This is a weekly column by Sandusky attorney Dan McGookey, devoted to telling true stories of homeowners who have been victimized by a lending system which makes it profitable to foreclose. The names used have been changed for privacy purposes. This is Trisha's Tale.
Trisha’s foreclosure nightmare began when she and her husband missed one mortgage payment in November, 2010. Not wanting to have a problem, Trisha sent the payment in shortly after its due date, along with an extra $500 to cover any late fees. Unfortunately for Trisha, her loan servicer, Hintington Bank, chose to send both those payments back, declaring Trisha and her husband in default on their loan. In fact, when she called Hintington, Trisha was told that it was too late for her to save her home; she was being put into foreclosure.
For months thereafter, Trisha kept sending in her monthly payment with Hintington cashing them, only to have them returned to her by way of a Hintington check. Finally in June 2011, the shoe dropped on Trisha as the bank filed foreclosure. At that point, Trisha sought out the help of McGookey Law Offices. In analyzing her situation, we discovered a major flaw in Hintington’s case. That was that her loan was actually owned by Fannie Mae, a government- owned entity which was founded decades ago to promote home ownership.
Consistent with that purpose, Fannie has detailed and exhaustive loss mitigation rules governing the conduct of its servicers. Loss mitigation is a reference to minimizing the loss to the government when a default occurs while at the same time working with the distressed homeowner to allow them to stay in their home if at all possible. A review of the rules quickly a number of which Hintington violated in their treatment of Trisha and her family. First and foremost, it was a blatant violation for Hintington to have returned the checks Trisha initially sent to make up for her one missed payment.
Likewise, it was an egregious violation for the Bank to tell Trisha that she was being put in foreclosure after missing just one payment. As you might think, the servicer of a Fannie Mae loan is supposed to offer the homeowner all reasonable options of home retention if the homeowner wants to stay. In Trisha’s case, not only did Hintington not offer Trisha any option in that regard, it actually drove her into foreclosure. Making matters worse yet, for many months following the first missed payment Hintington sent back every check Trisha sent. The bank’s conduct evidences its desire to manufacture a default where one would not otherwise exist.
We have pointed out Hintington’s transgressions to Fannie Mae, presently to no avail. It is indeed sadly ironic that a government-owned entity established to promote home ownership is using taxpayer dollars to literally drive people out of their homes. Of course in the sick world of securitized mortgage lending, where it is profitable to foreclose, the rules seem to be for public consumption only, and greed prevails!
The good news for Trisha and her family is that the normal course of things will not happen. We are intent on keeping the spotlight on Hintington’s and Fannie Mae’s illicit conduct so that without doubt they will back down. The lesson from Trisha’s case is that if you find yourself in default on your loan, but you want to keep your home and have a reasonable ability to make payments, even if not full payments do everything possible to demonstrate your good faith and document everything. Generally courts are loathe to order that someone’s home should be taken away if they can show they have taken all reasonable measures to save it.
Next week: the story of Carl, who actually corrected his bank’s error by obtaining insurance on his home when the bank let it lapse, only to find himself in foreclosure when he refused to pay the exorbitant late fees and other charges thrust on him by the bank resulting from its own mistake.
Copyright 2012 Daniel L. McGookey