Piggybankblog posted on 08/13/11
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Cross linked story with sun-sentinel.com
Many South Florida homeowners facing foreclosure may believe getting a preliminary loan modification offer from their lender will save them from losing their home. But, in fact, new rules approved by Fannie Mae allow lenders to continue foreclosure proceedings on those who haven’t made a mortgage payment in more than 120 days.
Those homeowners are safe only when they go back to regularly paying their mortgage, which typically happens only after a permanent loan modification is in place.
In June, Fannie Mae, which backs many mortgages in South Florida and across the country, ordered lenders not to start foreclosures on homeowners who are less than 120 days behind. Instead, lenders must offer loan modifications or other solutions.
But that’s not the case for those who are at least four months behind in their payments. Lenders can continue with the controversial “dual tracking” for them, so struggling owners can be paying in a trial modification program while going to court to fend off foreclosure.
With Fannie Mae’s backing, lenders won’t call off a foreclosure, until those homeowners prove that they can make the cheaper monthly payments, said Fannie Mae spokesman Andrew Wilson.
“We don’t want foreclosures to happen; we want to prevent them from happening but at some point it becomes necessary to proceed with foreclosure,” Wilson said.
Under the new policies Fannie Mae adopted in June, lenders can be stricter with owners with more delinquent loans — and that includes tens of thousands of Floridians, with the state leading the nation with foreclosure cases.
About 149,000 Florida mortgage holders were delinquent more than 90 days in the first quarter of this year, according to the Mortgage Bankers Association. A majority of the delinquent loans in the state are at least 90 days late, the association said. It does not have statistics for loans more than 120 days delinquent or for how many are in South Florida specifically.
In the past year, many South Florida homeowners have reported lenders have proceeded to foreclose on their homes, even though they have sought or secured preliminary loan modification agreements. Homeowner advocates have said many people may mistakenly believe such an agreement can save them from foreclosure.
Broward teacher Saint-Pierre Pierre, 40, is one of those late payers caught in what he considers a scary, confusing web involving Broward County foreclosure courts and his lender. He is making payments under a preliminary modification plan for his home in Pompano Beach. Meanwhile, he files court briefs on his own — he says he can’t afford an attorney — to fight off foreclosure. “I don’t want to walk away from my home,” Pierre said.
Pierre, who teaches history at Stranahan High, said he thought he was protected from foreclosure if he enrolled in a loan modification program. But Fannie Mae lenders will cancel foreclosures only when homeowners start on a regular permanent payment plan, Wilson said.
Pierre, who started a second job teaching at Broward College, has made the first two of three payments in his trial period, Wilson confirmed. PHH Mortgage first offered Pierre new loan payments in late May.
“We want to continue to work with you to modify your mortgage and help make your payments more affordable,” the lender wrote Pierre in a letter. PHH Mortgage told Pierre that if he made three trial payments of $1,146.61 — about $400 less than his original payment — then “your mortgage will be permanently modified.”
Pierre said he had been asking for two years to have his payments permanently reduced after his income dropped about 20 percent when Broward Public Schools could no longer afford to pay him and other teachers to work extra hours. His income fell from $66,309 in 2008 to $52,837 in 2009.
One early loan modification offer was rescinded. Then PHH Mortgage, he said, lost paperwork he sent in to apply for a new program. “They asked me to resend it four or five times,” he said. He hadn’t paid his mortgage for two years, because Pierre said he kept waiting for a new payment schedule.
So, he said he was thrilled to finally get a new offer in the mail. Then Pierre said he was surprised to receive a letter from attorney Lara Diskin informing him that PHH Mortgage would ask at a July 21 hearing for a summary judgment to foreclose on his home. The lender had started foreclosure in late 2010.
Broward Circuit Judge Maria Garcia-Wood set a December date for the house to be sold on the courthouse steps.
Dico Akseraylian, vice president of PHH Mortgage communications, said his company could not cancel Pierre’s foreclosure proceedings until he paid the final trial payment due Sept. 1. Pierre said he mailed the final payment Friday. If he did, then the foreclosure will be called off and his house won’t be sold, Fannie Mae spokesman Wilson said.
Meanwhile, Pierre plans to ask Garcia-Wood at an Aug. 19 hearing to reconsider her final foreclosure judgment. “I live at the courthouse,” he said. “It’s been a running circle. It’s driving me crazy.”
Where to find help
For information on loan modifications or other programs to help struggling homeowners, go to knowyouroptions.com that has a number of resources, interactive tools and other information for homeowners
You can call toll-free 877- 208-3652 to set up an interview to talk about your loan. The help center’s email address is email@example.com
firstname.lastname@example.org or 954-356-4205
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