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More political heat needed to help homeowners with loan modifications

More political heat needed to help homeowners with loan modifications struggle to get banks to cooperate

Colorado resident, Tom Blank, didn’t know he was setting out to become an expert in the game of home loan foreclosure politics when he had a chance meeting with longtime Carbondale resident Terry Counterman last fall.

“I was sitting on the bench outside my store, when Terry walked by and we got to talking,” said Blank, who owns the Main Street Spirits liquor store in downtown Carbondale.

“I’d seen him around, but I didn’t know him,” Blank said of Counterman, who has called his modest, late 19th century miner’s house at the corner of Garfield Avenue and Second Street home for the past 30 years.

Casual conversation turned serious when Counterman began talking about some financial and medical problems that had been mounting for many years, to the point that he had to mortgage his house. Things weren’t getting any better, and he was now facing foreclosure.

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“I offered to see what I could do to help him out,” Blank said.

Blank ran into delay after delay from the bank

The project became an obsession over the past four months, when Blank ultimately volunteered as power of attorney on Counterman’s behalf to work with the banks and wade through the sea of red tape to try to find a solution.

What he ran into was delay after delay from the bank, and a bureaucratic quagmire related to the federal loan modification programs begun with good intentions to help people in need during a deep recession.

Blank was able to help Counterman work out a loan modification deal to avoid foreclosure on a smaller $65,000 loan, using the federal HOPE for Homeowners program.

Early last week, though, Counterman was literally two days from foreclosure on a second, $180,000 loan, for which Blank is still working with Wells Fargo Home Mortgage to keep Counterman from losing his house.

Blank put some political pressure on Wells Fargo

A flurry of phone calls, and a little political pressure after Blank contacted the offices of 3rd District Congressman John Salazar and state Rep. Kathleen Curry, worked to buy some time. The foreclosure sale was continued for two weeks, until Jan. 20.

“We are suspending any foreclosure action and reviewing [Counterman's] file thoroughly to determine what options exist to assist him,” Jason Menke, a spokesman for Wells Fargo Home & Consumer Finance Group in Des Moines, Iowa, replied in an e-mail last Thursday following an inquiry about the case from the Post Independent.

Because Counterman’s is a second loan, it doesn’t qualify for modification under the federal Home Affordable Modification Program (HAMP), which is intended to assist people with their original first loans.

That doesn’t mean there isn’t another program that could work, Menke said.

Wells Fargo rep repeats company talking points, “Blaa, blaa, blaa”

The company also said in a December press release that it is working hard to complete loan modifications for its customers who qualify, using both HAMP and non-HAMP modification programs.

“Our goal has been to work with our customers to avoid foreclosures wherever possible, while balancing the interests of the 92 percent of our customers who continue to stay current in their payments,” Mike Heid, co-president of Wells Fargo Home Mortgage, said in the release. “When a viable alternative exists, there is no incentive for us to go to foreclosure sale.”

Record foreclosure year in Garfield County

Counterman’s is just one example among the hundreds of other people facing foreclosure in Garfield County, as well as around the country, as families struggle in the midst of a recession that has brought record unemployment, underemployment and other financial stress.

It’s also an example of the frustrations homeowners are having trying to work with lenders and the feds to try to keep their homes.

Often, foreclosure sale dates loom and the threat of losing one’s home becomes imminent, only to have the action postponed at the last minute as the lender and homeowner try to work something out, until they’re back at the same point in a couple of weeks.

The Obama administration rolled out programs such as HOPE and HAMP as the recession deepened, in an effort to help people, especially those who had been in their homes for a long time, keep their homes.

But the programs have been criticized for taking too long and not providing the help they were intended to provide.

The Garfield County Public Trustee’s Office had 408 foreclosure filings in 2009, including both residential and commercial properties — almost quadruple the number of filings in 2008, when the county had 108 foreclosure filings.

And, the number far eclipsed the 244 foreclosures filed in 1985 during the peak of the last major economic downturn in the region after the 1982 oil shale bust, Garfield County Treasurer and Public Trustee Georgia Chamberlain said.

It’s not a straight comparison, she said. “The population is different, and we have a lot more subdivisions and individual properties than we had in Garfield County back then.”

But it’s likely an indication of things still to come, Chamberlain said.

