HOUSTON—The taxpayer-funded program to help homeowners threatened by foreclosure is hitting snags in Houston. People who thought they were following the rules say they’re getting foreclosed on anyway.
In a new subdivision in Katy, Troy Cosse said the bad news came one day in the mail.
"The foreclosure sale date," said Cosse as she pointed to a sentence in a letter from her bank. "They foreclosed on my property. And I was like, wow, that was a low blow."
A low blow because she said she’d been negotiating with the bank after a five-month layoff left her behind on her house payments.
"The negotiator claimed they were trying to qualify me for all the different programs, I guess," Cosse said.
Those programs, the Home Affordable Refinance Program and the Home Affordable Modification Program, were set up by the Obama Administration and were intended to provide relief to over 7 million homeowners. But so far, the U.S. Treasury reports the programs have succeeded in permanently modifying the mortgages of a meager 4 percent of the 728,000 distressed homeowners who’ve applied.
"Something is definitely wrong with the system because I feel myself and many other people fell through the cracks," said Cosse.
Lenders say the sheer volume of paperwork needed to qualify makes the process long and complicated.
"And so the banks are very, very busy," explains LaTrice Martin-Gault, owner of a Houston for-profit company called Save Your Properties. "They brought in call centers you understand? And the client is only a loan number."
She says the result is what happened to Troy Cosse, who hired Martin-Gault to help her negotiate with the bank.
So did Patricia Smith, another Houston-area homeowner who got a couple months behind on payments. She said at first, she tried on her own to get the bank to modify her loan and said she was led to believe she was being considered.
And yet …
"They sent me a letter saying as of December 1st, your house will be in foreclosure and placed up for sale. I was overwhelmed," Smith said.
That’s when she hired Martin-Gault, who called the lender—the Bank of America -- and got through to a supervisor.
On recording of that phone conversation, the supervisor said, "I can’t guarantee you anything but I’m going to do is submit to possibly rescind this sale."
"For now, she’s still in the property and we’re going to pray it stays that way," said Martin-Gault.
There was even better news for Troy Cosse, whose loan also was with Bank of America.
The bank not only canceled the foreclosure but qualified her for the federal program, meaning lower payments—but only on a trial basis. Like thousands of others, she must prove she can consistently make payments before the new loan is made permanent.
Bank of America is one of the big lenders under pressure by the federal government to modify more of these troubled loans.
Bank of America didn’t respond to our e-mails but said in a news release it has 13,000 employees nationwide working on this, and the company is adding hundreds more.
If you’re at risk of foreclosure, the government offers help for no charge. Go to http://www.hud.gov/offices/hsg/sfh/hcc/fc/.
