Folow-up to No Hope for Homeowners – Foreclosure Prevention Program Falters
Will Countrywide and Bank of America Please Step Up?
In the last week of October I ran an article about the government’s lack of any significant efforts to stop the tsunami of foreclosures that are supposedly responsible for the current economic crisis, titled No hope for Homeowners: Foreclosure Prevention Program Falters, which explored evidence the government seems determined to merely pay lip service to the foreclosure problem, while letting another million-plus families linger in a state of insecurity and despair as they rapidly approach foreclosure.
Many people these days are quick to peg people under the threat of foreclosure as being irresponsible, overly-optimistic, or just plain greedy – assuming everyone tried to buy too much house for too little down in the hopes they might be the next Donald Trump.
“Kitty’s” story demonstrates the very precarious nature of America’s middle class, especially in the face of a contracting economy, increased competition from overseas, and a government determined to drive it to into extinction.
Read ‘Kitty’s” story and be warned that this could easily happen to any of us, and sooner than we could ever imagine.
How many paychecks, illnesses and credit rating hits are you from being kicked out of your home and onto the streets?
How secure is your place in the middleclass?
“Kitty” is actively seeking assistance in her efforts to avoid foreclosure, and she and her family are running out of time.
If you are in the position to help “Kitty” PLEASE CONTACT ME IMMIDIATELY and I will pass your information on immediately.
If you can not help “Kitty” yourself, please post or pass on this article – the more people who see it, the more likely we can help.
If we can not find some help for “Kitty” this week (first week of November, 2008) they may find themselves on the street for Thanksgiving.
I will keep you updated on “Kitty’s” situation.
Thank you, and have the Happiest of Holidays.
Anthony
“Kitty’s” Hardship Letter to Countrywide:
To Whom it may concern:
I would like to humbly submit my letter of explanation to you for my current credit situation and financial hardship.
My husband and I have both enjoyed the same careers for the last 20 years, during that time we have seen our share of ups and downs. We planned carefully. As you can see by my credit report, we did not incur huge amounts of credit card debt, and we only recently acquired auto loans, always paying cash for our vehicles in the past. In fact my credit history over the last 7 years has been good; my prior mortgage history was perfect.
In the spring of 2007 I was a victim of credit fraud. Someone applied for and obtained a credit card with Premier credit in my name, shortly there after I saw several charges on my Providian card that were not mine, while I was in dispute with them they sold my card off to another company, I am still disputing several of the charges.
I was cleared of the Premier credit card account the fraud department determined it was not my account. I can provide a letter from them to that effect if needed. It should have been noted and cleared off of my credit report.
About the same time the employer of both myself and my husband laid off 5,500 people on August 16th 2007. Over night we became a no income family. We were assured that we would receive our final paychecks, the coveted bonus checks we had all worked so hard for on the 20th.
On the 21st of August the company filed for Bankruptcy. Over night we lost our paychecks, our long awaited bonus checks, our health insurance, vacation pay…..and our 401k plan was frozen. Our health insurance and 401k plan were funded and managed by our employer. In short we were left with nothing.
We were devastated financially and emotionally.
We had just paid for our sons first year of college, we did not want to finance it, since we knew that our bonus checks were on the way, depleting our cash reserves and, if you will, wrongly betting on my bonus which I qualified for.
We also felt confident with our earnings even without my bonus. It took us months to get our funds out of the 401k plan by then we had lost a substantial amount of money due to the upheaval of the markets in the wake of the mortgage crisis that was just then coming to a boil. And our “vested” matching funds were not honored, or employer had withdrew those funds prior to filing Bankruptcy.
They also absconded with all of our Cafeteria funds, and stopped paying our “self funded” insurance premiums in May, which left us with unpaid medical bills that we thought were covered because we were gainfully employed and our employer was deducting the premiums from our pay check….wrong. We are responsible for all of those bills because they did not pay any premiums from May until they filed for bankruptcy in August.
