…and the difference between how a credit union handles homeowners in crisis
Imagine this: You’ve saved your pennies to build your dream home only to find out that your “dream home” is your worst nightmare.
Although not the Amityville Horror, but almost as bad, hundreds of homeowners across the country have unknowingly built homes on toxic locations. Once realized, homeowners have been put in an impossible situation trying to determine if they should walk away to save their health or hang on in order to preserve their investment.
Jerry and Sarah Covey know all too well about what can happen when you build in a new development gone wrong. In 2002 the Coveys poured their life savings into building their dream home in an up and coming newly developed area outside West Palm Beach, FL only to find years later that the land was tainted. Reports of deadly brain cancer, often found in children was radically occurring amongst residents.
As more neighbors fell ill the Coveys and their two small children knew that they could no longer live in the home without constantly wondering if they were next. Jerry says that once he and his wife discovered that neighbors were getting cancer, he knew that the plan was to ultimately move out. His first step was to try to work with his bank to see if there was anything that could be done to modify his mortgage.
“We immediately reached out to Bank of America to see if they could rework the loan,” he explains. “My wife and I have good jobs so we could continue to pay the mortgage, but knew that our situation meant that we would have to ultimately carry two mortgages (or rent) because there was no way we could stay.”
Jerry explains that he first asked about mortgage loan modification because modifying the loan seemed to be the most logical approach to the situation.
Despite Jerry’s best efforts, his pleas for help fell on deaf, or uninformed ears at the bank. “I made several calls about loan modification, but most were dead ends. Finally I talked to one customer service representative who told me to stop paying the loan for three months and then the bank would entertain the thought of modification.”
Jerry recalls the conversation occurring around the summer of 2009, during the height of mega bank robo signing and the hasty push for foreclosure.
“I really didn’t feel comfortable doing this because we’ve always paid our bills so to just stop paying seemed counterintuitive,” he says. But Jerry said that he felt his hands were tied and couldn't continue to make high mortgage payments on the tainted property while paying rent or possibly another mortgage.
He says that he and his wife decided to follow the bank’s advice and stop paying their mortgage for three months. “But I still continued to try to communicate with the bank, sending letters and making calls.”
The Covey’s real financial horror began once they approached the bank about modification after three months.
“After three and a half months I called the bank but was laughed at and told that they wouldn’t modify our loan because we were now in default. They told us we would need to catch up on loan payments or they would file for foreclosure.”
At this point the Coveys were still living in their toxic home and Sarah was done. “Staying at the property with our children was just not an option to us and we knew that we had no choice,” she says. The family packed a few bags, leaving the majority of their belongings behind and moved in with Jerry’s mother who lives an hour away from the property.
Jerry says that he continued to make payments on the mortgage for some time but eventually just gave up. The family left the property in 2009 and Bank of America began the foreclosure proceedings on his home that December.
The Difference Between Bank vs. Credit Union Foreclosure Assistance
As the Coveys drowned in the Bank of America phone tree, receiving one piece of bad information after another, IBM Southeast Employees’ Federal Credit Union ($800 million, Boca Raton, FL) dealt with similar cases, however members had a completely different experience.
Dorsey Campbell, Loss Mitigation Specialist at the credit union handled cases in the same area and says that the situation is simply no win. “Through no fault of the homeowner or lender, the area has become toxic, which becomes an incredibly difficult situation for everyone involved.”
“At some point you have to look at it from a legal standpoint because who is responsible? The seller, the town…who ultimately should be responsible for paying the loan?”
Campbell says that she recalls handling mortgages around the same area. “It’s tough because the area has been tested with many results coming back inconclusive or negative for toxins. However, people are still getting sick and no one can pinpoint where the toxins are coming from….people are scared and just no longer want to live there.”
Bottom line, Campbell says that the entire situation is pretty sticky. “You certainly feel terrible for the members who have face this--if they wanted to short sell or deed in lieu and start their lives another way you want to do whatever you can to help.”
The way IBM Southeast EFCU versus Bank of America approach a similar situation is completely different.
“We are always more than cooperative working with people in this type of situation. We don’t want to turn a ugly situation uglier…there are real hardships on many people’s parts.”
However, Jerry says that he certainly never felt the love from Bank of America during the process. Once he stopped paying, he continued to try to talk to someone, anyone at the bank, but the foreclosure machine continued to chug along.
“There were no notices, letters or any communication about the foreclosure. The bank came in and simply just changed all the locks, even though I continued to call every few weeks to see if we could do something…anything to rectify the situation. We just wanted to be free of the house and try to pick up the pieces of our life.”
“What makes this type of situation so difficult and different from other foreclosures is that these people are pushing to work something out,” Campbell says. “It’s not that they wanted to abandon their responsibility of their loan, but instead wanted to do the right thing…its really sad and unfortunate.”
However the problem working with a mega bank versus a neighborhood credit union is that the mega giant cannot discern between a homeowner in crisis due to environmental factors beyond their control and a homeowner who simply got in over his or her head and walked away.
The Coveys spent over a year banging their collective heads against the wall trying to get their bank to help, working with expensive attorneys and spending thousands of dollars trying to rectify the situation.
In December 2011, the Coveys were taken to court regarding the foreclosure, however, “No one showed up from the bank because their paperwork was such a mess,” Jerry says. The case was thrown out however following the ruling, Bank of America was back to its old tricks and continued to pursue foreclosure in 2012.
Campbell says that when a homeowner approaches the credit union with a similar situation, she and her team take a personal approach in order to arrive at some kind of solution. “We are looking at this realistically because we know sometimes people can’t make their full payment. People aren’t choosing this and we explore every option, whether it’s short sale, modification or deed in lieu. You have to go that extra mile for every member instead of just blindly barreling over them to foreclose in every situation.”
Why Can’t the Big Banks Just Get it Right?
So how can a credit union find solutions for its members, whereas the powerful bank--with every resource and tool available to them--cannot? According to South Florida real estate attorney BJ Reeves, it comes down to a matter of personalization and customization.
“These people were presented with a real personal, terrible problem and the bank couldn’t think outside the box to work with them? Unfortunately these banks are a one trick pony, which let’s foreclose and foreclose quickly.”
Reeves, a seasoned South Florida real estate attorney has dealt with her share of big bank debacles in the mortgage field. “The issue with the people living in the cancer cluster is extremely serious and I’m amazed that no one from the bank would help or even provide them with guidance so they didn’t end up in this situation.”
“However, I’ve seen how big banks tend to only focus on the business that brings profits and ignore areas that don’t.”
She recalls a case that has been in her files for over 20 years. “A quick fix, something that could probably be addressed swiftly, but this bank has completely ignored and shunned any communication attempt, even letters and communication from an attorney.”
Reeves says that decades ago Ocwen Financial Corporation managed to flip flop two neighbor’s lot numbers. “The property owners lived side by side but discovered that the neighbor who paid cash for his property had a mortgage on the property and the other one showed it did not.”
She says that what most likely happened is that the bank mixed up the numbers--a correction any logical person would think might be pretty easy to make.
“I have called, written and tried to communicate with this bank on countless occasions,” Reeves says. “But it’s amazing how much you can call and write, yet no one will respond or acknowledge your correspondence.”
Reeves, a credit union proponent says that she’s worked on closings for numerous credit unions and says that she definitely sees the difference in the way those mortgages are handled versus trying to work with the mega banks. “It just goes to show you these banks really should be too big to save.”
Feel as if your big bank is bullying you? Find a credit union to pursue mortgage refinance or modification freedom.By Gina Ragusa