made a mistake and would offer a settlement of $5,000 for the error.

Bank of America

In Nevada, Adil Baeza and Najwa Elbahi of Reno inexplicably received a foreclosure notice three months after starting a modification last year with Bank of America.

Bank of America spokeswoman Jumana Bauwens said that the bank apologized for the error, which happened because "after completing the permanent modification, we found that we did not prepare the documents correctly to show the forbearance they were entitled."

Bank of America rescinded the foreclosure and took "corrective actions to fix their credit reports, delinquency and fees associated with this error" in January of this year, she said.

Geoffrey Giles, the attorney representing the couple, said the bank only corrected the error after he interceded and that the couple was owed other compensation. "Previously [Bank of America] was making generous deals with homeowners they did this to, but the problem is apparently so widespread that they have thought better of the process, so now they are just saying 'sorry.'" Giles said he was handling a number of similar cases.

Carolyn Chaney of Seattle, Wash., had a different problem with Bank of America. Five months after beginning her modification in August of 2010, she received a notice from Bank of America informing her that she owed $1,400 in missed payments and late fees.

Contacted earlier this year by ProPublica, Bauwens of Bank of America said the notice had been sent in error and that all the late fees would be waived.

Bank of America, like the other servicers contacted for this piece, did not respond to questions about whether these problems were widespread or what steps the company was taking to prevent these sorts of errors.

PHH Mortgage

In West Haven, Conn., Anthony Bondi had made three payments of about $850 -- the payments specified in his modification agreement -- when he received a statement from PHH Mortgage asking for over $1,800. "What they did to me was wrong," he said.

Dico Akseraylian, a spokesman for PHH, said the company was "ready to honor the loan modification agreement as accepted by Mr. Bondi," and that it had attempted to reach him "to address this matter," but wouldn't say whether the company had made a mistake or not.

Jeff Gentes, an attorney with the Connecticut Fair Housing Center who worked with Bondi, said the jump in the payments was likely due to an accounting error by PHH and said such demands for extra money often pop up in the early months of a modification.

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