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Ohio ranks 48th of U.S. states in the percentage of delinquent loans modified under HAMP

Ohio ranks 48th of U.S. states in the percentage of delinquent loans modified under HAMP

Families like the Stewarts are a typical example of what Ohio homeowners are facing. Shannon Stewart, 29, had lost some of his health benefits. They fell three months behind on their mortgage and got the foreclosure notice on their Clyde home just before Thanksgiving.

“We were so depressed,” said Mandi Stewart, 26, a stay-at-home mom. “We asked our mortgage place to lower our payment, but they kept saying, ‘There’s nothing we can do.’”

Last March, the Obama administration set up the Home Affordable Modification Program to help people like the Stewarts work with mortgage servicers to modify loans. But the program hasn’t worked as planned, and people are still losing their homes because of interest rate hikes or unexpected expenses at an alarming rate.

Mike Rockwood has modified five of his own loans, including his personal residence and investment property. He has created a top-notch workbook to walk you through the steps of fighting to get the best terms on your loan modification.

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As mentioned, Ohio is one of the states where the program has been least effective. Ohio ranks 48th of U.S. states in the percentage of delinquent loans modified under HAMP. In the third quarter of 2009, there were 133,467 delinquent loans. Of those, 14,132, or 10.5 percent, were modified, according to data from the Cuyahoga County Foreclosure Prevention Program.

Empowering and Strengthening Ohio’s People came to the Stewart’s rescue

The Stewarts did find help last year — not directly from their bank but from Empowering and Strengthening Ohio’s People, a Cleveland-based group that serves as an intermediary between homeowners and banks.

Funding is drying up for such non-profits, however.

An ESOP counselor helped the Stewarts lower their monthly payment from $658 to $308 after weeks of negotiating with the bank and going over the family’s finances.

The new payment also reflects the reduced value of the house, Mandi Stewart said. When they bought the home, it was worth $74,000. Today it’s worth $58,000, she said.

U.S. Rep. Marcy Kaptur, D-Toledo, said she has lost faith in the Obama administration’s commitment to easing the mortgage crisis.

“There are millions of homeowners in foreclosure, and there’s nothing that compels these institutions to work with them,” Kaptur said of the mortgage holders.


In theory, HAMP should yield the same results that ESOP got the Stewarts.

A homeowner in trouble calls his or her mortgage servicer and goes over finances on the phone.

Based on the verbal information, the servicer arranges for a trial loan modification, good for three months. During that time, the homeowner submits paperwork to prove his or her financial situation and the servicer works out a permanent modification.

Actual scenarios look more like this:

In Marion, Karli and Mick Crawford called their mortgage company once they couldn’t make payments, and the servicer told them they weren’t far enough behind. Once they reached the foreclosure stage, the servicer told them to sit tight and wait for a counselor to contact them.

As the foreclosure loomed, they waited. Karli checked in regularly. One day, they were told a counselor had tried to contact them without luck.

Karli spent hours on the phone, seldom talking to the same person twice. She provided information and documents three, four, sometimes five times. She was told they made too much money to qualify for the Obama program. She was told they made too little to qualify for the bank’s other programs.

The HAMP program targets loan servicers, which process loans and collect payments for the investors, who put up the money.

Mark Seifert, executive director of ESOP, said that national foreclosure legislation should target those who have the most to lose — the investors.

Loan servicers make profits off struggling homeowners

Whether or not the servicers benefit from foreclosure is a matter of debate.

Paul Koches, executive vice president of loan servicer Ocwen, said servicers win when a loan is modified. It’s an easy job when all parties are happy — Ocwen just sends out the bills and collects the checks. When homeowners default, Koches said, manpower is needed to field the calls, not to mention the mounds of paperwork and legal fees.

Seifert, however, said servicers benefit from foreclosures. They tack on fee after fee, which the servicers pocket. Once the homeowner is out of the property, they no longer have to deal with the loan.


Rates of mortgage workouts vary widely by servicer.

Seifert said his counselors usually have better luck dealing with the smaller servicing companies.

Mary Kay Bean, a spokeswoman for JPMorgan Chase, said the biggest problem with HAMP is getting up-to-date documents from the homeowner.

According to data she provided, Chase has offered 280,000 homeowners trial loan modifications. Of those, 178,000 were offered under HAMP, and 94 percent decreased the borrower’s monthly payment.

But only 26 percent of the homeowners made three or more payments and submitted the necessary paperwork. And as of late October, 98,344 of the loans still had not been decided on.

Ocwen, a smaller loan servicing company, has one of the highest rates of mortgage modifications.

Koches said he saw a wave of foreclosures coming, and the company started bracing itself in 2007, nearly doubling its work force in two years.

Modification is a science, he said. The new monthly payment must be acceptable to both the homeowner and the investor, and be more than the house could fetch on the market.

“We have an understanding of the psychological pressures that folks are under,” Koches said. “It’s usually a product of other things that have crept into their lives.”

Servicing staff will take note of the homeowner’s tone and language, and use scripts to best fit their situation.

The goal is to be empathetic, but also instill a sense of ability, to make homeowners want to pay off their mortgages.

“If we make certain adjustments, and get you into a modified loan, that spins it around and makes them want to assist in their own successful outcome,” Koches said.

Larger banks have started to take notice and have asked for information on their systems.

“We’re an independent servicer, so we’re really set up better in terms of structure, technology and expertise,” Koches said.

Home foreclosures continue to climb in the state, increasing from 59,041 claims in 2004 to 85,773 claims in 2008, according to Ohio Supreme Court data.

Through Sept. 30 of this year there have been 66,453, compared to 65,452 in the same time frame in 2008.

In Sandusky County, there were 218 foreclosures filed in 2004. In 2008, there were 321, an increase of 47.2 percent. This year, there were 317 foreclosure filings through Sept. 30. There were 242 during the same time frame in 2008.

In Ottawa County, there were 127 foreclosures filed in 2004. In 2008, there were 273, an increase of 115 percent. This year, there were 206 foreclosure filings through Sept. 30. There were 205 during the same time frame in 2008.

Save the Dream Program

In 2008, Gov. Ted Strickland launched the Save the Dream program to help local loan counseling agencies find state and federal money.

Stephanie Casey-Pierce, outreach coordinator for Save the Dream, said the program revolved around an advertising campaign and hotline. Operators would take data on the homeowner’s situation and refer them to the appropriate agency.

Trends in foreclosure have changed since the crisis began, Casey-Pierce said. At first, most of the foreclosures were clustered in the urban areas. Now they are trending more and more toward the rural areas.

One year after the Stewarts’ ordeal, Mandi sat on the sofa with Rilee in her lap. Neither could stop smiling.

“This is my house,” Mandi said. “Here I can paint if I want to. I can do whatever I want with it.”

This Christmas, Rilee and her siblings, 5-year-old Arrianna and 2-year-old Logan, will wake up in their own rooms and open presents laid out under their large, live Christmas tree.

“I really think without ESOP I would be living in an apartment right now,” Mandi said. “I would recommend ESOP to anybody.”

Before completing and sending in a loan modification package, you may want to obtain some coaching to combat the stall tactics banks/servicers are using to cut to the front of the line of other applications and get approved faster

Click here to get proven help with your home loan modification

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