By PETER S. GOODMAN
Published: November 28, 2009
On the day in June when her mortgage company finally agreed to lower her monthly payments, Yolanda Thomas felt a twinge of hope that she would hold on to her Queens apartment, the first home she had ever owned. The loan modification extended by Chase Home Finance was technically a trial, not a permanent alteration, but this fact seemed of lesser significance.
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U.S. Will Push Mortgage Firms to Reduce More Loan Payments (November 29, 2009) ?I felt they were working with me,? Ms. Thomas said. ?I felt very positive and hopeful, like I had a chance to keep my house.?
But five months later, Ms. Thomas, 35, is back at the beginning. She has made her reduced payments on time. She has submitted the proper paperwork, she says, while enduring a bewildering array of conflicting instructions from her bank. But last month, Chase rejected her application for a permanent loan modification and invited her to start over and send in a new application, for another trial.
?At this point, I don?t know what is going on,? she said.
Ms. Thomas?s experience shows the confusing and frustrating ways of the Obama administration program aimed at keeping millions of troubled American borrowers in their homes.
Four years ago, she bought her apartment ? a three-bedroom condominium in Ozone Park ? for $530,000, putting down about 10 percent and borrowing the rest through an interest-only loan from Washington Mutual. Given her $130,000 salary at a marketing job, she had no difficulty making the $2,700 monthly payments. Indeed, she continued to add to her savings, which grew to about $80,000, while paying college tuition for two younger brothers.
But in April 2008, amid the recession, Ms. Thomas was laid off. She continued to make her mortgage payments by tapping her savings. By that fall, with her savings nearly exhausted and credit-card debt mounting, she turned to a housing counselor at the Ridgewood Bushwick Senior Citizens Council, a nonprofit group based in Brooklyn. The counselor began seeking a loan modification from Washington Mutual, which had been purchased in distress by JPMorgan Chase.
This March ? after several rounds of mislaid paperwork and resubmitted forms ? Chase extended a so-called forbearance arrangement, allowing her to make no payments for two months while she continued to look for a job.
Ms. Thomas soon found a new marketing job that paid roughly half as much as her previous position. In June, on the basis of that income, Chase approved her for a trial loan modification, which reduced her payments to $1,174.30 a month.
The trial loan modification documents that Ms. Thomas signed promised that the new payments would become permanent, provided she made her three trial payments on time and then submitted required documents confirming her financial situation.
According to notes kept by Ms. Thomas, Chase promised not to report her to credit agencies as delinquent while she made her lowered payments. But by early July, Chase collection agents were calling regularly, threatening to foreclose. Chase reported her to credit agencies as delinquent, which increased the interest on her credit card debt and her car insurance rates. When Ms. Thomas began calling Chase to try to reverse this, she got nowhere.
?Once, I was told this happens all the time,? she said. ?Then I was told that this never happens and there was nothing that could be done. It was just bad information all the time.?
In a letter this month, Chase told Ms. Thomas that it had asked major credit rating agencies to ?remove any negative payment history? from her credit profile. But this admission that the bank had made a mistake was itself made in error, Tom Kelly, a Chase spokesman, said.
?We actually should not have sent her the letter,? Mr. Kelly said, maintaining that Ms. Thomas should indeed have been reported to the credit agencies. ?We?re not always perfect.?
As her trial period ended at the beginning of October, Ms. Thomas still had no word about a permanent loan modification, so she sent in a fourth month?s payment.
In late October, Chase told her that she had been turned down for a permanent loan modification because her income was insufficient. She insists that her income remained the same, though Chase produced a pay stub showing that she had in fact worked full-time in May and only part-time in September, earning less.
Two days later, Ms. Thomas received a letter from Chase saying that her application was still being considered, but missing a required tax document. Then, by phone, Chase told her that, never mind, she should start over.
Despite the mishaps, the Chase spokesman says, Ms. Thomas?s case amounts to a success story.
?She?s ahead of where she would have been without this program,? Mr. Kelly said.
Where she is now is in limbo, awaiting word on another trial modification, this time based on her new salary of about $100,000, courtesy of a new job.
?I?ve been working my whole life and paying my bills,? she said. ?I just want to pay my mortgage.?