In short, losing our jobs was just the beginning of the nightmare.
Our employer owed my husband several thousand in expense funds and as a manager, none of his funds were protected or considered earnings because they had not yet paid them to him. All of the branch managers lost their funds and have little to no recourse.
My husband and I tried to find any kind of employment possible. In November I got a job offer as an Operations Manager. I worked there for about 10 days when the owner’s son came to me and said that because of their own financial problems they could not afford to pay me…..he then gave me a check for 1/2 of what they owed me and that check bounced.
It took me weeks to collect the pay they owed me.
Then I took a temp job for a local business…..the owner went to Mexico for Christmas and failed to tell us that he was not coming back…. I was never paid for my work.
I also took another job as a pet sitter, I did get paid for that job. Not enough to have any effect on my unemployment but enough to keep current on my car notes and put some food on the table.
On February 18, 2008 I was hired by an insurance company as an Underwriter. 5 weeks later March 28th all 16 of us who were hired for the same position with the same start date around the country were let go.
Unemployment ran out for both my husband and I in mid February. We were left penniless, were forced to sell what we could to survive., and borrowing from family.
My son got a part time job at college and sent money home to us.
April 15th I started with a company in a position with a bank in Westchester Illinois. Since my sister lives in the area I was able to stay with her while on assignment, leaving my family behind in Houston.
May 20th my husband was admitted into the hospital after being ill for several months. The diagnosis was pulmonary edema and congestive heart failure. We have no medical insurance.
This diagnosis is life threatening and another devastating blow to our family. His heart was functioning at just 20% of it’s capacity.
His prognosis is uncertain at this point as it is still early and we don’t know how well the medications will work. We have incurred yet another $20,000 in hospital bills, not to mention the cost of his follow up care and medications. We are uncertain if he will be able to go back to work on a full time basis.
June 9th I started a position with a large national insurance company that will allow me to work from home in Houston and to care for my husband. After being stuck in Chicago for the last 2 months it was good to finally return home
I fully understood the precarious financial position we were in.
I paid who I could, borrowed what I could from family, and called my creditors to try and work out payment plans. I also knew that I would have been able to file for protection under chapter 7 bankruptcy laws. However, I did not want to do that, nor do I want to file bankruptcy, although my attorney advises I do so.
To this end we respectfully request that you allow us to be considered for a loan modification. The only way I can stay employed in my current line of work is to avoid foreclosure or bankruptcy.
Thank you for your consideration; I am attaching documentation to support some of these hardships. I am sorry this is such a long letter. If I have failed to address anything please give me opportunity to do so
Sincerely,
“Kitty”
Live simply. Love generously. Care deeply. Speak kindly. Leave the rest to God.
We walk by faith not by sight….. Faith is knowledge of that which can not be seen.
Your Mortgage or Your Life... 
Rents are very resonable in Houston, would Kitty be better off renting? How much is her mortgage payment? Would a decent apartment be cheaper? Sounds like her home is more of a burden than an asset. With both her and her husband’s career up in the air at this point, it sounds as though their home is acting as an anchor that is preventing them from being able to move to an area of the US with a better job market. She should ask her lender about their “cash for keys” program in lieu of going through an actual foreclosure and eviction.
Thanks Steve – you may be right, and will pass on your comments. I do know there is an emotional attachment at the very least. Thanks again!
What a painful story to read. And on top of all that, her home probably isn’t worth what she paid for it, so selling isn’t an option.
I agree with SteveP that the home is a financial burden on them right now. A deed in lieu might be a better option, or a short sale if they can find interested buyers.
A loan modification will turn out to be a band-aid if she loses her job again and can’t manage the payments on the plan.
[…] was on Your Mortgage or Your Life and was reading a post regarding a family on the brink of disaster, and the letter just touched my […]
I was touched by Kitty’s letter, and have added her letter to my blog as well, I agree with Steve that the house may be an anchor and if there is a possibility to release that anchor she may be able to take her family elsewhere such as Chicago where she was able to find work.
