If the Olsens of Utah County are any indication, the dysfunction among the nation’s banks who service mortgages runs long and deep.
Three members of the same family have experienced mounting frustrations, dislocations and months of stress in trying to renegotiate loans on their homes after they had financial setbacks. Each had bought or constructed homes near the height of the housing market only to see their finances and homeownership threatened for a variety of reasons in the economic meltdown.
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Each at some point made decisions about their loans and their dealings with the banks out of frustration or naivete about negotiating with large and, based on their experiences, what appears to be poorly administered processes at the institutions.
Thousands of Utahns may have experienced many of the same problems in trying to modify loans taken out during the boom, a frenzied run-up in housing prices that according to a congressional commission was created in part by the very entities with whom they are now trying to negotiate. Dozens of lawsuits document similar frustrations.
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In the beginning » Mark Olsen said he bought a home for his family in a new subdivision of Lehi in 2007 for $300,000, putting up $60,000 as a down payment and for fees. His loan from Countrywide Home Loans came with initially low monthly payments that were to rise dramatically in five years, at which time he believed he could refinance.
But after losing his job and trying to start a home-based Internet marketing company in 2008, Olsen ran into financial problems and knew he couldn’t make his full mortgage payment. So he called Bank of America, which had acquired Countrywide after it went bust, to try to make new arrangements.
That, he says now, was a mistake.
The call initiated a back and forth between Olsen and BofA representatives over his desire to lower the principal and the size of payments.
"Every time they would say something like, ‘Yeah, let’s do something to help you,’ " he said. "But every time they would jack the payments up higher."
Then, in the midst of negotiations, a foreclosure notice was tacked to his front door. The family decided to move out of its now significantly devalued home and try to do a short sale, in which a lender agrees to accept less than is owed on a mortgage.
Despite what Olsen said were several significant offers, BofA never agreed to a short sale. At the suggestion of the bank, the family moved back in with the prospect of qualifying for a loan modification.
"They gave us the hope we were going to be here long term," Olsen said.
As the family was putting away silverware, the Olsens found a FedEx package with a loan-modification agreement that had been sent to the vacant house months after they had moved out, Olsen said. Another round of negotiations faltered, and on Feb. 15 a new foreclosure notice appeared on their door.
So Olsen called BofA, "and they said there’s no sale date on your house. I said, ‘Really, I have a notice of trustee sale set for March 19, and I’ve been trying for seven months, plus the three-year span, to get something going for us.’ "
That led to more discussions and then on a recent Saturday a phone call from a bank vice president who asked for copies of paperwork but appeared to be unaware that a senior negotiator had also been working with them.
Finally, this. Olsen said he received details of a new offer — a 40-year loan for $362,000 on a home he said is worth around $220,000, though a senior vice president recently got involved.
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