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.
Categories: Mortgage servicing, Mortgages, The foreclosure mess
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Comments
I get so tired of people wining about businesses, saying that they are using deceptive practices. Wake up people it is called "Buyer Beware" Did you ever think that these business are not deceptive at all. That when they give you information like modification over refinance they believe you understand what that means. In today's society with all the technology available to us, it only takes one click of the mouse to investigate any word or program out there. If Mrs. Cottrell took a little initiative and investigated the Obama plan she would have soon realized that she was not eligible. She was not falling behind on her mortgage and she could afford same. It is amazing that she was able to find an attorney because they way it is portrayed in the article she has no knowledge to deal with simple matters. The American people need to take responsibility for there actions. Mrs. Cottrell was trying to get something for nothing, plain and simple. It backfired...
Posted by: So tired | July 5, 2011 2:02 PM
So tired, one thing to keep in mind: In 2009, a loan modification was still a pretty new concept to the majority of homeowners -- especially Making Home Affordable-related plans, which launched that year. Housing counselors reported then that mortgage servicers were having lots of trouble understanding and/or following the rules, so it's expecting a lot of borrowers to figure out what the industry pros apparently could not.
Ms. Cottrell told me that she wishes she had been informed upfront that she didn't qualify for anything. She said she wasn't trying to get something for nothing.
Posted by: Jamie Smith Hopkins | July 5, 2011 2:08 PM
it's not just the mortgage companies, and it's not just being unaware. i took equity out of 2 IRA accts to pay down credit cards so i could refinance with lower rate. As soon as the banks got my payments they promptly lowered my credit limit, thereby increasing my debt to credit ratio to a higher number than before. i'm totally screwed!
Posted by: karen | July 5, 2011 2:51 PM
As someone who deals with morgage companies and homeowners on a daily basis, I see it as both their faults. Morgage companies, title companies and some realitors don't always disclose the correct information. But the homeowners don't always research as much as they should. However my view is for-profit banks are horrible and do not have the customers back. People need to learn not to trust them.
Posted by: Sarah | July 5, 2011 5:00 PM
Here is my story. I recently got a notice marked "Homeowner Relief 2011." It referenced my Chase mortgage several times and spoke as if it were from Chase. It said that Chase understood that things sometimes happen that are "out of your control" and wanted to discuss our loan situatio to see if we qualify for a workout.
We have never missed a payment and are not under water so we wondered was going on. When we called, the person said that this was an Obama plan and we might still qualify even though we weren't behind. Wjhen I tried to find out who was running this program, he refused to tell me until I "gave him ore information." When I refused, he said suspicious people like me were making it impossible to stabilize the housing situation and hung up on me.
Chase told me this person wasn't related to their bank.
I sympathize with people who are frantic to keep their houses, but urge them to be suspicious and very careful. Unfortunately, many people may not know the right questions to ask or understand the explanations -- especially if someone is deliberately trying to put something them.
Posted by: Phyllis | July 6, 2011 7:22 AM