Family stuck in mortgage red tape

  • Article by: JAMES ELI SHIFFER , Star Tribune
  • Updated: January 27, 2010 - 10:58 PM

A Twin Cities family's earnest efforts to save their house through a federal program has brought only frustration.

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Jason and Jennifer Sonterre, with their kids, from left: Amelia, 6, John, 2, and Charlotte, 9, say they “did things right” by not overspending on their St. Francis house. But after Jason’s pay took a big cut, the family applied for help as soon as the federal mortgage assistance program was introduced .

Photo: Jeff Wheeler, Star Tribune

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With their mortgage consuming about half of their monthly income and the bank threatening to foreclose, Jason and Jennifer Sonterre looked like perfect candidates for the federal government's Home Affordable Modification Program, which was supposed to help up to 4 million Americans hold onto their homes.

But like thousands of families who applied for the mortgage assistance, the Sonterres have spent the past 10 months filling out paperwork and waiting for a straight answer from their bank.

"The government was helping banks, so the banks were going to help us stay in our house," said Jennifer Sonterre, who owes about $148,000 on her Anoka County property to Chase Home Finance. "Naively, looking back, I believed that would happen."

In the face of widespread criticism, the U.S. Treasury Department is expected to announce changes aimed at speeding approvals for those seeking help from the program as soon as today. As of Dec. 31, just 66,465 home loans had been permanently modified through the $75 billion program announced by President Obama last March, the department reported.

"It's a mess, it's chaotic and it's irrational,'' said Mark Ireland, supervising attorney with the nonprofit Foreclosure Relief Law Project in St. Paul.

A spokesman for the Mortgage Bankers Association acknowledges that some lenders were "overwhelmed" by modification requests.

Chase spokeswoman Christine Holevas said the Sonterres don't qualify for a modification but may be able to get other assistance. She said Chase has prevented 885,000 foreclosures since 2007 by modifying loans. According to the Treasury Department, Chase ranked fourth among lenders for granting trial or permanent modifications to 36 percent of eligible delinquent loans.

"The volume of requests for mortgage help has been, and continues to be, tremendous,'' Holevas said. "We've spent a lot of effort implementing the [federal] program, updating our systems with the new federal guidelines, increasing our capacity through the hiring of more than 5,000 professionals, and becoming more efficient in managing the considerable paperwork associated with this effort."

Nationwide, temporary modifications for 850,000 borrowers reduced monthly mortgage payments by a median of $500, Treasury spokeswoman Meg Reilly said.

Jason and Jennifer Sonterre bought their house in St. Francis for $120,000 in 1999. As their family expanded with three children, they refinanced twice to renovate the house. They figure they have about $2,000 in equity.

"The thing that frustrates me the most is that we did things right," said Sonterre, 32, who stays at home to take care of the kids and her infirm father. "We didn't get in over our head with our house."

The family was clobbered by the economic collapse. Jason Sonterre, a manager for a group of car dealerships, saw his annual pay drop from $93,000 to $48,000. By late 2008, the family was in serious money trouble, missing mortgage payments in November, December and January.

A trail of paperwork

They applied for help as soon as the mortgage assistance program was introduced last March. They thought they would qualify, because the program was aimed at homeowners who could still afford a mortgage despite financial setbacks. At the time, their mortgage payments accounted for far more than 31 percent of their household income, the program's threshold.

Their first application to Chase got lost. After resubmitting their documents, the Sonterres were told to expect an answer in six to 10 weeks.

But bank officials never seemed able to finish the paperwork. The family had to keep sending in updated bank statements and pay stubs. At one point, Jason Sonterre was told the loan modification department was shutting down for six weeks to train staff.

John Mechem, a spokesman for the Mortgage Bankers Association, said lenders didn't know how to train staff until the program's regulations were completed in late June or early July. He acknowledged that there were problems "tracking, keeping, finding documents."

While he waited for an answer from Chase, Jason Sonterre persuaded his employer to bump his pay up to about $63,000. That enabled the family to make the full payments once again, but it also tipped their monthly income over the program's limit by $175. When they finally heard from the bank in November, they were told that their mortgage was now eating up 30 percent of their income, just shy of the 31 percent requirement.

But the Sonterres were still three months behind on their mortgage, which meant late fees of $53 a month and regular foreclosure notices.

Jennifer Sonterre decided not to take "no" for an answer. Over two days in November, she talked to 10 Chase representatives. One told her she qualified for a trial modification, then later said she didn't. Another representative suggested she quickly sell the house and use the proceeds to pay their mortgage, Sonterre said. She wrote letters to government agencies, to senators, the governor, the president.

"I want to stay in my home. That's all I want," she said. "This is where I have all of my memories. I don't want to lose it."

Later in November, Chase offered the Sonterres a plan to raise their monthly payments by $300 to make up for three payments they missed, but the Sonterres can't afford it.

The bank also continues to send mixed messages. In some letters, Chase threatens to foreclose and in other letters the bank invites the family to seek mortgage relief, saying "we believe your home loan may be eligible for a loan modification program."

After Whistleblower inquired about the Sonterres, a Chase representative called Jennifer Sonterre and told her the lender is trying to help.

"We don't want to own anyone's home," Holevas said. "We try to do what we can to resolve the issue and help people stay in their homes, whenever possible."

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  • Jason and Jennifer Sonterre

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  • MAKING HOME AFFORDABLE

    What: A government program offering mortgage modifications or refinancing. Loan modification changes the terms of an existing loan to make it more affordable. Refinancing replaces an existing loan with a new one, often at a lower rate.

    Who is eligible: To be eligible for mortgage modification, you need to be having problems making payments and the payments must exceed 31 percent of your current gross income. For refinancing, you must be current on your payments. The amount you still owe on your first mortgage must not exceed 125 percent of your house's current market value.

    Where: Go to makinghomeaffordable.gov for details and links to free housing counseling. Call 1-888-995-4673 for additional counselors associated with the program.

    JANE FRIEDMANN
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