SALT LAKE CITY (ABC 4 News) – New hope for families on the brink of losing their homes is quickly turning to frustration and disappointment. As homeowners contact their banks to apply for the government’s new “Making Home Affordable” program, they’re finding their banks are pushing back.
Clay and Julie Weldon found out about the program last month and decided it was their best bet for getting out from under a sub-prime loan that had almost doubled the interest rate and their monthly payment. Now that Clay has bounced back from a nearly devastating layoff last year and is working again, he’s making enough money to make ends meet, but only if the bank adjusts their loan rate down from a whopping 10.5 %.
“We’ve been trying and trying for more than a year,” he says, sinking in his chair, seemingly exhausted just talking about the ordeal.
“We’ve asked Wells Fargo a hundred times to let us apply for a loan modification and every time we get the run-around,” he says.
“It’s exhausting,” gasps Julie, describing a year-long battle with the bank, one which she admits her family is losing.
“I just don’t know how much longer I can keep this up. Sometimes I think, ‘Just take the house. It’s too hard to keep fighting this way.’”
She’s not alone in her exhaustion. Utah mortgage lenders report thousands of “walk-aways” littering neighborhoods of all incomes from Weber County, to Davis, Salt Lake, Summit, and Utah Counties. “Walk-aways” are homes that have been abandoned by owners who decided they had no hope of keeping up the payments and instead just walked away and let them fall into default.
Tired and frustrated as they are, the Weldons are determined to stick it out. That’s why they’re decided to try one more time.
This time, though, they may have the federal government on their side.
“The U.S. Treasury Department has created a simple set of criteria for perspective applicants,” says mortgage broker and program advisor Christopher Holmes. “Participating banks that have received TARP (Troubled Asset Relief Program) money are required by the government to allow their customers to apply for loan modifications.”
In a word, banks that took tax dollars from the government CAN’T tell customers no. That authority is vested in the U.S. Treasury Department.
That’s not stopping bankers, though, from turning customers away.
Barry Squires of Saratoga Springs has watched his home depreciate in value for the past two years, to the point where he owes far more for it than it’s worth. His bank, Wells Fargo, won’t even talk to him about refinancing his loan and is telling him he doesn’t qualify for the government’s “Making Home Affordable” loan modification program.
“They’re telling me that because of the extraordinary circumstances that exist in Saratoga Springs – namely, that property values have dropped so far – that I don’t qualify for a loan modification,” he said.
Squires says he’s assumed the banks themselves are responsible for deciding who qualifies for a loan modification and who doesn’t, and that his bankers know how the program works. Both would be false assumptions.
The government has been very straightforward and simple in its approach to this program. The message is clear:
“Making Home Affordable” is a government program. The government runs it. The government decides who’s eligible for it and who isn’t. Banks are expected to follow instructions.
The Weldons, the Squires and thousands of other Utah homeowners have more clout than they may realize this time. The secret seems to be persistence and perseverance, by passing the non-descript customer service reps and data entry operators who answer the phone and put customers on hold for hours, hours that turn into days, days that turn into weeks, weeks that turn into months, months that people like Clay and Julie Weldon don’t have.
