January 11, 2010 – Good News America: Everybody is trying to help.

My loan was originally set up as an 80/20 which means 80% is originated by one bank while the other 20% is from another bank.  The 80% was done through a company that has since gone under but before the bankruptcy, my loan was transferred twice, ending up with America’s Servicing Company (Wells Fargo).  The ASC loan was a 5 year adjustable rate mortgage (ARM).  The risk with an ARM is that without a fixed rate, the bank can raise your monthly payment if the Fed raises their rate.  It’s a gamble because with a 5 year ARM you have a lower interest rate than a fixed rate plan for the first 5 years but in the 6th year, the rate goes up (at least that’s what the bank is gambling on).  When I decided on a 5 year ARM, I figured after 5 years, I can always refinance if necessary. On January 11th 2010, I got a notice from ASC stating that my interest rate was dropping, resulting in a lower monthly payment.  I guess my gamble paid off because my mortgage payment actually dropped.  The second mortgage with Chase bank is a 15 year fixed rate resulting in a consistent $241.65 per month.  Both mortgages together totaled $780.63 per month including insurance and taxes.  Not too bad for a 3-2 single family home worth $175,000.00 (Good luck finding a decent two bedroom apartment for under $800 per month in Austin, TX).  In recent years some homeowners have been criticized for being irresponsible because they “bought too much house” and therefore should lose it based on their own bad decision.  That’s debatable for anyone but in my case it’s not even a reasonable accusation and here’s why.  When things are going well in my line of work, I make about $3200.00 per month, not including rental income which is about $850.00 per month.  That means the mortgage was only 26% of the expected income level for my line of work.  Before the interest rate started to drop, it was as high as 37% but that’s not factoring in the rental income.  (Loan modifications were designed for people whose payments were even higher than that and the goal was to get their payments down in the 30-33% range by lowering the interest rate and even forgiving part of the debt).  If you consider my rental income, then the mortgage only got as high as 30% so, I don’t think I can be categorized in the “bought too much house” column.  My business plan was real simple; keep renting rooms to boarders until I finished the studio at which point I’d instead rent the studio for a lot more.  The demand for “Short Term Rentals” (or STRs) in Austin has risen sharply in recent years, so much so that a few years ago, the City of Austin started issuing permits for homeowners who want to take advantage of the business opportunity.  If my house had not been in foreclosure, I could have gotten one of those permits (there is only a limited number available for the various neighborhoods).

When the banking industry started to see a sharp increase in loan defaults, the federal government offered assistance to the public by funding HUD approved housing counseling services (This was part of a “Making Home Affordable” initiative started by the federal government to help homeowners avoid foreclosure).  ASC provided me with notices to that fact on a regular basis.  I guess the idea was that these counselors would help navigate the foreclosure avoidance process.  I was relieved that the federal government was doing something about this problem, so, I signed a power of attorney with one such business called Frameworks CDC.  They told me that I should forward my documentation to them and they would be an intermediary.  So, I tried to respond to ASC’s RFI on January 12th, 2010 when I sent the requested documents to Frameworks expecting that they would be aware of deadlines and forward them in time.  Then on January 25th I received a letter stating that my assistance request was denied because I failed to reply in the timeframe listed in the RFI. (Notice that in the RFI, ASC gives a 10 day deadline from the date of the letter which leaves only 5 days to deliver the response.  Since it takes 5 days to get it by mail and then another 5 days to send it back, well that leaves you a whopping 0 days to gather the documents.  Of course, you could fax the documents to them, but they include personal information such as social security numbers, loan numbers, IRS information and fax and email transmissions are not encrypted, which means anyone monitoring your computer/fax transmissions can read the contents.  Some would argue that worrying about lack of encryption is just paranoid however, I have to disagree since my identity has been stolen 3 times already; twice from government databases and once when a Chase Bank employee emailed my account information to his personal email address).  Another consideration when deciding how to send your documents is that, in some cases you need to use certified mail so that you can prove the bank received your response (This becomes important later when you have to file a lawsuit).  After I got the notice that ASC had not received my response, I called frameworks and asked my account representative what happened.  Turns out she hadn’t sent the documents and didn’t sound very concerned.  Nor did she want to accept any blame or level of responsibility to act in a timely manner.  So on February 1, I faxed the requested documents to ASC myself which included my hardship letter and income profit/loss statement.  Soon after that I cancelled the Frameworks power of attorney and signed up with a different agency but found them not to be any more helpful.  Most of the time when I had a question about the foreclosure process, the rep did not know the answer and I didn’t trust their ability or motivation to keep up with the process so, since then, I’ve been doing everything myself.  It makes me wonder how much of our tax dollars are going towards paying these counseling services.  And, why do we pay them, particularly since they don’t possess any unique industry knowledge that will help you save your home?  Maybe if they knew more than the homeowner and handled the paperwork reliably on our behalf it would be worth it but, clearly they don’t see that as their responsibility, so…..what’s the point?   Just because you claim that you are there to help, doesn’t mean you are….. Sounds like a waste of tax dollars to me.

