A long road to loan modification for Maryland family
Bill Henderson and his family in Queen Anne's County offer a window into the tortured loan-modification process that few -- relatively speaking -- have managed to get through successfully.
They've just been approved for a trial modification. But it was a long time coming.
When we last heard from the Hendersons, they had convinced the state Department of Housing and Community Development -- which owns their loan -- to modify rather than foreclosure. They went to court-supervised mediation to get that agreement, helped by forensic mortgage auditing firm Professional Compliance Examiners.
That was October. Months passed. The state and its mortgage servicer said they were waiting on the mortgage insurer, the USDA's Rural Housing Service, to sign off on the modification. Then last month it looked as if everything was falling apart.
Here's how the Hendersons explained it to President Barack Obama in a letter:
On October 5, 2010, we went to mediation about our home mortgage. We were fighting to save our home. ... In that mediation, the lawyers were on the phone with CDA a branch of DHCD - MD Department of Housing and Community Development and RHS – Rural Housing Service. DHCD said they were not required to follow HAMP guidelines. RHS said they would not approve the loan modification unless HAMP guidelines were followed. They would send DHCD the guidelines necessary to get this modification approved.
Since this October 5th mediation we have been waiting for an answer on our loan modification. RHS has been the hold up on this matter. We were informed in February by DHCD and our Servicer, Bogman, Inc. that they had both approved our loan modification according to the HAMP guidelines specified by RHS. They were waiting on the decision of RHS.
Everything that RHS requested was followed and agreed upon by all. On Friday, April 8, 2011, more than 6 months after our mediation, we received a call from our Servicer. They informed us that RHS did not approve the loan modification. They were not given a reason why and we have not received any information as to why it was not approved. Both DHCD and Bogman, our servicer, said they don’t understand why it was not approved. They said the loan modification should have been approved.
RHS, the very agency that laid out specific HAMP guidelines to DHCD and our servicer, did not approve their own HAMP guidelines!?! Our question to you is why RHS, a branch of the FEDERAL GOVERNMENT, did not approve our loan modification? Your HAMP program, a federal government program to help homeowners stay in their home, was not even followed by your own agency. It was their guidelines that the servicer and DHCD HAD to agree upon for the modification. ...
The big banks are allowing modifications, but not RHS, a FEDERAL GOVERNMENT agency!! WHY? What can you do to help us before our family gets thrown out on the street?
They cc'd me, so I called USDA -- the parent agency of mortgage insurer -- to find out what had happened. It took several weeks for the agency to sort through the history of the case for an answer, at which point the modification was approved (though not, I was assured, because I had inquired). This was the official statement about the matter:
"On February 3, 2011, USDA Rural Development’s Centralized Servicing Center received a loan modification request from the company servicing the Henderson’s loan. The application was incomplete and additional information requested. A second loan modification was submitted on March 4, 2011. The application was reviewed and on April 4, 2011 a letter was sent to the servicing company recommending a traditional loan modification. On April 26, Rural Development’s Centralized Servicing Center received a third loan modification request. USDA has approved the loan modification and will submit documentation to the lender this week."
What the USDA is saying, a spokeswoman confirmed, is that the first request of any sort it received for modification didn't arrive until four months after the mediation hearing.
But Jacqueline Lampell, a spokeswoman for the Maryland housing department, said the state, both directly and through its servicer, was in contact with the agency in November and December. She confirmed the Hendersons' account that the USDA mortgage insurer was involved in the October mediation where the agreement was struck.
Both USDA and the state housing agency were loathe to make their timeline arguments strongly, lest they be seen as finger-pointing.
"Since going through loan modifications was a new process for Bogman, CDA and RHS, there was a lot of back and forth to figure out the best way to do it," said Lampell, with the state housing department. The state "did not pursue any legal action while this was an open item, and the Hendersons were able to stay in their home during the process, and now they have achieved a positive outcome."
In case you're wondering: The state-owned loan program is self-supporting and does not tap state funds.
The Hendersons, who have one child, are both employed -- Bill hauls construction equipment and his wife works for the school system. But his income has been battered by the recession. These days he's out of state during the week in order to make a living, returning home on weekends.
He said this week that he's hopeful the deal to drop their monthly payment from $2,500 to about $1,800 will work out. He said he has no worries about holding up his end of the deal. It's the system that makes him anxious.
"I've got everything in writing, which makes me feel better," he said. "I hope it's been resolved, let's put it that way."
He didn’t know if writing a letter to the White House would do any good, but he said he was "getting to the point of desperation." And as it happens, someone from the Treasury Department did call -- after the modification came through.
"They said the White House was responding to the letter I sent," Henderson said. "I told them, 'We just got notice two days ago that [the modification] had been approved.' He said, 'Very well — if you have any problems, just give us a call.'"