A Mortgage Nightmare’s Happy Ending

The New York Times’ Gretchen Morgenson reports on a homeowner’s happy ending.

TWO and a half years ago, Robert and Amy Ahleman, a construction contractor and a financial services employee, were mired in a mortgage nightmare. After missing just one loan payment on their modest, well-kept bungalow in Bensalem, Pa., the couple began receiving notices from their lender. Default fees and eviction threats followed.

As the amounts they owed ballooned because of mounting late fees and other dubious charges, their lender refused to take their payments, claiming they were insufficient — which put the Ahlemans even further behind. …

Back in July 2008, when the Ahlemans’ troubles were first detailed in a front-page article in The New York Times, their experience was less common than it is today. Since then, of course, millions of average Americans have been sucked into a foreclosure maelstrom that is ruining their finances and their lives. …

The Ahlemans can attest to the fact that a modification, when properly engineered, can offer a less financially painful solution for everyone involved in a potential foreclosure. Yet while the couple’s default survival tale is uplifting, it’s hardly the norm. The terms they received on their loan modification are rarely offered to troubled borrowers today, and so their journey — and their escape from the possible consequences of a foreclosure — remain unusual. …

Ms. Ahleman said she immediately began pestering Litton for a loan modification.

“I harassed and harassed Litton,” she recalls. “We had to submit the paperwork right when our loan was transferred. We didn’t hear anything through January and February. I would call them hysterical, crying.”

After months of no progress, in the spring of 2009, a reporter called Litton to ask why the Ahlemans’ loan modification was stalled. Litton responded quickly and later made the couple a compelling offer: It said it would cut the interest rate on their first mortgage from a variable rate of 9.3 percent to a fixed rate of 4.59 percent. Litton also offered to waive $38,332 in arrears on their loan, which included late fees and legal costs that had accumulated while the loan was in default. …

The moral of the story is, if you are looking for a loan modification, you better hope your story lands on the front page of the New York Times!  If not, an attorney who is experienced in how mortgage servicers work may be you next best bet.

The article also explains the larger implications of the foreclosure crises and it’s drag on the economy.