It is so true and tragic how we rely on our employers for so much in terms of our retirements, our incomes, and our let’s just say security. But what can we do really, its not realistic for all of us to get second jobs or find alternative ways to make money as there aren’t enough jobs out there to begin with.
Wow. That hit my heart but just like them this happens to every person in the us. Then again we voted a Black President in office? What the hell is the greedy Americans thinking? Well If I can help let me know, Hell I am worried about losing my job and living in the street real shortly here…..when is america going to GET OFF LINE STOP PROMTOING ON WEBSITES AND BLOGS AND DO SOMETHING ABOUT THIS!!!!!! GET TOGETHER LETS ALL DO SOMETHING STOP SITTING ON YOUR ASS!!! LETS HELP THE COUNTRY BY PUTTING ARE VOICES OUT THERE, BY GETTING THINGS DONE OURSELFS FORGET THE GOVERMENT, LETS DO THIS OURSELF!!!!!!! TAKE IT ALL BACK!!! COME ON STOP TALKING ON LINE ABOUT NON SENSE, PAYING CABLE BILLS ETC, LETS GET TOGETHER AN STOP THIS MADNESS PAY OFF ALLL MORTGAGES STOP THIS BAILOUT BS!!! THAT GOES TO BONUS CHECKS ETC
Has Kitty tried a loss mitigation/loan modification company? I work with one that has had very good success. I would be definitely willing to speak to her and see if there’s anyway I can help.
Steven – nice! Feel a little better? I had to write everyday for two months strait to get the anger out of me, now I am chill again, and ready to make something happen.
I have been on my computer for 14 1/2 hours now just posting, emailing, responding to comments with out a break.
I can only hope enough people see this post and pass it on, and we can make some bad press for the lenders – and just maybe get help for a few people.
If everyone who reads this article decided they were going to help one family avoid ending up on the street, we would help thousands and thousands of people.
That’s thousands more than the H4H program.
Baby steps, friend. Baby steps.
Thank you “Kitty” for sharing. My heart goes out to her and her family.
Thank you Anthony for prefacing the letter saying that not all people faced with this situation are greedy, stupid, flippers.
I have several friends outside the lending world who don’t understand the magnitude of the problem. They lump all people facing foreclosure as deadbeats looking for a free handout.
If the government continues its evasive stance toward this crisis, these same friends will be standing in line waiting for their own handouts.
Maybe the lack of help from banks and govt, is because both know that the banks are all on their own death spiral. What’s the point in doing anything now when they gotta blow up the entire thing later? Or, they realize the prices still have further to fall, so why help now, if it’s only going to create a false bottom?
Whatever the reason, it’s creating havoc for the rest of the economy and the lives of millions of people.
Anthony, Thank you for sharing my story.
And to Steve; rents in Houston are resonable compared to other parts of the country, but then so was the purchase of my home compared to other parts of the country. It is all relative. I have less of an emotional attachment to my home than you would think, but it is my home. My neighborhood. My fight for what is right, what is being touted as a way to work through this hard time but not being honored by the lenders.
As for the cash for keys program, not sure that Countrywide offers that. In any event I am trying to avoid foreclosure and Bankruptcy.
The issue here is that Countrywide and many other lenders are not operating on a level playing field.
Fate and Chance can happen to any of us, as it did me. We are all so close to the edge. Any one of us can be betrayed by an employer, or, if we are retired we might have lost our lifes savings in the stock market. Look at all of the companies that have gone out of business, Bear Sterns, Lehman, Washington Mutual. They wiped out all of their employee stock funds. No bail out for them.
