The Problems in Dealing Directly with Indy Mac
According to a story in The Ventura County Star, Indy Mac (now named OneWest Bank after its seizure by FDIC last July and its subsequent sale to private investors) doesn’t seem to enjoy dealing directly with their borrowers. If the events leading to the foreclosure of Josie Lowe’s home in Simi Valley, California are any indication, Indy Mac at some point will ignore the fact that a struggling homeowner is still making payments, stop all communication, and foreclose on a home without warning.
Ms. Lowe’s experience in trying to do her own loan modification follows what is becoming a familiar pattern among do it yourselfers. What starts off as a request by the homeowner for a loan modification is countered by the lender with a payment plan to catch up on missed payments. A lender will often propose a payment plan, which starts immediately, while the loan modification process gets started. Instead of reducing monthly payments, the homeowner is required to make larger payments to catch up on missed payments. In Ms. Lowe’s case the payment plan, on which she made monthly payments totaling $21,000 carried an additional bomb that was waiting to explode in the form of a balloon payment in the amount of $11,473.
Not to worry, the bank told her that a loan modification would take care of the shortfall. On top of that, she felt she was honoring her side of the deal by making regular monthly payments. In February, almost fourteen months after starting the loan modification process, Indy Mac told her she didn’t qualify for a loan modification. The reason for her disqualification was that Lowe had failed the FDIC loan modification model twice, said an Indy Mac/OneWest spokesperson. “To qualify for a loan modification, the homeowner has to be able to pay a minimum amount of the interest due on the loan, and Lowe couldn’t make that minimum payment,” she said. Of course, the minimum interest payment on a modified loan is set by the lender so it wasn’t that she could make a minimum payment, she couldn’t make their minimum payment for a modification.
Even after disqualification, Ms. Lowe was told to continue making payments as there was still a “chance” that she could get her loan modified. It wasn’t until the bank returned two of her payments that she thought there might be something amiss. Calling Indy Mac to inquire about the returned payments, Ms. Lowe found out exactly how big her problem was; she, along with her blind mother and young son were getting evicted due to their home being foreclosed. She had made her call to Indy Mac on May 11th. The auction date was set for the next day, less than 24 hours from getting the news on the foreclosure.
She has now retained an attorney to determine whether the auction sale can be reversed so that she can stay in her home with her mother and son. Her attorney said of the case, It’s “fraudulent”, and added, “It may be through sheer negligence; perhaps one hand didn’t know what the other was doing within the large corporation as it went through takeover and sale in the months that Lowe was trying to work out a loan modification… Still, that is no excuse for what has happened”
These cases that fall in the cracks, get turned down for specious reasons, or completely blow up due to lender’s incompetence seem to be on the increase as loan modifications flood the desks of processors. Like many other similar victims, Ms. Lowe could have avoided this mess by starting the process with an attorney to guide the negotiations and call out the lender’s misrepresentations during the modification process. In this case, she probably could have avoided the payment plan completely, had a much better chance at qualifying for a modification with an attorney negotiating on her behalf, and would not be in the fight of her life trying to save her home.
