Losing your home to foreclosure is traumatic, no doubt. And for a variety of reasons--from internal bank bureaucracy and missteps to slow-moving government programs--the pain can stretch out for months.
It takes an average of 336 days for a home to move through the foreclosure process, from the first day a default notice was filed to the final disposition of the property, according to the latest report from RealtyTrac. That's the longest average since the 2007.
For Janet, a 48-year-old attorney and mother of five who asked that her full name not be used, the process has stretched out for nearly 900 days, and counting. That's more than two years without paying a single mortgage payment.
Her story is a lesson on how to keep a roof over your head.
"It requires fortitude -- never take no for an answer -- and an ability to not become intimidated by paper," says Janet, who now lives on Social Security disability payments. "Paper is just paper. If it's a 40-page form, fill it out and send it in. Never let the process get in the way of the goal -- to stay in your home."
From Success Story to Distressed Homeowner
Janet has the classic American bootstrap success story. She left a dysfunctional family at 16, got a job and an apartment, finished high school and started college. By the mid-1980s, she was married with two toddlers, going to school and bartending at night. Her husband left, but she earned her bachelor's degree and put herself through law school.
Decades of prosperity followed. Janet established herself as a real estate attorney and opened her own firm. Her children flourished. Janet remarried and had another child. She also adopted the 5-year-old child of a client who had died of cancer and whose spouse was killed in an accident a few months later.
And she bought property: "I reinvested every dollar I was making into real estate," she recalls. "Some were vacation rental homes, or flipped homes, but I was always reinvesting."
In 2006, Janet was diagnosed with breast cancer. She took out home equity lines of credit on the three properties she owned to pay the bills while she underwent treatment. "I thought the worst that could happen is I would sell the properties to pay off the debt, be healthy and go on my way," she says.
Janet fought through surgery, radiation and chemotherapy. Too sick to work, she went on Social Security disability. In 2007, she put her homes up for sale. The first two went into foreclosure.
A Short Sale Fail
In spring 2009, Janet and the kids moved into the smallest of the homes. She owed about $298,000 on the mortgage and roughly $44,000 on a second lien. In December 2009, she found a buyer willing to give her $100,000 in cash for it in a short sale. Her lender, Bank of America (BAC), didn't respond, and the court scheduled a foreclosure auction for February 2010.
Janet requested a postponement and contacted Bank of America again about the short sale. It appraised the property at $179,800 and rejected the offer. "The bank does not accept offers at 60% of fair market value," says Bank of America spokeswoman Jumana Bauwens.
A month later, a bank representative named Delila called Janet to tell her the offer would be accepted if she and her broker filed additional documents. Elated, she called the buyer, who was still interested.
"When I called back, I was told [Delila] had been separated from the company and there was no way they could reconstruct that file," says Janet. "The person who took over said 'No thank you.'" Janet asked that we not share her identifying information with Bank of America. As a result, Bauwens can't comment on that aspect of the situation. "It is very difficult for us to respond to [a situation] we haven't been able to research," she says.
In mid-2010, Janet's cancer recurred and she began another round of treatment. She got a fiscal reprieve in October when the bank froze all of its foreclosures while it conducted an investigation of its processes. (Bank of America is still trying to cope with the aftermath of the mortgage meltdown.)
Embracing the Delays
In the meantime, Janet tried the mortgage modification route. From September to mid-December, she called the bank more than two dozen times to request its Home Affordable Modification Program application package.
"Every time I called they would say, 'Oh, your loan doesn't qualify' or 'The investor who bought your loan doesn't participate,' or 'Because you have no income, you don't qualify,'" she says. She persisted, received the application, and spent the next several months sending it to various addresses at the bank's request.
In March 2011, Bank of America wrote to say Janet wasn't eligible for HAMP because the home wasn't her primary residence. She sent copies of her voter ID card, electric, sewer, water, and other bills showing she lived in the house.
In April, Janet received notice that her case had been delayed due to "additional processing time needed." May brought another letter informing her that the lender would call to discuss her loan's eligibility.
Rather than becoming discouraged, Janet learned to embrace the delays. "Once you know [the correspondence] has been received and you can prove it by signature, don't call to check your status," she says. "If the goal is to stay in your home, there's no benefit in moving your file from the bottom to the top of pile."
In June, Janet learned she'd been approved for a trial period in HAMP -- but the modified payment would be $19.96 higher than her original one. "I thought, 'What kind of crack do you people smoke?' If I couldn't pay the first one, I can't pay $19.96 more," she says. "I sent a letter in to begin the process again."
Bauwens speculated that the bank may have combined the mortgage, property taxes and insurance in one payment -- a standard procedure after a loan modification. If that's the case, it wasn't made clear in the documents examined by DailyFinance.
Mistakes and Misinformation
In September, Janet met with a Bank of America home loan counselor, who told her she was no longer eligible for HAMP, but was eligible for her state's attorney general's mortgage modification program. The woman also told Janet that she would be her only contact going forward. The next day, Janet received a letter instructing her to correspond with a different customer relationship manager. Bauwens says the letter may have been sent before the appointment.
Without explanation, in September Janet received a mortgage bill $264.25 higher than her original payment. Bauwens says it's possible that after the trial HAMP offer, taxes and insurance were added to the mortgage bill.
In October, the bank notified Janet that her HAMP offer had been officially canceled, attaching a "values chart" that explained the decision. It was riddled with errors: The income it listed for her was double her actual income; the property was valued at $264,252, despite BofA's earlier appraisal of $179,800; and it listed homeowner's association fees of $24.75. Janet's property isn't part of a homeowner's association.
"All she had to do was call back up and say the information used to calculate the debt-to-income ratio was wrong," says Bauwens. But under a HAMP modification, housing payments are set at 31% of income, and Janet's disability income might not be adequate to sustain even a modified mortgage payment. Depending on which state she lives in, Janet may be eligible for the Hardest Hit Fund, which helps homeowners who have suffered job loss, she adds.
In the letter cancelling the HAMP offer, Bank of America suggested Janet try to do a short sale.
Lesser of Two Evils
Janet says for now, she'll continue to return the ball every time it lands in her court, and will sue if necessary. "My original loan was with Washington Mutual, which was sold to Countrywide, which was sold to B of A, and I truly believe they don't have the requisite documentation to foreclose," she says. "But I still have avenues I can pursue on their own crazy agenda before I pursue mine."
Janet's ultimate goal: Hang on for another 18 months until her youngest kids graduate high school. She concedes the dubious ethics of her quest, but argues it's the lesser of two evils -- gaming the foreclosure system versus becoming homeless.
"I get it -- it's a moral hazard, but it's not by choice. If I could have traded cancer and the loss of my profession, I would have," Janet says. "People should walk in each other's shoes before they make those moral high-ground judgments."
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How to Stretch Out a Home Foreclosure for Years