Homeowners sue BofA, Wells Fargo

More frustrated homeowners turned to federal court this week for help with their mortgages, saying Bank of America and Wells Fargo failed to provide promised payment modifications.

The two cases, filed Tuesday in Massachusetts, seek class action status.

Three specific families are identified, one with a loan serviced by Bank of America and two by Wells Fargo - the nation's two largest mortgage servicers. They were granted trial modifications, according to court documents, but haven't received long-term modifications despite having submitted all required documents and made timely payments for more than three months.

The claims are simple, the two filings say: "When a large financial institution promises to modify an eligible loan to prevent foreclosure, homeowners who live up to their end of the bargain expect that promise to be kept."

The Home Affordable Modification Program (HAMP) is the main federal plan for reducing mortgage payments, part of a $75 billion plan to stem the national foreclosure crisis. HAMP calls for a three-month trial period, intended to give time for the homeowner to demonstrate an ability to keep up with the lower payments. However, there are growing reports of homeowners in trial plans ultimately being rejected for modifications despite making their trial payments or even being foreclosed on during the process.

The modification process has generated so many complaints that regulators and lawmakers are pressuring lenders to improve.

The Massachusetts cases, which are not open to borrowers in other states, say homeowners are "living in limbo" and spending scarce resources on payments that might ultimately not save their homes.

"Some are in fact continuing to receive foreclosure notices," said Stuart Rossman, a lawyer with the National Consumer Law Center in Boston, which brought the lawsuit along with a law firm and another advocacy group.

Bank of America didn't immediately respond to a request for comment this afternoon. The Charlotte bank may not yet have been served. The bank has said it is taking "extraordinary measures," including sending workers to borrowers' homes, to help customers fulfill requirements for long-term modifications

A Wells Fargo spokeswoman said the company "will respond to the lawsuit once we have a chance to review it."

The San Francisco bank, which bought Wachovia late in 2008, has been "diligently working to convert - from trial to completed modifications - customers who meet the HAMP guidelines," Debora Blume said in an e-mail. "Unfortunately, not all customers who enter a HAMP trial do ultimately qualify for the program. In these instances, we work to determine if another foreclosure prevention option is available to them. "

Earlier this month, 10 Ohio homeowners filed a civil case in federal court against Bank of America, also saying the bank broke promises to modify their payments.

The circumstances differ in that the Ohio homeowners say they were promised modifications during a federally sponsored event last year. As of the filing date, they hadn't received documents or had their payments reduced, meaning they are not as far along in the process as the Massachusetts families.

Are you struggling to get a loan modification? Please e-mail me, shopkins@charlotteobserver.com, or call direct, 704-358-5173.

U.S. Sen. Kay Hagan helping save homes

Three Charlotte families, whose struggles to avoid foreclosure were shared Sunday in The Observer, are now getting help from Washington.




U.S. Sen. Kay Hagan's staff is looking into problems the three families have had trying to modify their mortgages and save their homes. Hagan told Save Your Home this afternoon that during her first year in office, her staff worked with more than 100 N.C. families facing foreclosure. About 75 percent are still in their homes, she said.



The foreclosure-prevention cases represent a small but complicated and important part of her constituent services effort.



"Foreclosures affect whole neighborhoods, whole communities, not just the individual," she said. "Due to the economic environment we're in...they're more than they've ever been."



Statewide, foreclosure filings jumped 17 percent last year while Mecklenburg County saw a 52 percent gain compared with a year earlier.

A year ago, the Obama Administration rolled out a $75 billion foreclosure-prevention program intended to slow the bruising pace of home losses. The program has been widely criticized, with much of the blame falling on lenders and mortgage servicers for being slow to respond. Banks and other firms have scrambled to improve, but homeowners, lawyers and foreclosure-prevention counselors continue complaining of confusing requirements, repeatedly lost paperwork and poor customer service that create lengthy delays.

"We can't force anyone to approve a modification, but we can certainly contact regulators," Hagan said. "A bank has to respond to a regulator, so it's a good way to get information to a constituent when they haven't been able to do it on their own.

"A lot of the time, the issue is lack of paperwork or not getting in touch with the right person. That's something we can help with."

Here are Hagan's answers to several other questions.

Question: What does it say about a big federal foreclosure-prevention program when it takes a U.S. Senator's staff to get people through the process intended to help them?

Hagan: It's probably due to the fact that we have so many people in this foreclosure situation. That's one reason I'm saying my office is open to help. We have a toll-free line: 877-852-9462.

Question: There's a debate about whether the government should be involved in widespread foreclosure prevention. What do you think?

Hagan: Home ownership is one of the basic building blocks of (personal) equity. I want to do everything possible to keep people in their homes. A government can help citizens in these very vulnerable times.

Question: One factor driving the foreclosure crisis has been exotic loans, often with spiraling interest rates, that borrowers didn't understand. The first bill you proposed in the U.S. Senate deals with financial literacy education. What would it do?

Hagan: This bill offers funding for states to put forward (financial literacy) curriculum in grades 6 through 12 that would actually teach our students about borrowing, credit cards, loans, accessing your credit score -- teaching young people the skill sets necessary in this world. This is critical.

Note: If you're struggling to save your home from foreclosure, I'd like to hear from you. Please e-mail shopkins@charlotteobserver.com or call direct at 704-358-5173.

See where the foreclosures are in Mecklenburg County with our interactive map, just updated with 2009 data. http://www.charlotteobserver.com/maps/story/712627.html

Caught up in the wave of foreclosures?

Last Monday, 14 of the 20 Mecklenburg homeowners scheduled for a foreclosure hearing before Cameron Scott actually showed up.

That was the highest rate of attendance the Mecklenburg County assistant clerk of court recalls having at the hearings - one of the last stops on the road to foreclosure. Used to be, no more than 15 percent of people came, said Scott, one of three attorneys who run the hearings.

More people are coming because they are more likely to know that, even at the last minute, they can stave off foreclosure. Some know because they read about it in The Observer. I know this because when I talk with people worried about losing their homes, they often show me one or more stories I’ve written about how to stop foreclosures.

But then I hear the process hasn’t worked for them. Or they didn’t call soon enough. Or they have more questions.

Here at the Observer, we began writing about the foreclosure problem long before it was recognized nationally, before it helped bring down the economy. That news coverage continues. With this blog, we’re reaching out in a new way.

Are you struggling to get a mortgage modification? We want to hear from you.

Were you able to get a modification? We want to hear your success story.

Are foreclosures hurting your community? Tell us about it.

Is it your job to help people save their homes? We want to hear your tips for what works.

We want to be a resource for linking people with the help they need. We also hope this blog becomes a place for sharing not only stories of struggling homeowners but also ideas about how to solve a problem that touches everyone. Sometimes, we’ll do all our talking in this space. Other times, your stories will also run in the newspaper.

Please join us.

Coming Sunday in The Observer: Read MoneyWise for the stories of three struggling homeowners and a discussion of whether foreclosure prevention programs are a good idea.