The government is touting several bail out plans for homeowners in distress, the H4H or Hope for Homeowners program is one that Anthony has written about previously. Great program, but none of the lenders are offering it. It would save many homes from foreclosure, it would share any future equity with FHA, and it would save lenders thousands in foreclosure fees……where is the common sense, where is the incentive (if not the bail out program) for lenders to really work with homeowners? They take the money from the government, but give nothing in return.
This more than my personal story, this is a story about all of us who are in the same predicament.
This is about holding our government accountable. Don’t offer a bail out if it is only a bail out for your cronies, and sell it to us as a bail out of our Country, our Financial System and the bail out that saves the World from financial collapse.
I did am not asking for a handout, just a hand in getting back on track with my life as are so many who have suffered hardships through no fault of their own.
If we can give billions to AIG and Goldman Sachs so they can bonus their employees then we can give to those of us who have the desire to get back on track and want to keep our homes and who are willing to share the future equity in our homes……I don’t see the executive of AIG or Goldman Sachs giving up their bonuses, or anyone holding the executives of Lehman or BearSterns accountable.
Thanks again, this is a most humbling experience and the compassion shown by so many is greatly appreciated.
Kitty
Dear Kitty unfortunately I work for one of the largest mortgage companies in their collections department and hear heart breaking stories everyday. If you want to contact me I can offer to be a 3rd party negotiator on your behalf and try to get you a hardship. I just hope that it is not too late. If you want me to try to help you Please contact me ASAP
KItty you will get your loan modification, especially if it is with Countrywide. I already know of a investor, who lives in a multimillion dollar home, who got 3 million dollars of loan modification on properties he doesn’t even LIVE IN! So if they are willing to GIVE AWAY loan mods to people like that you should qualify as well. Sad to see investors being “rewarded” before homeowners!
Kitty’s situation is one that is caused from LIFE CHANGING EVENTS. Not a subprime loan issue. But saying that I am a Unit Manager in Loss Mitigation with a very very large subprime lender. I can say that 75% of the Loan Modifications we do are with people that had just that. Life Changing event. Loss of job – medical – martial problems – drugs and allot of people just don’t react and respond fast enough to adjust and adapt to their financial situation.
Now – HERE IS THE MOST IMPORTANT CONSEQUENCES THAT KITTY AND MILLIONS OF OTHER PEOPLE WHO CONCEDE TO A FORECLOSURE – DEED-IN-LIEU OR CASH FOR KEYS:
IT HAS SERIOUS IRS CONSEQUENCES. The 1099 issue that was put on hold earlier this year suspends tax liability on any loss that is taken on a property. But there are restrictions that need to be understood. For example in this case if Kitty – and I’m making up some numbers – refinanced her house with a new loan of $300,000 and she paid off her first mortgage of $200.000 and the lender loses $50,000 then kitty could be responsible for paying federal and state income taxes on a 1099 income of $50.000! That is an enormous consequences. I have a customer that we are losing about $150,000 and he will be getting a 1099. No if Kitty has a $300,000 mortgage and they paid off a mortgage of $280,000 then the 1099 will be very small. It is loan amount minus the mortgage they paid off.
Do you homework on this before you make a decisions. Modification is the only way out of this sometimes.
If you talk to yur attorney about BK then you must get a Letter-of-an-Opinion on this 1099/tax issue if you decided to walk away.
Anthony, i just wrote a very long email and sent it your gmail account. Please read it. I think there is a way to keep “kitty” in the home, have the payments stopped for 6 months to giver he some breathing room, the loan modified with a principal balance reduction and a set rate of 3.5% over a 30 year term. Please refer to the email for more details. Lets use state/federal laws on the lenders and make it right. Loan modification companies simply hope for the best, and thats not good enough.
