Wednesday, March 11, 2009

TOP STORY >> Homeowner facing threat of foreclosure

Leader editor-in-chief

He built a house in Prairie County about five years ago and paid his mortgage every month until the economy went bad.

Now he’s fighting to keep his mortgage company, Countrywide Financial, from foreclosing on his home.

We’ll call him Jerome, who admits he’s fallen behind with Countrywide. He’s trying to catch up, but the company won’t accept anything that’s past due unless he pays it in full.

He’s not alone: Every 13 seconds, a home is foreclosed on in the U.S.
Since Jan. 1, more than 450,000 families have lost their homes.

One in five homeowners are “underwater” — they owe more on their homes than they’re worth.

Countrywide isn’t too eager to work with Jerome — yet. But the lender is in a heap of legal trouble for contributing to the housing meltdown with its freewheeling lending practices — remember those introductory “teaser” rates? — so Countrywide is not in a strong negotiating position.

Jerome doesn’t want to end up in foreclosure, which is why he’s negotiating with Countrywide. Can someone from Prairie County outwit the predators at Countrywide?

He loves his house, which he built with the help of friends and relatives, and he doesn’t want to give it up. He doesn’t have a huge mortgage: He owes about $70,000 on a $100,000 home.

It wasn’t as if he’d gone in way over his head: He’d saved thousands doing the contracting himself. His house is worth a lot more than what he owes on it.

But when the country went into a recession and gasoline skyrocketed to $4 a gallon, he had trouble keeping up.

“I spent more driving to work than on the mortgage,” Jerome says. He also lost a part-time job.

He’s delinquent about $3,000, but he’s paid half of that, although Countrywide won’t accept a partial payment just yet.

“When I called Countrywide,” he continues, “I was told to send a certified check for $1,500, to help cover what I owed. But another person told me later I shouldn’t have sent the $1,500 because I’m delinquent. They told me not to call back till the end of March.

“The first person was nice,” he says. “The second person was a bitch. The third person was also nice.”

“I’m trying to get a loan modification,” Jerome says. He’s not asking for a rate reduction. He just wants more time to catch up.

Countrywide may not have any choice if it wants to keep operating: Work with Jerome and hundreds of thousands of others or face more lawsuits. Countrywide has been hauled into court all across the nation for its dubious lending.

Jerome expects to hear back from Countrywide this month, and he’s hopeful they’ll take his money and let him pay out the rest of the skipped payments over several years.

That way everybody wins: Jerome keeps his home and Countrywide keeps collecting the mortgage.

But here’s the catch: Several former executives with Countrywide have formed Private National Mortgage Acceptance Co. (or PenyMac), based in Calabasas, Calif., where Countrywide is based.

They’re buying up delinquent homes for pennies on the dollar and selling them at a quick profit.

Congress and the courts are starting to side with borrowers.

Several states have filed suits against Countrywide for deceptive and predatory lending.

Several bills are passing through Congress, which could help Jerome avoid foreclosure.

But Countrywide’s name is dirt, even though it’s been acquired by Bank of America, which isn’t doing too well itself.

After taking billions in federal bailout money, the bank says it will change Countrywide’s name because the brand has become too toxic.