Hardship Letter: Michael Hill’s story is one like hundereds of sad stories all over the country druing the housing crisis, but finally got the call he’d been waiting for. Congratulations, th rep from JPMorgan Chase said, your trial mortgage modification is approved. Hill’s monthly payment, around $900, would be nearly cut in half.
But there was a problem. Chase had foreclosed on Hill’s home a month earlier, and his family was just days away from eviction.
“I listened to her and then I just said, ‘Well, that sounds good,’ ” Hill recalled. ” ‘Tell me how we’re going to do this, seeing as how you sold the house?’ ” That, he found out, was news to Chase.
Millions of homeowners face foreclosure in the continuing housing crisis, but homeowners often have more than the struggling economy and slumping house prices to worry about: Disorganization within the big banks that service mortgages has made a bad problem worse.
Hill was able to avoid eviction — for now. Chase reversed the sale by paying the man who’d bought the home an extra $19,500 on top of the $86,000 he’d paid at the auction. But other homeowners say they lost their homes because the communication breakdown within the banks was so complete that it led to premature or mistaken foreclosures.
In the worst breakdowns, such as Hill’s, banks — and other companies that service loans — actually work at cross-purposes, with one arm of the company foreclosing on the home while the other offers help. Servicers say such mistakes are rare and result from the high volume of defaults and foreclosures.
The problems happen even among servicers participating in the administration’s $75 billion foreclosure-prevention program. Servicers operating under the year-old program are forbidden from auctioning someone’s home while a modification decision is pending. Hardship Letter.