However I just ran across this and it says that if a chapter 7 discharges a debt then it’s not considered taxable income. So you need to make sure this is very well researched AND don’t file until the house is sold AND THE 1099 HAS BEEN ISSUED. OTHERWISE YOU MAY NOT BE CANCELING OUT THE DEBT BECAUSE YOU FILED BK BEFORE THE 1099 WAS ISSUED. IF YOU DECIDE TO WALK DO A DEED-IN-LIEU AND DO IT FAST…….THE LENDER MAY NOT BE ABLE TO ISSUE THE 1099 UNTIL THE HOUSE IS IN THEIR POSSESSION SOLD AND 1099 ISSUED. IT’S A VERY COMPLICATED THING BUT YOU HAVE ONLY ONE CHANCE IN GETTING IT RIGHT!!!!!!!
Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.
2. Is Cancellation of Debt income always taxable?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:
Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
http://loanworkout.org/2008/08/the-irs-on-shorts-sales-foreclosures-and-debt-forgiveness/
I have been in the mortgage business for nearly 30 years and have worked in non-profit education, lending, and counseling as well. Since the mortgage business is not generating the income that I need to survive…or even exist…I am doing contract work for a non-profit that I worked for previously in Foreclosure/Loss Mitigation Counseling. If I had as many mortgage loan applications as I have foreclosure files I would have a years worth of business.
I can tell you from a very first hand view that the sub-prime issue is not the major cause of the foreclosure tsunami. The majority of cases I have are hard working people who, in most cases, have paid their loans on time in the past and are now running into problems. Loss of income/jobs is the biggest reason for default right now. There is certainly a portion who have non-conforming or sub-prime loans that have adjusted to payments that they can not afford, that got homes with “stated incomes” that weren’t real, or who bought way to close to the edge. But these are not really the majority.
Most are people just like Kitty. People who have lost jobs and incomes and are experiencing the results of the overall meltdown of the economy as we have known it. This is very likely to get worse before it gets better.
The government programs that have been put out there as far as the H4H and FHA Rescue were not well thought out and quite frankly just aren’t going to work as set up. They were put together by people who are not at the ground zero of this and don’t truly understand what is happening. This is not neccessarily a knock on them. Let’s face it, we have never been through anything like this before.
The only thing that has been done to really help the situation from the government is the money put forth for counseling and loss mitigation to non-profit agencies through HUD and NeighborWorks in the bill that was passed in July. There are many good people working at this issue to help people work through things. I have been able to save 90% of the files I have worked on through modification, forebearance, or repayment plans, losing only those who just did not have any money or income at all and none in sight.
For those who need help PLEASE do not go to an organization who is going to charge you a fee. There is a cottage industry springing up out there that is charging people up front fees of up to $1000 saying they can help, when in reality they are just taking money from people who don’t have it to give. If you need help call the HOPE NOW line, go to the HUD website or NeighborWorks and find an agency in your area that will help you for free because they have funding to do so. They need to be HUD approved and the NeighborWorks organizations are the best as they have recieved the best training.
As for Kitty, hang in there. As you know Countrywide was bought by Bank of America and they have recently settled law suits in at least 11 states relating to mortgage related issues. They have a new program coming out on December 1st to help work through the troubled loans and foreclosure problems. Check into this and get the details. I have worked on several cases with Countrywide and it is my exeperience that they are not, for the most part, aggressively seeking to foreclose on people but are looking at everything they can do to avoid it.
I wish you the best. If I can answer any questions for you I would be happy to do so. This is a time in our lives when we all need to be looking at what ways we can help each other. We are a great country, a great people, and we will get through this too. Keep your faith, it is always the highest priority.
Definitely try to modify the loan, there are numerous plans out there. Keep calling until you get someone that will assist you.
As for your husband, very sorry to hear that. I would like advise you to be very careful of bed sores. Don’t always trust what the doctors say, use your gut feeling. Unfortunately I believed in the doctors and hospital system until I lost my father. I sued and won a settlement but it does not bring back my father.
Thank you everyone for your support and suggestions.
I am pursuing many of them as we speak. Many of them have already been pursued to no good end. Which is the point of all this. Getting the word out, getting the story out and finding a way to help ourselves through this crisis. The help is not coming from the bail out plan, and so far the government has not found a way to mandate changes that are needed at this time.
