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Homeowners: Loan changes led them to foreclosure

Families and members of Alliance of Californians for Community Empowerment march in the downtown Los Angeles financial district recently to demand banks' accountability, foreclosure moratorium and loan modifications. Many homeowners claim that banks failed to live up to their end of the deal when they agreed to trial mortgage modifications. (AP Photo by Damian Dovarganes)

Families and members of Alliance of Californians for Community Empowerment march recently in the downtown Los Angeles financial district to demand banks' accountability, foreclosure moratorium and loan modifications. Many homeowners claim that banks failed to live up to their end of the deal when they agreed to trial mortgage modifications.(AP Photo by Damian Dovarganes)

By Jacob Adelman
AP Writer

Los Angeles — Grocery store owners William and Esperanza Casco were making enough money to stay current on their mortgage, but when JPMorgan Chase & Co. offered a plan that reduced their payments, they figured they could use the extra cash and signed up.

The Cascos said they never missed a subsequent payment, so they were horrified when the bank decided the smaller payments weren’t enough and foreclosed on their modest Long Beach home.

Their story is echoed across the country by people who claim — some in lawsuits — that banks didn’t live up to their end of the deal when they agreed to trial mortgage modifications.

The suits add to a feeling among many struggling homeowners that they’re getting little help from the part of the government’s $700 billion Wall Street rescue that aimed to help them directly.

Treasury statistics show that only about one-third of the nearly 1.4 million homeowners accepted into the government’s payment reduction program over the past year have had their reductions made permanent.

“It is extremely unfair that someone like me and my wife who have owned our home for 17 years and never missed a payment could end up in foreclosure,” Casco, 47, said in Spanish through an interpreter.

Chase spokesman Gary Kishner was unable to comment on whether the Cascos had been current on their payments but insisted the bank had treated the couple fairly.

“We worked with the borrower to give him as many opportunities as possible to qualify for a modification,” he said. “However, they were not able to do so and therefore we were forced to foreclose on the property.”

Several federal lawsuits filed in Boston accuse major lenders of breach of contract under the government’s Home Affordable Modification Program, in which banks agreed to participate as part of the bank bailout.

According to the lawsuits, the banks agreed under HAMP to grant permanent mortgage modifications to borrowers who make all payments during trial modifications.

Attorney Shennan Alexandra Kavanagh said several of the plaintiffs lost their homes after their payments reverted to their original sums that they were unable to pay. She said she believes tens of thousands of borrowers in Massachusetts alone could be covered by the suits if they get class-action status.

One of the lawsuits, against Bank of America Corp., was consolidated earlier this month with similar complaints in five other states, Kavanagh said.

The lender will continue aggressively defending itself against the cases, according to an e-mail attributed to Bank of America spokeswoman Shirley Norton.

More lawsuits have been filed against other lenders elsewhere.

“I think that banks are playing games with us,” William Casco said.

Casco said his monthly mortgage payments to Washington Mutual Inc. went up to $2,765 when he refinanced his home in 2006 to pay for a new a meat counter at his store in the industrial Los Angeles suburb of South Gate.

Chase was acquiring Washington Mutual in January 2009 when Casco said it sent a note telling him he qualified for a lower forbearance rate. The El Salvador native sent the tax returns and business documents the bank was requesting.

His payment was reduced to $1,250, where it remained for several months until Chase told him to apply for a trial loan modification.

Again, Casco said, he sent Chase the documentation requested. His payment rose to $2,363 in June, then returned to the forbearance rate in October.

Casco said he continued paying what he was asked until August 2010, when Chase told the Cascos that they were $50,000 behind on their payments and put them into foreclosure.

The home has since been sold and Casco is fighting eviction. That has him considering joining an existing lawsuit against the bank or seeking support to file a suit on his own.

“I’m determined to do whatever it takes in order to keep my house,” he said. “I feel that a great injustice has been done to my family.”

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

One comment

  1. I applied for remodification of my mortgage loan through 21st century leagal services.in June 2009 and this fraud company took my three month payment as token and disappeard.I filed a complaint agaist then to consumer protection depatt.But no result so far.Then I applied through my mortgage co (chasese Bank , they put me on trial for 7 months and rejected my application. Now they sending me threat to pay them moorethen $7000/ penelty even I dont owe them any penney.

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