For Md. homeowner, a refinance request gone wrong
Angela Cottrell regrets ever calling her mortgage servicer to ask about refinancing options. What Wells Fargo suggested she do ultimately increased her loan balance and ruined her credit, she said.
Cottrell, who bought a Charles County home with her husband in 2005, couldn’t take advantage of lower interest rates with a traditional refinance in 2009 because their home’s value had dropped below the mortgage balance. When she heard about an Obama administration program allowing certain “underwater” borrowers to refinance, she said, she contacted Wells Fargo.
She said staffers there looked over her financial documents and told her she qualified for lower payments — but through a modification, not a refinance. The company enrolled her in a trial plan, only to declare months later that she wasn’t eligible because she made too much money.
The company demanded she immediately pay back the difference of about $14,000 or it would foreclose, according to the attorney she later hired. She also faced unspecified late fees despite paying the agreed-upon amount on time, said Jason Ostendorf, her Owings Mills-based lawyer.
They say they don’t understand why Wells Fargo put her in a modification when it had all the information it needed upfront to see if she qualified. Cottrell said she never claimed she couldn’t afford her mortgage. She said she had, in fact, made $6,000 in additional payments over the years to bring down her principal balance more quickly — progress that was completely wiped out by the modification.
“I figured if you tell somebody they qualify, they qualify,” said Cottrell, 59, an insurance claims processor. “They never explained to me what would happen if I didn’t qualify. If they had explained to me, ... I would never have gone into it.”
Stressed and angry, she sued last year. That case is on appeal. But Wells Fargo — which declined to comment, citing customer confidentiality considerations — did agree to forgo foreclosure by increasing her mortgage balance by $11,000.
“Why do people have to hire a lawyer before the mortgage servicer does their job correctly?” asked Ostendorf, her attorney.
This is one of the outgrowths from the reporting of this week's story about mortgage-servicing problems. Stay tuned for a few more installments.