ARIZONA DAILY STAR
Newly divorced and battling ovarian cancer for the second time, Lori Ann Mitchell was hoping for a home loan modification to help her get back on her feet.
What she received from Wells Fargo instead was a rejection phone call a few days before Christmas and the threat of foreclosure at the end of the month.
There are shades of gray in this story, of course. Every loan-modification request is complicated, but those are the basics.
A mother of two, Mitchell lives on a pretty limited income. Her cancer keeps her from working. Her mother lends her a fair amount of money to make ends meet.
Still, she has never missed a mortgage payment on her north-side home.
Not when her monthly payments were $1,457.23 and she and her ex-husband were divorcing. Not when they dropped to $941.83 after Wells Fargo accepted her for a trial modification this summer under the federal Making Home Affordable plan.
She was supposed to make three trial payments under the program, but instead she said she made five as she waited and waited to hear from the bank. She’d call for updates, but could never get a set answer. She could never speak to the same person twice. And then …
“They just dropped me. Boom,” Mitchell said. “It’s devastating. First of all I had put a lot of hope in this. I don’t find hope a lot with cancer. … But when I hit the third month, and they hadn’t rejected me; and I hit my fourth month, and they hadn’t rejected me, I started getting high hopes.”
Those hopes were dashed a few days ago with the ring of a phone. The voice on the other end of the line said Mitchell needed to pay the difference between her previous payments and the modification payments she had been making for the past five months. And that difference, about $2,500, was due by the start of the year.
“I didn’t expect them to call me and start harassing me for money, telling me ‘in two weeks it’s going into foreclosure,’ ” she said.
When Mitchell was pursuing her modification, she said she struggled to reach a human being at Wells Fargo. Now that she was being threatened with a potential foreclosure, she had no problem connecting with the bank.
Tom Goyda, vice president of communications for Wells Fargo, couldn’t speak to whatever conversation took place between Mitchell and a bank representative.
He couldn’t say why a bank representative would drop a foreclosure threat on someone who is current. He speculated it might have been a miscommunication.
Maybe. But it sure seems like this kind of miscommunication happens a lot, and to some degree, Goyda acknowledged that.
“We also hear from customers who have been told that they are not going to go to foreclosure, and they get a foreclosure notice,” he said. “Or they haven’t been told anything and the first thing they hear about it is they get a foreclosure notice.”
Turns out Mitchell’s modification request was rejected because of some missing paperwork to verify her income. It’s a common obstacle in the modification process, Goyda said, particularly if income includes factors like alimony or child support. A big chunk of Mitchell’s income comes from loans from her mom, and child-support payments.
Now that a reporter has called about Mitchell’s loan, though, Wells Fargo is taking a second look.
“In this case we are taking another look at the loan right now, and we’ll work to see if we can get the documentation in,” Goyda said. “We are trying to collect the documents that are still outstanding. If we don’t get those, we will evaluate other options.”
That’s good of the bank, but it shouldn’t be this way.
If someone qualifies for a modification, change the loan. If she doesn’t, then leave it be. If borrowers need to provide more documentation, then let those borrowers know.
Stressed-out homeowners trying to save their homes shouldn’t get lost in an unresponsive maze.
It takes only five minutes with Lori Ann Mitchell to see how stress rolls over her like the tide. There was the divorce, then the ovarian cancer, and now the home. All waves crashing down on her.
“She is constantly on edge. Constantly,” said her mother, Ann Carr, who said she is borrowing money from a friend to pay the $2,500 Wells Fargo wants. “Her house is being ripped away from under her.”
Unlike a lot of struggling homeowners, Mitchell does not owe more on her home than it’s worth. She owes about $180,000 and could probably clear the loan with a sale. It would seem selling her home would help ease her suffering, but she doesn’t feel that way. Her heart is in the home. All she wants is more affordable payments to help ease a tough stretch.
To that end, here’s my solution: Modify the loan to a more affordable payment for the next five years. At the end of the five-year period restore the payments to the original amount.
By then the housing market will likely have improved, and Mitchell will hopefully be back on her feet. In the meantime, the bank is spared a foreclosure, the loan stays performing and Mitchell gets the gift of time to fight her cancer and see better days.
Much better than a surprise foreclosure threat before Christmas.
