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Special Reports - Real Estate

Saturday, Oct. 31, 2009

Mortgage Q and A: Lenders, homeowners meet at Modesto table to talk

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Homeowners fearing foreclosure packed the Home Rescue Fair question and answer sessions Saturday. Their questions revealed as much the answers.

Every family had a different story. Multiple mortgages, negative mortgages, creative mortgages, bankruptcies, the scope and complexity of the mortgage market meltdown was hashed out in two rooms at the Stanislaus County Agriculture Center.

In one room, Steve Altman answered in Spanish. In the other, Andrew Mendlin led a discussion in English. The two lawyers volunteered a Saturday morning to stand in front of a frustrated crowd that did not like much of what they had to say.

Some of the questions:

Q: Why would an equity loan on top of a first and second mortgage suddenly demand a payoff when my income fell? I didn't miss any payments. Do they want to force me into foreclosure?

A: The lender is looking at your loan as part of its risk portfolio and not liking what it sees.

Q: I have a first and second mortgage and I can't pay it all. I heard I should just pay my first because the second can't foreclose.

A: They can foreclose, but they wouldn't gain anything unless the sale brings more than the first mortgage.

Q: I have a negative amortization loan, and I owe a lot, but there were parts they didn't explain.

A: Lots of people feel they were misled, but unless you can prove fraud, you're bound by the contract you signed.

Mendlin, a real estate and personal injury lawyer, says his office gets dozens of calls a week for foreclosure help but few clients. "If you're having a hard time paying your loan, you're going to have a hard time paying an attorney."

"I see some people who are really in need. Others are actually here wanting to make a business decision: Is it crazy to keep making payments when the value of your home has dropped so low?" Mendlin said.

The questioners were waiting, papers in hand, for one-on-one meetings with their lenders. In all, 285 families came looking for a do-over, a financial reset button or, like Mark Figueroa of Modesto, just "breathing room."

Figueroa, an Air Force sergeant who commutes from Delhi to Mountain View, pays $2,367 each month for mortgage, tax and insurance on a home he bought in 2000 for $175,000. He refinanced when values were higher and took some of the equity. He owes $282,000 on the home, now worth about what he bought it for. Though his job seems recession-proof, his wife is a self-employed manicurist whose income has fallen drastically over the last year.

Figueroa came to the event for answers, but the best Bank of America counselor Keuana Green could promise was options.

Bank of America took information at the fair for a "holistic" look at each customer's financial picture, said spokeswoman Jackie O'Garrow.

A loan negotiator would call within 10 to 20 business days, Green told Figueroa.

Green said she had spoken to many customers who had been looking for help for months. "I definitely understand their frustration."

Like Figueroa's.

"This didn't do anything. It's just ... ." He shook his head angrily as he left.

Steve and Rhonda Pate of Modesto also were fuming.

"We got a loan modification on a three-month trial. It's been five months, and one department's saying it's approved and one department's saying we need to send in more papers," Rhonda Pate said.

The Pates have sent their 35-page packet of information to the bank five times, she added.

"What I want to know," Steve Pate said, "is why'd the president give all that money to the banks? Why didn't they give (homeowners the money)? I would have paid off my mortgage. The banks would've got their money."

For Soila Valencia, it was a good day. "I got an Obama!" she cheered.

On the federal Making Home Affordable program, her monthly payment, with tax and insurance, will be $983, about what she paid just for her mortgage before the modification. But more important to her, the three months of delinquent payments she owes will be added to the end of the loan instead of being due immediately. Her first payment will be due in December.

Valencia worked with Chase, whose counselors brought laptops to the fair and checked customers' eligibility for the federal program on the spot.

Event coordinator Yamilet Valladolid of El Concilio said she had 80 volunteers working the fair and was "just blown away" by the community response. So many families lined up for the event they opened the doors an hour early, she said. "This really shows the need."