When it comes to home mortgages, most people associate the acronym "FHA" with the Federal Home Administration. In the case of Daniel, as I suspect with millions of Americans with FHA-insured mortgages, the acronym would more appropriately stand for "Foreclosed Home Administration". Such a shame. A government agency charged with providing mortgage insurance at taxpayer expense so that more Americans could realize the dream of home ownership presiding over and dismantling that very dream? Unthinkable, you may say.
In the upside down world of securitized mortgage loans however, where the reality is just the opposite of every self-evident truth of traditional mortgage lending, the very basic mission of the FHA, on an everyday level, has been turned on its head. Now the FHA has simply become a tool of the Wall Street Banks to be used to further line their very deep pockets. Daniel's story is a case in point of this fact.
Daniel's problems in paying his FHA-insured mortgage started four years ago when his not-so-perfect storm occurred: He went through a divorce and lost his job at the same time. Despite these problems, Daniel resolved that he would do everything he possibly could to save his modest home, on which he owed a $70,000 mortgage. This meant taking on two, and sometimes three jobs to make ends meet. However, his heroic efforts meant nothing to his loan servicer, PNB, which promptly took him into foreclosure once he started to fall behind on his payments. It did so in utter disregard for FHA rules, obstensibly meant to keep homeowners out of foreclosure, and in their homes whenever possible.
It is important to note that Daniel was no deadbeat when it came to his mortgage. From day one when he saw his problems developing, he reached out to his loan servicer for help, only to be rejected. Foreclosure judgment was rendered shortly after the Complaint was filed, and no modification was in sight. This was the state of affairs for Daniel when he first came into our office almost a year ago. Since that time we filed a Motion to get rid of the old judgment, which was granted. Recently, Daniel has obtained a new job. Now things look good for him, whereas at one time all seemed lost. The only reason that Daniel was able to turn things around in his favor is that we were able to successfully show the court that PNB did not follow the FHA rules. Where was the FHA? The answer is nowhere in sight.
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 that makes it profitable to foreclose. Note from the author: If you have questions or comments regarding this or any Foreclosure Story article, please visit www.mcgookeylaw.com
Next week: The story of Lara, the first person we’ve met who has been offered a damage award by the State Attorney General as her portion of the $25 billion “robo-signer” settlement reached between the government and the nation’s five largest mortgage loan servicers in April of this year, and how we might use the settlement offer to reverse the foreclosure judgment against her.
Copyright 2012 Daniel L. McGookey