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One Family’s 9-Month Trip Through the Loan Mod Twilight Zone

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Spiral_KaCey97007_CCFlickrTalking on the phone recently, Bevin Beckage read the bank’s letter again and laughed. Denied a modification of her mortgage after nine months spent correcting Wells Fargo’s mistakes. Denied even though the bank still can’t get its own paperwork right.

Denied, even though it was a Wells Fargo employee who suggested Beckage apply for a loan modification in the first place.

“It’s a full-time job, let me tell you,” Beckage said, describing her battle with the bank with a frustrated chuckle. “A lot of people would have given up already. Well, I am relentless.”

The Political Struggle

The issue of mortgage modifications has become a major political issue in recent months as lenders and legislators struggle with new economic realities. Nearly a quarter of Americans with mortgages owe more money than their house is worth, according to a recent study covered here. Unemployment rates hover around 9%, near the all-time high.

And the government’s premier program for helping people avoid foreclosure is an unmitigated disaster, according to the Government Accountability Office. The Home Affordable Modification Program was given $50 billion to help up to 4 million homeowners. But only 680,000 people have obtained help from the program, according to the Treasury Department, prompting Republican leaders in Congress to call for the program to be scrapped.

Lost in the high-level politics are stories of individual families struggling, and usually failing, to win loan modifications.

“If there is all this money from the government to help lower payments, I don’t understand why they make it so hard to get,” Beckage says.

For its part, Wells Fargo admits it has struggled to keep up with so many requests for loan modifications. The company had 6,000 employees specializing in helping people keep their homes in 2009, says Jason Menke, a spokesman for Wells Fargo Home Mortgage, the company that services Beckage’s loan. Today it has 16,000.

“The industry as a whole was not prepared for the number of customers facing financial hardship, and admittedly we were not always providing the consistent level of service to customers that we want to deliver,” Menke says.

Stretching for the American Dream

In 2006 Beckage and her husband were living in a duplex in Allenton, Pa., close to the Willow Grove Air National Guard base where Beckage’s husband works. (Because debt issues are frowned upon in the military, Beckage says, and the family’s financial problems remain private, Beckage asked us not to name her husband.

With one young daughter and hopes for another, the couple started looking for a larger home. They found one they liked north of the city, a four-bedroom colonial close to Beckage’s sister. The asking price was $350,000. Because the couple had saved up such a large downpayment, they managed to talk the owners down to $320,000. They bought the place in February 2007.

Even so, Beckage knew the mortgage would be a stretch. No more dinners out. No vacations. No new cars for a while. Beckage gave up her job as a travel agent when her daughter was born, so the family relied solely on her husband’s income.

“We could afford it, but we had to give up the lifestyle that we had before,” Beckage says.

Three months after they moved in, Beckage discovered she was pregnant. With twins. That meant buying two beds, two car seats, twice the number of diapers and clothes. One twin is allergic to milk, the other has acid reflux, which meant hospital visits and buying the most expensive kind of formula.

Normal stuff. But the family already was living near the limit of what they could afford. The extra expenses of twins pushed them over the edge. There were months when they had to buy diapers and formula with a credit card. In 2010, they missed two mortgage payments.

“We’d depleted our savings to get the house and thought we’d be able to build it back up,” says Beckage. “We didn’t plan on twins.”

Within days of missing their second mortgage payment, the family received a certified letter from Wells Fargo declaring foreclosure on their house in August 2010. They managed to escape the jam thanks to a loan from Beckage’s parents.

The crisis was averted for the time being. None of their neighbors know that Beckage is still just one medical bill away from losing her house.

“Honestly, we’re still overwhelmed,” she says.

A Lifeline Becomes a Nightmare »

Image: KaCey97007, via Flickr.com

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