The Government Program That Failed Homeowners

The Hamp program, supposed to help homeowners save their houses, may have led them deeper into a bureaucratic swamp

David Dayen
theguardian.com, Sunday 30 March 2014 10.00 EDT

Chris Cooley never missed a payment on his mortgage in Long Beach, California. Every month, Wells Fargo would debit him $3,100 for the four-unit building; one of the units was his, and the other three he rented out for income to cover the mortgage. In 2009, when the housing crisis hit, Cooley needed a way to reduce his mortgage. He renegotiated his loan through the Home Affordable Modification Program, known as Hamp. Initially, it was a success: his mortgage payments fell in half, to $1,560.

So it was surprising when a ReMax agent, sent on behalf of Wells Fargo, knocked on the door in December 2009 and told Cooley the building no longer belonged to him. The bank planned to take the building he had lived in and rented out for a decade – and list the property for sale.

So much for government help.

But it turned out that Cooley was not getting government help; without his knowledge, Wells Fargo had put him on what was only a trial Hamp payment program. He had been rejected for a permanent mortgage modification – only Wells Fargo never informed him about the rejection, he says, nor did they give him a reason why.

What followed was what most homeowners would consider a nightmare. While Cooley tried to stave off foreclosure to save his home and livelihood, Wells Fargo paid the other renters living in the property $5,000 to move out behind his back, and then denied Cooley further aid – because his income, which he drew from the rentals, was too low. “They took my income away from me, and then they couldn’t give me a loan because I had no income,” Cooley said. “What a wonderful catch-22.”

The bank held his final trial payment in a trust and never applied it to his loan (to this day, Cooley has never received that money back). For two years, Cooley appealed to Wells Fargo for some alternative form of relief, sending in paperwork time and again, talking to different customer service representatives who knew nothing about his situation, and generally running in place without success.

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http://www.theguardian.com/money/2014/mar/30/government-program-save-homes-mortgages-failure-banks