December 20th, 2009 – Best Christmas Present Ever

It’s only 5 days before Christmas 2009.  At this point in the process, I was still naive enough to believe that America’s Servicing Company (ASC) was being sincere in their efforts to help avoid foreclosures.  Since then I’ve seen how the bank’s attorneys will use every trick in the book to force you out when their clients’ business interests are served by that course of action.  My house, in December 2009 had at least $50,000 worth of equity so the bank had no incentive to give me a modification.  It makes more business sense to foreclose and then sell the house since there is equity… at least in the absence of regulation.

Most people would be heading out of town around the 20th for the Christmas holiday.  I hadn’t really celebrated Christmas in several years since I lost touch with my family in East Texas, but most people do.  What a convenient time for the bank to be conducting foreclosure business.  You know, when the bank requests information, they’ll demand that they receive it within 10 days of the date of their letter, but you don’t really know how to proceed, especially if you’re new to all this foreclosure stuff.  It’s really hard to find help from lawyers, HUD approved councilors, and the like because they’re booked up or are already on vacation by the 20th.  I got a default notice that gave me until January 19th to bring my loan current or else face “acceleration” which means they can terminate your ownership of the home.  It was less than a week prior that I got the notice to send in the questionnaire for assistance and it would not be for another 4 days before they would even be able to confirm that they received my response.

Three days after Christmas, I received an acceleration notice.  It’s a good thing I wasn’t out of town trying to spend time with family when it came (a 10 day deadline would come pretty quick when you get the notice 5 days after the date on the letter).  On the 28th, I called ASC and they verified that they had received my statement of wages and expenses but, they now say they need proof of income.  So…I wrote a letter and faxed it to them with proof of income as they had requested.  Somewhere, I found this discontinue phone contact form.  It’s necessary to stop creditors from harassing you.  It may seem like a small thing but it’s a Godsend.  Creditors will drive you nuts calling you every week or two asking you the same questions over and over again.

On January 11th, I got this request for information (RFI).  You’ll notice that if they don’t receive your response within 10 days, they’ll throw out your request for assistance.  That’s not much time to do your research, collect the information, create documents and then mail it in.  It’s a good thing I had a home office, database, a scanner, fax machine, and the professional experience of an account manager.  Without those tools and resources, I think compliance with their demands would have been impossible.  Can you imagine the average homeowner with nothing more than a desktop computer and maybe a printer trying to respond to this type of request over and over again for 2 years?  I can’t, which is why I think this kind of highway robbery has never gone to trial.

DECEMBER 13TH, 2009 – Account Delinquency Letter

DECEMBER 13TH, 2009 – Account Delinquency Letter

On December 13th, 2009, I received an account delinquency letter from America’s Servicing Company (the mortgage servicer) on behalf of Wells Fargo and Deutche Bank.

