Mortgage

6 years later and we still can’t modify or refinance our mortgage

Predatory lending experience keeps getting worse

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Your mortgage lender places you in a predatory loan and you ask for a simple loan modification to today’s rates. You pay your bills and have never defaulted on anything. Can you get the loan modification you’re seeking, or are you stuck?

In part 1 of this series I outlined the situation that placed me in a predatory loan on my current residence. Since we purchased right at the top of the market in 2007, our property took a nosedive in value not long after we moved in.

We were thankful to be in our dream home, especially when our mortgage lender told us we got the last jumbo loan in town.

Over the last several years I have wanted to take advantage of the lower interest rates; however, we had virtually no equity and it seemed unlikely that any lender would make a new loan. We fell into that category of people who pay their bills and were unwilling to go into default just to obtain a loan modification.

In the last few months, prices have shot back up and we now have some equity. We’re still short of what we paid for our home, but at least we’re not upside-down.

Several days ago I decided to explore whether we could obtain a loan modification. I asked for our 6 percent interest-only loan to be modified to 4.32 percent, the best-prevailing jumbo rate in our area. I also asked for a fully amortized loan. We wanted to keep the payoff date the same.

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The lender who made the loan had to portfolio it. (In other words, the lender didn’t sell it to another institution or hedge fund on the secondary money market. It still owned the loan.)

In my 30-plus years in the business, this turned out to be the worst customer experience I've ever had with a lender."

I spoke to our mortgage broker and she suggested that we contact loan servicing using the 800 number on our mortgage statement. In my 30-plus years in the business, this turned out to be the worst customer experience I’ve ever had with a lender.

The first person I reached listened to my description of what had happened on our original loan and then advised me that I had the wrong department and that I had to call a different 800 number.

The next person I reached was very helpful, except he couldn’t do anything since he was based outside of Texas. He offered to put me in touch with someone who handled Texas. He then referred me back to the department that had just sent me to him.

Over the next 2 1/2 hours, I spoke to seven different people. Each time I had to repeat my entire story, all the loan information, as well as answering questions as to whether we were having trouble making our mortgage payments (we weren’t).

I felt as if it was Groundhog Day, as I kept being referred back and forth to the same two departments. I finally spoke to a woman who wanted my financials over the phone. When I couldn’t provide her with a rapid summary of our 80-page profit and loss (P&L) statement, she sent me to a website where she instructed me to enter my financial information.

I repeatedly tried to use the site, but as soon as I entered my loan number, nothing else happened.

I finally tried calling back the loan modification department and reached someone who was willing to at least check what was going on with my specific loan.

The first thing he told me was that there was no way this loan could be modified. It was sold as part of an investment portfolio to the bank’s investment customers. My only option was to obtain a refinance.

I asked if I had any recourse. He told me I could write to the investor group to request the name of which group had the loan, and he gave me the address.

After I hung up, I decided to research what my options might be. My research showed that I could probably file an action for unfair and deceptive lending practices. But here’s the rub: Because I waited until we had some equity in our home to explore obtaining a loan modification, I was outside the statute of limitations. In other words, I waited too long to take action.

So I’m stuck for another number of years in an interest-only loan that cannot be modified and I still can’t refinance because we still don’t have sufficient equity.

I wish my case were isolated. Sadly, it’s not. If you suspect that your lender is engaging in predatory behavior or is taking actions to avoid funding a loan so it can charge a higher rate, don’t wait to see an attorney to see what your options are. Do so immediately. I certainly wish I had.

Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of the National Association of Realtors’ No. 1 best-seller, “Real Estate Dough: Your Recipe for Real Estate Success.” Hear Bernice’s five-minute daily real estate show, just named “new and notable” by iTunes, at www.RealEstateCoachRadio.com.