After the 1982 bust, which was more localized and more industry specific than the current recession, it took several years before things settled down. Garfield County saw foreclosures climb from 63 in 1982 to a peak of 244 in 1985, before dropping off over the next five years to 32 in 1990, and into the teens during the mid-1990s.

“The financial crisis that began in September of 2008 was more global, and much more dramatic,” Chamberlain said. “But I think we can expect to see that same kind of trend with foreclosures this time, where we have that peak 2 1/2 years later in about mid-2011. It’s not a happy forecast.”

Hard luck case

Blank believes cases like Counterman’s are the perfect candidates for the various loan modification programs that are available for people to reduce payments and lower interest rates.

He’s on disability and can’t work, but he does have some limited income, including Social Security, to at least keep up with some level of payments. He’s also been in his house for an extended period of time, unlike the many bad loan situations in recent years where people were allowed to buy homes they couldn’t really afford.

It’s just that he’s fallen on hard times for a variety of reasons, including a recent fall in which he broke his hip and has been laid up, unable to pay bills and stay on top of the pending foreclosure action.

But the time it takes, and the paperwork involved to get help can be overwhelming, even for someone in good health, Blank said.

“The intent of Obama’s program was to help middle- and low-income people who have been impacted by the economic downturn,” he said. “The basic problem seems to be a failure to communicate between the banks and the feds to get help to these people.”

Blank worked for four months to try to make something happen for Counterman, before the Jan. 6 foreclosure deadline came.

“We were a day and a half from Terry technically being out on the streets in his robe with a walker,” Blank said last Monday, just before the deadline was extended.

Counterman, 62, said he almost had his house paid off at one point several years ago, when a series of financial strains began to build related to caring for loved ones who had become ill, including his mother, as well as a variety of medical problems of his own.

“I was able to make payments up until about two years ago, but then I became bed-ridden and basically couldn’t function,” he said. “I tried to keep everything going, but I had no means to pay on the notes anymore. Now, I’m just trying to hold onto the house and stay here.”

He thanked Blank, as well as neighbor Beth Cockrell who checks in on Counterman and brings him food on occasion, for lending a hand.

“It was a blessing from God as far as I’m concerned,” he said. “They were kind enough to help me.”

Applying political heat

Blank believes his calls to elected officials may have prompted some action to postpone Counterman’s foreclosure. But it’s going to take more political heat to fix the bigger problem, he said.

“I hate to see foreclosures happen that don’t need to happen,” he said. “I understand that some have to, but I’ve seen too many people give up who could probably get some help.”

Edward Stern, regional spokesman for Rep. Salazar, said the congressman has received a substantial number of calls from people looking for resources to help them manage their home loans.

“Others are just looking for help improving communication with their lending institutions,” Stern said.

Salazar, who voted against the bank bailout last year that propped up lending institutions with taxpayer funds, issued a statement in early December calling on lenders to step up efforts to help people who are fighting off foreclosure using the new government programs.

“Instead of getting the help they need, my constituents are being sent through voice mail systems or to outsourced call centers.

“They’re being misled, They’re getting the run-around for months, and then being denied,” Salazar said in the statement. “I’ve heard from many constituents who have had difficulties getting help with their mortgage, and they need to be able to get their concerns addressed.”

However, lenders are in a pickle, too, noted Linda McKinley, mortgage advisor with the Cherry Creek Mortgage office in Glenwood Springs.

“The programs that are supposed to be helping aren’t,” she said. “In the beginning, a lot of lenders were modifying rates and setting up new payment plans for people. But six months later, a lot of those people were back in financial trouble.”

The problem isn’t so much the interest rate or the amount of the mortgage payment, it’s the fact that people are out of work and can’t afford their mortgages any longer, she said.

“It doesn’t matter what you do on a loan, if people aren’t employed they can’t pay the mortgage,” McKinley said. “Lenders can’t just suspend all payments.

“It is frustrating, and I feel for so many people,” she said.

One move that could help would be if a local push to raise FHA loan requirements in Garfield County are successful, McKinley added.

Local elected officials, along with Rep. Salazar and Sens. Mark Udall and Mike Bennet, have sent letters of support for increasing the loan limit from $425,000 to the maximum $729,000 to better reflect the county’s median home price.
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Source: http://www.postindependent.com/article/20100111/VALLEYNEWS/100119999/1083&ParentProfile=1074

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