Thursday, September 09, 2010

From Loan Modification Purgatory to Foreclosure Hell

by Calculated Risk on 9/09/2010 10:27:00 PM

David Lazarus has an interesting foreclosure story in the LA Times: Suddenly, their house is taken over

A few details:

The couple fell behind on their mortgage payments (he works in construction). Wells Fargo put them in a HAMP three month trial modification program in December, and they made all their payments.

After the three months were up, Ellen Kahara said, they were told by Wells that their case was still under review and that they should keep making the $1,400 payments. They did.

The bank continued requesting paperwork as part of its review process. ... The Kaharas received a letter from Wells dated Aug. 11 saying that their application for a permanent loan modification had been rejected. The letter said the Kaharas would have 30 days to discuss other options available to them.

"No foreclosure sale will be conducted and you will not lose your home during this 30-day period," the letter said.
On August 18th there was a knock on the door - it was the new owner who had bought the home at foreclosure!

Obviously Wells Fargo made a huge mistake with the foreclosure, but perhaps just as outrageous is how they strung the couple along for months - collecting seven or eight monthly payments - and then finally denied the permanent modification when they were ready to foreclose.