'Act of Congress' to sell house
Lenders often say they don't want to repossess houses. So you might expect that a borrower selling to avoid foreclosure -- and not via short sale -- would delight them.
But Bonnie Jordan, exactly that sort of borrower, says her lender endangered the sale of her Edgewater house by not promptly providing a key number: how much she owed.
"I've never seen anything quite like it before," said Diane Olsen, Jordan's real estate agent. "They just gave her the worst runaround."
Jordan said her title company contacted Chase for the payoff information Feb. 24 and several times afterward with no luck. Then Jordan tried, calling the company March 1 and many times afterward. Most of the time, she said, she left messages for people who didn't call back.
Once she was told that Chase didn't know the total because her case had been forwarded to a law firm, and so the number would include attorneys' fees. She said she called the law firm and was told first that it didn't have her information, and later that it didn't have any idea how long she might have to wait to get it.
Meanwhile, Jordan's March 12 closing date was closing in.
Then the buyer's lender -- for reasons unconnected to Jordan's situation -- decided not to extend a mortgage for the deal. That pushed off the settlement date by five days as the buyer rushed to get replacement financing. But Jordan still didn't have the payoff information.
On March 11, the day before she was originally supposed to close, she called House Majority Leader Steny Hoyer's office to plead for help.
Just before 1 p.m. March 12 -- several hours after her original closing time -- she got a call from a Hoyer aide who said the information was on its way. (Hoyer's office confirmed to me that it had worked on her case.)
Both Jordan and her agent said they think Chase wanted to foreclose on her because she had equity. She'd made a 50 percent down payment when she bought the home.
"Why wouldn't they for a change want to own a property that had $100 to $150,000 in equity?" said Olsen, with ReMax Advantage Realty in Severna Park.
I asked Tom Kelly, a spokesman for Chase home lending, why it took 16 days for the company to provide information that -- according to Olsen -- normally takes a day or two. He said it's more complicated for a homeowner in the foreclosure process.
"We had to determine if the borrower had incurred additional fees," he said.
He said the clock didn't start until she requested it March 1. Although she signed an authorization form for the title company, only the borrower can request that information if she's in foreclosure, he said. "We provided the ... payoff statement in fewer than 10 business days from when we received an authorized request," Kelly said.
Did it take the intervention of the House majority leader's office? "The payoff letter was already in process," he said.
Jordan doubts it. A representative at Chase's law firm "said they were all backed up, 'We don't know when we'll have it,'" she said. (The firm wasn't too backed up to file paperwork to start foreclosure proceedings on her loan, though -- it did that March 8, which added more fees to her grand total.)
Jordan also says no one told her title company that it wasn't authorized to get the payoff information.
Olsen, her agent, said she was glad Hoyer's office could help but thinks it's a shame that it came to that. If all struggling borrowers turn to their Congressmen, “the entire system will come to a grinding halt," she said.
Jordan bought the house when she left Florida for Maryland in 2007, but it was not an auspicious move -- and not just because she paid $575,000 but ultimately sold for $450,000.
Her husband couldn't find a job here. Neither could Jordan, an attorney specializing in elder law. They tried to sell last summer, but a buyer backed out of the contract after they had already packed up and moved back to Florida. After that, she said, she couldn't afford the mortgage.
"It's been a nightmare," she said.
Her financial woes aren't over, either. But at least she avoided foreclosure.
In an email to relatives headlined "WE SOLD THE HOUSE!!!!!!!!!!," she wrote: "It literally took an Act of Congress."
Categories: The foreclosure mess
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Comments
Banks can't make a profit on a foreclosure. They can collect interest that accrued from the time you stopped paying them and they can collect statutory maximum collection/attorney fees, but nothing beyond that.
Also while a few days is normal, by MD law lenders have up to 3 weeks to get you a mortgage pay off statement which is why normally it is ordered almost as soon as the house goes under contract. Another option the title company had was a "force payoff" or basically estimate a worst case scenario and then overpay the loan. Overpayment would then be returned to the seller but this would allow the sale to take place on time regardless of the lender's response time. Admittedly in a FC scenario there is more money/fees to account for.
Sounds like a simple case of someone not ordering the pay off soon enough.
Posted by: Josh Dowlut | March 31, 2010 10:56 AM
This was anything but a "simple" case and apparently the point of the story has been overlooked. That is, homeowners are not being given a fair shake by certain lenders who habitually give them incorrect or patently false information as was the case here. It makes the perfect argument for why there needs to be government regulation in the form of a Consumer Protection Agency to oversee practices that are hurting homeowners. The HAMP loan modification process is a another example where banks are denying modifications and the homeowner has no idea why. There needs to be accountability where there has been none.
Posted by: Bonnie Jordan | March 31, 2010 1:08 PM
Simply maddening.
"We had to determine if the borrower had incurred additional fees." They would brazenly risk the sale falling through rather than give a payoff sans fees and bill for those without having them secured by the asset.
I agree with Bonnie. There needs to be more accountability and MUCH more consumer protection.
@JohnScottSmith
Posted by: John Scott Smith | March 31, 2010 1:49 PM
When you fight the devil it is best to be on your A-game, and if your pay off wasn't ordered as soon as your house went under contract, especially knowing these complications, then the people working for you were not on their A-game. No denying the putrid scum most of these banks are, but that's all the more reason to be more vigilant with them.
As for a comprehensive consumer protection law, it's an interesting concept, but changing a couple of laws to have the banks return to the regulatory environment they had from 1907-1999 would be better. Look up the repeal of Glass-Steagall in 1999 and the CFMA 2000 to really get your blood boiling.
As for HAMP and the like, they're bank bailouts disguised as consumer bailouts. A Primary reason banks are so reluctant to negotiate is the ever changing bailout environment leading asset managers to conclude it is not in their best interests to unload at these prices when a new bailout could be right around the corner.
Posted by: Josh Dowlut | March 31, 2010 1:55 PM
What a ridiculous story. I completely agree that Chase probably wanted to foreclose so they could take over a property with equity in it. It absolutely took the involvement of Congress to get this done. I had a friend go through a similar situation attempting to get a major electronics manufacturer to refund him money for a defective product under warranty that they said they couldn't replace. One excuse after another excuse just kept coming until the Attorney General's office got involved. Then things automagically started rolling the day before and the company repeatedly said how unnecessary it was to get outside help like that. He would never have gotten his refund had the Attorney General not gotten involved and I don't doubt for a minute that this lady would never have sold her house had Steny Hoyer's office not gotten involved.
I think it's time we enact new consumer protections in the mortgage industry, roll back some of the financial regulation repeals in the 1990's, and do some trust busting. We should not be reading horror stories like this one ever.
Posted by: BigDragon | March 31, 2010 2:31 PM