We are still reeling with excitement over the latest result reached on behalf of our Client Tom in his mortgage struggles with his bank, Chase. Indeed, this success story ranks among the best we’ve seen. We first met Tom only four months ago, when he came to see us after having received his second foreclosure complaint. His mortgage story was indeed a tale of woe. After having taken out the $104,000 mortgage in 1999, his 11.9% interest rate, combined with a 15 year maturity date, caused his payments of principal and interest to be over $1400 per month, an amount which was beyond his reach. By 2004, Tom fell behind on those payments, resulting in his first foreclosure. To forestall that process, Tom filed the first of two bankruptcies. Unfortunately, neither of those led to a reduction in his interest rate, or an extension of his loan maturity date.
Tom did enter into a reinstatement of his loan with Chase, and later a modification. Between those events however, Tom’s payments actually increased $300 a month. We see this happen quite often; a homeowner struggling with his or her mortgage, reaching out to the bank (actually a loan servicer) for help, only to end up with higher payments at the end of the process. When Tom’s son developed a serious illness in early 2013, with resultant medical bills, “the straw that broke the camel’s back” occurred, and Tom stopped paying on his mortgage altogether. And as if the above story of Tom’s decade-long struggle on his mortgage wasn’t nightmarish enough, the crowning blow was the fact under the terms of the mortgage it came due in full, with a balloon of over $100,000, in October, 2014, only ten short months away!
In Tom’s case however, it can be said that from the ashes of his disastrous mortgage tale arose the phoenix of a reborn mortgage, one that bore almost no resemblance to the one which spawned it. What exactly caused Chase to do a total turnaround in its treatment of Tom, we’ll never know for sure. However, given the glaring issue appearing from the foreclosure complaint regarding whether Chase was the bank entitled to foreclose, we feel it’s a fair bet that Chase was concerned about standing. Compare the before and after terms of the mortgage modification, offered courtesy of Chase:
Prior to Modification After Modification
Principal & Interest payment $1407 $902
Interest rate 11.9% 4.375%
Loan Balance $132,000 $75,000
Loan Maturity Date 10 months, balloon 99 months, no balloon
payment of over $100,000
If you think you read the part about the principal balance reduction from $132,000 to $75,000 wrong, you are mistaken! In order for Tom to realize that reduction, he must make his payments on time for the next three years. We are extremely confident that he will be able to do so. So in Tom’s case, Chase came through, in a big way. Even though one might say that after ten years of mortgage horror for Tom it was about time Chase did, we would prefer to look back at it as being a case of “better late than never”.
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Kate Eyster and Lauren McGookey contributed to this article.
Copyright 2014 Daniel L. McGookey