I have from time to time brought to attention here stories written by my homeboy, business writer Alain Sherter. He's written a story that I think that you may want to read. Part One appears today on Marketwatch.com.
The story is that of the Gentry family from Fountain Valley, California, in Central Orange County. The mother, 66-year-old Marianne, works; her 74-year-old husband Marvin is disabled; her 42-year-old son Terry has multiple myeloma, a cancer of the white blood cells.
These are the kind of people, the story notes, that the HAMP Loan Modification program was supposed to help. Instead, it has been ready to leave them without support, without hope, and without a home.
The primary mistake the Gentrys made, like many in Orange County and elsewhere in the heady days before mid-2008, was trusting a loan officer. They wanted to remodel their house to make it easier for the disabled father to get around -- not exactly the height of self-indulgence. Here's part of the story:
Three years ago, the Gentrys decided to refinance, mostly to get some cash to pay for renovations to their home to make it easier for Marvin, who uses a walker, to get around. According to Marianne Gentry, their mortgage broker for the refi, FirstUnited Bank, recommended the Gentrys get a "pay-option" adjustable-rate mortgage, in which payments periodically increase, through IndyMac. ARMs have proved disastrous during the housing bust, and delinquencies on these loans continue to soar. Because of how they're structured, option ARMs also often don't qualify for loan modification under HAMP.
Gentry said she was nervous about the new loan, but the family felt pressured. "I wasn't going to sign," she said. "I said I wasn't comfortable. One of the loan officers got very aggressive, stood up out of his chair and shouted at me. He said, 'There's no other way!'" Gentry said. FirstUnited also assured them that if necessary they could refinance, she said. So they signed.
You can imagine generally what happened next, as the economy and local housing prices collapsed. Still, you may have thought that people were working on solving such problems, as with the HAMP program designed to keep people in their homes. The Gentrys certainly had this understanding, until the story developed:
During OneWest's review of her loan, Gentry sought advice from two lawyers and a staffer at the U.S. Department of Housing and Urban Development; all three told her they thought the family qualified for HAMP. Between her Home Depot salary and husband's benefits, they pull in roughly $4,000 a month before taxes. Cutting their mortgage to $1,800 a month, the level it was at before they refinanced in 2007, would stabilize their financial situation enough to resume making house payments, Gentry said. "It would be tight, but we could make it."
In early February, a OneWest employee told Gentry that the loan remained under review and that she was on track for a mortgage extension. She was shocked to get a recorded message on Feb. 22 saying their house was in foreclosure.
That's all I am allowed to quote from the online story. (If you like it, please let Marketwatch know.) In the comments, you'll see the sympathy that some writers have for people who can offer great advice about how one could have made different financial choices -- so long as they have the benefit of hindsight. Although the most significant "choice" the Gentrys could have made was: don't become disabled, don't get cancer.
Part two of the story -- when things get legal -- appears tomorrow.