Foreclosure Stories: Hoodwinked on HAMP

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 Kathy's Tale.

In March 2004, Kathy refinanced her mortgage with National Country Bank. Several years later, National Country was taken over by Public National Bank (PNB), so Kathy was directed to make payments to it.

In 2007, Kathy began having financial difficulties as she was going through a separation from her husband, and he was no longer helping her with the mortgage payments. In order to make ends meet at this time, Kathy worked three jobs. However, despite her best efforts to make things work out, Kathy began to fall behind on her mortgage payments in May 2008. After being previously told several times by her bank that it would not work with her on a loan modification which would lower her monthly payment, Kathy once again called the bank in the summer of 2008 to ask about a modification.

However, rather than work with her, or even inform her of her rights under any governmental programs designed to provide relief for homeowners such as Kathy, the bank filed foreclosure against her in November 2008. Over the next six months, Kathy continued to work with the bank in an effort to gain a loan modification by supplying it with all her financial information. Again, throughout this period, never once did the bank inform her of her rights under the Home Affordable Modification Program, known as HAMP, which Kathy would have qualified for based on her income and mortgage expense.

Unfortunately, without warning the attorney representing Kathy in the foreclosure action withdrew her representation without ever filing an Answer to the Complaint on her behalf. Thus in March 2010, the court entered an order of foreclosure against Kathy. Thereafter, her home was put up for Sheriff’s sale and sold to PNB. In October 2011, PNB obtained a court order requiring the Sheriff to physically remove Kathy from her home. At this point Kathy contacted McGookey Law Offices. We immediately filed the appropriate papers with the court to gain a stay of the order requiring Kathy’s eviction from her home. At the same time, we filed a request to have the foreclosure order set aside based on the bank’s failure to comply with the requirements of HAMP, and qualify Kathy for a loan modification, Although the court has not yet ruled on that request, we are confident of success. In the meantime, Kathy is safe and secure in her home after coming dangerously close to being wrongfully removed.

The lesson of Kathy’s story is this -- if you are not offered the possibility of modifying your loan to lower your payment, or if your bank tells you that you do not qualify for such a modification, do not simply believe that the bank is acting properly, because there is a very realistic chance that it is not. Programs such as as HAMP are specifically designed to provide relief for financially-distressed homeowners such as Kathy. And, as in Kathy’s case, banks routinely ignore their responsibilities under the law because it is profitable for them to foreclose.

Next week – the story of Sam, who was forced into foreclosure despite being on time on his mortgage payments.

 Copyright 2012 Daniel L. McGookey