Foreclosure: A Sociological Disaster
The names of the subjects in the following entry have been changed to protect their privacy.
I spoke mostly to Mary Hernandez, who is the family's strength in many ways, but particularly when it comes to the home financial issues, mortgage modification, etc. They have lived in their home for five years. Mr. and Mrs. Hernandez bought their home in the regular way five years ago. Their home cost $466,000 (20% down, 30 year fixed loan, monthly payment of $4100). Sadly, it is now worth $150,000.
During 2008, Mary's parents' small business began to suffer a steep decline in income. Their company services and maintains apartments in Southern California. For many years they had been making approximately $80,000 per year. But, during 2008 their income plummeted to $30,000. In December of 2008, this drop in income reached the critical level. In spite of the assistance of both daughters and son-in-law, this drastic income drop made paying the $4,100 monthly mortgage payment impossible.
Wachovia was the mortgage holder at that time. The family went to that bank and requested a loan modification. At that time in 2008, the government's TARP program and President Obama's $75 billion program to stave off foreclosures were both in place.
Wachovia wanted paper work. An application was submitted in January of 2009, a total of 60 pages of application.
They then began to experience the realities of 'loan modification.' The 'modification' program offered by Wachovia bore no resemblance to President Obama's program. None. Month after month they were required to submit more and more information about themselves. The Hernandez family called once or twice each month but received no information at all about their application. What they did receive, however, were more and more requests for family information.
Then in September 2009, Wachovia was taken over by Wells Fargo; the next step in this growing and disastrous drama. The bank change lead to a lost application and other forms, which the Hernandez family had already submitted. They all needed to be replaced. Additionally, new forms were needed each month. Again, the Wells Fargo Program bore and bears no elements of President Obama's Program.
Things seemed bleak for the family. But, Wells Fargo said they would come to the rescue. They said they would help. Wells Fargo astutely told the family that an income of $1,700/month was insufficient to pay a mortgage of $4,100/month. So, Wells Fargo did the obvious 'helpful' thing: they increased the mortgage payment to $4,200/month. It was at that point that the family stopped paying the mortgage. They had nowhere near the now required $4200/month. Adding insult to injury, Wells Fargo then offered to reduce the mortgage payment to $3,800/month for one year, with the difference having to be paid back during the next year.
This was December 2009. The last straw. The family decided to let the house go into foreclosure. Mary said it was particularly frightening. The family knew they had to leave, but had no idea when or where to go. Wells Fargo continued to make matters worse. They wouldn't tell the family when they had to leave. The bank also would not tell the family if a short sale was even possible. Nor would the bank tell the family, even if it was allowed, what amount of money the short sale would have to generate to satisfy Wells Fargo.
The Hernandez family very recently discovered The Los Angeles Neighborhood Housing Services, a local non-profit agency, who may be able to help the family obtain a loan modification or to conduct a short sale. LANH will try to help them do a short sale, should such a sale even be allowed by the bank.
Many people are leaving their homes because they have not gotten any of the aid that President Obama promised. Where the $75 billion has gone is anybody's guess. Since the President's sole agenda during the past year has been health care, virtually everything else has fallen through the cracks -- like 4,000,000 American families during 2010.
I know the Hernandez family only because of Mary. She came to my office one week ago, suffering from severe depression and panic attacks. She has been severely depressed for quite some time, pretty much since this situation began. Her panic attacks started two weeks ago.
The emotional devastation of families in the Hernandez position is immense. Four million American households will duplicate the Hernandez's experiences this year. Here they sit, having no realistic idea of what's happening to their homes, their lives, or themselves.