After finally saving their Battle Ground farm and house from foreclosure, Jacqueline and Joseph Freeman feel like they’ve shrugged off the weight of the world.
In February, the Freemans’ monthly payment dropped from about $2,150 per month to $1,500 per month. But it took them 18 months of dogged effort, along with free advice from a local nonprofit housing resource center, the publicity of a newspaper story and help from the Vancouver office of Sen. Patty Murray, D-Wash., before they were able to lower their house payment.
“After we talked to Patty Murray’s office, they must have lit a fire under someone,” said Jacqueline Freeman, who said she had almost given up on getting help through the Obama administration’s Home Affordable Modification Program.
The $75 billion program was set up to help between 3 million and 4 million troubled homeowners modify their mortgages. But in two years, it has helped 539,493 U.S. borrowers gain permanent mortgage modifications.
The Freemans knew HAMP offered no guarantees.
Staying in the program required daily phone calls to their lender and repeatedly faxing in documents — sometimes up to 50 pages a day, Jacqueline Freeman said.
“Now that I’ve been through this process, I can see why it was so difficult,” she said of HAMP, launched by the Obama administration in February 2009.
Critics say HAMP has kept many homeowners stalled in limbo, making smaller payments that fail to stave off foreclosure.
“It didn’t matter whether it was HAMP or another internal bank program, it just went on and on forever,” said Kevin Gillette, program manager at the nonprofit Community Housing Resource Center in Vancouver, which provides mortgage default counseling to troubled homeowners.
Gillette has told some delinquent homeowners to save up their money, rather than making mortgage payments in trial loan modifications that could fail to gain permanent approval.
Gillette said he is now seeing more borrowers get help.
“Over the last 4 to 6 months, I’ve seen a marked improvement,” Gillette said.
After the October disclosure that many banks had used “robo-signers,” or people who signed foreclosure documents without meeting all legal requirements, attorneys general from all 50 states launched investigations into mortgage modifications. As the scrutiny of foreclosures climbed, Gillette gradually began to see improvements for couples like the Freemans.
“I’m seeing some old backlogs get solved,” he said. “If you’re just starting the process, you’re getting an answer within 60 days. And maybe they can’t help you, but at least you’re getting an answer.”
Gillette said the process is much better than before, when lenders would accept months worth of reduced payments through a trial loan modification, then deny the permanent change and present borrowers with a bill for the difference.
“When you were in a trial modification, your interest rate didn’t change, only your payment,” Gillette said. In that situation, the loan balance increases each month because payments are not covering the principal.
In the Freemans’ case, loan servicer Wells Fargo at first said the couple were in arrears on their mortgage by more than $38,500.
Now, Jacqueline Freeman said, the company has applied the reduced payments they made — approximately $27,000 — to their mortgage balance and forgiven the difference.
“Was it worth it? It was because it ended well,” said Freeman, despite the tense moments wondering whether she and Joseph would lose their house and sole livelihood from their farm-school business, Friendly Haven Rise.
“When we started this, we had no idea of the amount of stress we would be going through,” she said.
Lenders also did not anticipate the deluge of mortgage delinquencies that followed the 2008 meltdown of financial and credit markets and the ensuing job losses that shaped the Great Recession.
“It is clear the industry was not prepared for the significant number of customers that would face financial hardships,” said Tom Unger, a Portland-based spokesman for Wells Fargo.
However, the bank has started to implement changes to how it processes delinquencies, Unger said, starting with assigning one company representative to work with each troubled household.
That policy helped, according to Jacqueline Freeman.
“Before, there was a real lack of continuity,” Freeman said. Calls to one phone number were answered by a variety of different voices who often requested paperwork the Freemans had already faxed to Wells Fargo.
Double and triple requests for the same papers dwindled once the new caseworker took on the Freemans’ mortgage modification. And still, the modification was almost denied because of a last-minute hitch in how the couple reported their earnings from the farm.
“If not for this woman, it would have fallen apart on the last day,” Freeman said. “She called us up and said, ‘You got accepted,’ and we were dancing around the table.”