I’d been in my house for just over 5 years.  Back in 2004, after looking all over south and southwest, I bought in a south Austin neighborhood between S. 1st and S. Congress.  It’s a good location because both streets will take you straight downtown.  That also meant that home values would likely continue to increase.  The house was a fixer upper previously owned by the Maxies.  Mr. Maxie was a former state trooper and worked on the secret service detail at the Texas State Capitol.  I’m not sure if they actually called it the Texas Secret Service but, it was their job to protect the governor.  Yup, he was one of then future president George W. Bush’s personal body guards.  Rumor has it, back in the 90’s a neighbor kid and his friends broke into the house, stole Mr. Maxie’s guns and then shot up his house with his own guns (some of the bullets are still inside the front door, which received a marginal D.I.Y. repair).  I don’t know if that adds value to the house but in Texas, it’s a pretty cool conversation piece when people come over for the first time…”Hey those look like bullet holes”.  “They are.  See, what happen was…”.  That’s the kind of thing that people talk about which is good for a business.  It may be a little weird but once the studio is finished, I’ll bet it will get people in the door to rent the studio, just from the word of mouth.  Besides, Austin is a weird town.

The thing that originally drew me to the house, however, was not the history connected to Mr. President George W., but it had been one of two model homes when the neighborhood was new back in the 1980’s.  What would have been a garage on a typical house, was enclosed for use as a real estate office and was nicely landscaped out front.  The former real estate office bonus room attracted my attention for use as a future film post-production studio.  My first studio was a fairly cubicle shaped bedroom on Shoreline drive, off East Riverside.  That’s where I slept and did the sound mix for “Master of the Game” (MOG), the first feature film to be shot at the now ubiquitous Austin Studios (formerly airplane hangars at Mueller airport, now redeveloped into a mixed-use subdivision.).  Since I had mixed “MOG” with great results (the film got a limited theatrical run and distribution on DVD through blockbuster.com), I knew what was needed and what wasn’t to get professional results out of a studio.  Given my background, it made perfect sense to buy the house and build one, in spite of the fact that I didn’t know the first thing about construction.  Another great thing about the Maxie house was that the electrical work was already configured for the builder’s intended use of that space as an office, not a garage which usually has only one GFCI plug (GFCI is one of those plugs with the red reset button, like what you find in some bathrooms…no good for a studio).  It had three 120v and one 240v circuits. The room was big.  Larger than your typical two car garage and it was in my price range….Jackpot!

When I got the delinquency letter, my resume listed 7 years’ experience in account management, project management, systems installation and maintenance, but the doors had closed on my future in the systems integration business.  I had only a few thousand left in my retirement account which I had cashed in so that I could continue paying my bills (including the mortgage).  Around that same time, I followed a lead with a local production company and was hired as an independent contractor on a month to month basis.  The job involved engineering and video operator work on mobile production trucks in the live sporting event arena.  This was right up my alley since I had a college degree from the University of Texas in TV and film production as well as 7 years’ experience installing, designing, and troubleshooting AV and TV systems and equipment.  After Three years of working as an independent contractor, all the hard work finally paid off when the production company offered me the video and lighting operator position at the soon to be launched “Longhorn Network”.  Full time work, health insurance, and regular pay.  How could a bank turn me down for a loan modification now?…  But, the LHN job happened later, towards the end of my effort to secure a loan modification.  Let’s go back to 2009.  Since I was now running my own business, I needed a home office, database, accounting software…etc.  I bought a new computer and all the software (mostly old versions off eBay) and got the office setup in the smallest room of my studio.  By the time I ran out of money, the home office was fully setup.  The database software was just sitting there staring me in the face not getting much use.  Managing accounts in the SI business required meticulous record keeping so, I was already conditioned for the difficult (if not impossible) job of keeping tabs on a giant corporation, but I never thought I’d use my new home office to navigate through such a personal ordeal.  Over the four years that followed, it would see more personal use than business.  But, what to do about that delinquency letter?  Well, I figured I should probably fill out the form and send it in…so I did.