The New York Times has a story on Lilla Roberts, a 73-year-old retired physical therapist. She rented out a part of her home to a tenant.
Sometime in 2007, however, the tenant stopped paying his rent. Thanks to New York’s tough rental laws, she couldn’t easily evict him. Without that $900 a month, she couldn’t make ends meet and still pay her mortgage. Thus it was that in March 2008, she requested a mortgage modification from her servicer, the Wilshire Credit Corporation, a division of Merrill Lynch that specialized in delinquent mortgages.
What happened over the course of the next few years can only be described as Kafka-esque. Wilshire Credit asked her for a hardship letter; she sent one. Nothing happened. Three separate times, Wilshire set up short-term payment agreements — two of which included $7,000 upfront payments — claiming that it would make a decision on a long-term modification once the agreement expired. She paid every penny — to no avail.
Sometimes, when she was between short-term agreements, Wilshire would refuse to take her check. Sometimes, it cashed them. Sometimes she was told her request for a modification had been denied. Other times she was told it was being considered. At one point, the foreclosure mill law firm of Steven J. Baum, which represented Wilshire, tried to get her to waive her legal rights as part of the third short-term agreement. (The firm would not discuss the details of the case on the record.) All the while, behind Ms. Roberts’s back, Wilshire was inching toward foreclosure.
In March 2010, Bank of America, which got Wilshire when it bought Merrill Lynch in 2008, sold the servicing company to I.B.M. As part of the deal, though, it kept Wilshire’s servicing clients.
Was life any better with the mighty Bank of America now servicing her mortgage? Not a chance. Bank of America took her money in May and June. But in July and again in August, a bank employee told her not to send a payment because the bank was close to offering her a new repayment plan. Instead, in late August, the bank foreclosed and turned the property over to Fannie Mae.
If you believe this is a rare occurrence, you are sadly mistaken. Consumer attorneys are reporting that they see this kind of behavior from the banks on a daily basis! Once you call the bank looking for a loan modification, you can expect that something similar to this will happen to you.