Thank you, and I will be following up with you as this story unfolds.
Kitty
Why were my comments censored? So sorry if they upset someone but they were perfectly valid.
Linda,
I did not post you comment because it was callous and uniformed. If you would like to make an informed argument against helping people in need – one that is not full of conjecture and disparaging remarks about someone who is already in pain – I would be happy to post it.
There is a big difference between getting a job and getting a good job. Kitty left her ailing hubby in Houston to take work in Chicago. She was not on vacation.
If your spouse was very ill, would you call spending some of that precious time you have left with them thousands of miles away at a job a vacation?
Please, if you can’t help, stay out of the way.
[…] A Hardship Letter to Countrywide – Family on the Brink of Disaster “One reader – who we will call “Kitty” – has volunteered her to share her story, recounting the chain of events that has thrust her family from the comfort middle-class security to the brink of bankruptcy and foreclosure in the span of about one year. “Kitty’s” story demonstrates the very precarious nature of America’s middle class, especially in the face of a contracting economy, increased competition from overseas, and a government determined to drive it to into extinction. Read ‘Kitty’s” stor […]
Yeah, why was my comments censored too?
I know I gave a fake email, but I don’t want to provide an email.
I just suggested that she have her son apply for financial aid, so that he can afford to go to college. That would take some burden off her. If she didn’t know that was an option, well, now she knows, and that advice alone can make a huge difference. It is easy to apply too.
Hello – your comment was not censored – it was a good suggestion. It just was blank when I tried to approve it – WordPress is kind of lame – but I did see it in the email notification.
I only omitted Linda’s because it was not wee thought out, and came across hurtful instead of thoughtful.
I offered to post a comment from her that makes the same point of view she offers, I just asked that is be more constructive and less of a personal attack on someone who really does not deserve to be further victimized.
That was my editorial decision.
I will always publish counter points of view if they are argumentative, and not simply an attack. The dialogue is what I am after.
Hello,
Thank you for the suggestion my son is applying for financial aide for the next semester. I appreciate everyone’s suggestions.
Thank you,
Kitty
[…] A Hardship Letter to Countrywide – Family on the Brink of Disaster “One reader – who we will call “Kitty” – has volunteered her to share her story, recounting the chain of events that has thrust her family from the comfort middle-class security to the brink of bankruptcy and foreclosure in the span of about one year. “Kitty’s” story demonstrates the very precarious nature of America’s middle class, especially in the face of a contracting economy, increased competition from overseas, and a government determined to drive it to into extinction. Read ‘Kitty’s” stor […]
[…] A Hardship Letter to Countrywide – A Family on the Brink of Disaster. […]
If you are underwater on the house, your lender will probably be more forgiving about working it out with you, because the lender would lose money be repossessing it.
If the lender thinks you have equity, it will be more likely to play hardball. At least until recently, lenders were acting like they wanted to repossess real estate and build a portfolio, possibly selling some at auctions or through real estate listings when better ones became “available” as a use for the funds they had committed to that “program”.
I don’t know the best way to apply leverage but that’s what you need, and it sounds like there is some helpful advice from others here. One final thing: write detailed notes on all your conversations with the lender, including times, names, dollar amounts, etc. If they jerk you around in a way that might interest a judge, be especially careful in documenting that. Don’t complain to the lender about it until you have the documentation ready to go; then you have something that the lender might respect.
If possible get email addresses of people you talk to, and conduct sensitive communication by email. It’s self-documenting. We had a hard time getting an email address, they tried to avoid it, but with some luck and logic we were able to figure it out.
Now we’re on a repayment plan.
It’s not what you know but what you can prove that might make the difference.
Good luck Kitty.
OK here’s the constructive advice: Get rid of the car payments.
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[…] A Hardship Letter to Countrywide – A Family on the Brink of Disaster. […]