Raging against the foreclosure machine | iWatch News by The Center for Public Integrity
By 2009, the adjustable interest rate for Cassandra and Bernard Gray’s Durham, N.C., home loan had spiked to more than 12 percent. “I didn’t know if we were going to be on the street or in a shelter,” Cassandra recalls. “We couldn’t afford groceries. It got pretty bad.”
They were thrilled to sign up for a modification plan with their loan servicer, GMAC Home Mortgage, Cassandra Gray said.
The modification lowered their payment from $1,128 to $768 per month. But after three months, GMAC began returning their payments, the Grays claim in a complaint filed with the North Carolina Commissioner of Banks.
GMAC customer service representatives told them there was a “computer glitch” and that the problem would be resolved. Instead, GMAC twice started a foreclosure action.
GMAC claimed it had no record of any payment being received. The Grays have submitted bank statements that appear to show GMAC returning the $768 payment — several times. GMAC has since assessed more than $20,000 in interest and fees.
“I thought I was doing the correct thing” by obtaining a loan modification, Cassandra Gray said in a recent interview. “But I came home one day and there was a foreclosure notice on my door and a sign in my yard. I called constantly, but it was as if the dots were not connecting.”
A North Carolina clerk of court recently dismissed the foreclosure on grounds that GMAC had not properly demonstrated that it had standing to bring a foreclosure. But once GMAC gets its documentation in order, the loan servicer can foreclose again.
GMAC said it could not comment without borrower consent. The Grays did not sign a form authorizing the lender to talk about their case. But the lender did say that it is “working directly with the borrower to address their claims.”
Since 2007, nearly 9 million homes have been lost to foreclosure, according to data from RealtyTrac. About 4 million are currently in default on or in some stage of foreclosure. Some of these homeowners saw their payments skyrocket, some lost their jobs, and some bought a more expensive home than they could afford.
But many, like the Grays, say that their foreclosures or defaults were triggered by an error made by the mortgage servicing company. Common errors include late fees generated through questionable accounting and imposed without notice, excessive charges for property inspections and maintenance, and inflated or unnecessary attorneys’ fees.
Many homeowners who have tried to correct what seem to be simple accounting mistakes say that the servicers — often, an arm of a major bank — are unable or unwilling to help them resolve even the most basic problems.
“Every time I would call I’d get a different person,” said William Allen, a retiree near Baltimore who is fighting a Bank of America foreclosure. “I worked on it nearly a year and it didn’t do me any good.”