Here’s the problem with the Obama Administration’s approach to foreclosure prevention: it depends entirely on the banks voluntarily doing the right thing, even when homeowners have held up their end of the bargain to prevent a foreclosure.
Take the case of three homeowners in Queens, New York. Each one met the requirements for a “permanent” modification of their mortgages–which means a reduction of payments for five years–as laid out under the Administration’s Home Affordable Modification Program (HAMP). They did so by making three months of trial modification payments to JP Morgan Chase and verifying their incomes. They had contracts with Chase and fulfilled their obligations under those contracts.
So how did Chase reward them?
Permanent modifications denied. Delinquency reports to credit rating agencies issued. And the cherry on top–foreclosure.
These three homeowners—each working full-time, with at least one job, working up to six days a week–are fighting back. With the help of the Urban Justice Center, a non-profit legal services provider in New York, they filed suit last Tuesday against the bank in federal court in Brooklyn.
“We want Chase to live up to the contracts that they entered into and give permanent modifications to these homeowners,” said Ted De Barbieri, an attorney at the Urban Justice Center. “If you’re going to sign onto HAMP, you have to follow the rules. These homeowners followed the rules, and now it’s time for Chase to.”
A spokesman for the bank told the Wall Street Journal that Chase would be “happy to talk with the customers, review their situations and see if we can help.”
This official response stands in stark contrast to what the homeowners have experienced in dealing with Chase up until now. De Barbieri said that prior to filing the lawsuit, even with the help of community-based HUD certified home loan counselors and the Urban Justice Center, the homeowners had been unable to get an adequate response from Chase.
Here’s a little more information about these three citizens who Chase–post-lawsuit–suddenly says it will try to help.
Shanaz Begum lives with her husband and two sons–one of whom is headed to college in the fall–in a home they purchased in 2005. She fell behind on mortgage payments in September 2008 after she lost her job as manager of a retail business. Begum now works for the Department of Transportation on weekdays, and on weekends as a server at Boston Market. Her husband is a full-time taxicab driver. Begum has made trial modification payments of $1576 on time for eight months.
Tamara Williams lives with her two sons in a home she purchased in 2005 and has made three on-time trial payments of $1,274 this winter. She fell behind on her mortgage when she lost her job in November 2008, and went into foreclosure four months later. She now works doing post-renovation and demolition cleanup for a contractor and also attends school.