Saturday, December 4, 2010

It's no 'Wonderful Life' for county homeowners

Hazel Nitis went to court on Tuesday. The day she had dreaded - the day she likely would be tossed out of her Mesa home - had arrived.

For most of this year, she'd worked to avoid this day. In March, she called her lender when she realized that she was about to fall behind on her mortgage. Cancer, after all, has a way of sapping your strength - and your bank account.

For seven months, Wells Fargo did its best George Bailey imitation, assuring Nitis that it would try to work something out to lower her payments. Then the bank went all Mr. Potter on her and foreclosed on Nov. 2, auctioning off her condo for a fraction of the loan's value.

A spokesman for Wells Fargo says it's not the bank's fault. It was just following the guidelines set up by the investors who owned Nitis' loan.

That is little solace to Nitis, a 48-year customer of the bank who wound up with a foreclosure stain on her record.

She's not the only one. If you live in Maricopa County, you likely know it is definitely not a wonderful life when it comes to dealing with banks these days. By the end of the year, about 50,000 Arizona properties will have been auctioned off - at times for less than the banks could have gotten had they just worked with the homeowners.

I wrote about Nitis two weeks ago, and the stories came pouring in. Stories of people felled by the economy or illness, begging their banks for loan modifications and being assured that help was on the way, right up until their homes were sold out from under them. Of people who are waiting now for the ax to fall and wondering where they will go when it does.

Nitis is better off than most. She owns property elsewhere and says she could have sold something had she realized the bank wouldn't come through with a way to lower her payments - at least until she is cleared to return to work.

A Wells Fargo spokesman says the bank tried to find a way for Nitis to keep her home but said it functions merely as a liaison, following guidelines set by the investors who owned her loan.

"We worked for several months to explore options that might have allowed Ms. Nitis to retain her property in Mesa," said Jason Menke, a spokesman for Wells Fargo Home Mortgage. "Unfortunately, due to the second-home status of her condominium and the challenges we encountered in finding an affordable repayment option for her, we could not offer her a modification.

"It is our goal to exhaust all options before moving a home to foreclosure sale. From January 2009 through September 2010, we provided more than 2.45 million customers with mortgage-payment relief through refinances and modifications."

Nitis was living in California when she bought the two-bedroom Mesa condo in 2006, putting down $35,000 and financing the remaining $135,920. She's been living there full time since late last year, when she went on disability to fight lymphoma.

By March, she realized she soon would be unable to pay her $798-per-month mortgage and called the bank, hoping to lower her interest rate or stretch out her loan. Over the next months, an array of Wells Fargo representatives assured her that they could work something out, even after the notices began coming in August, the ones informing her that her condo would be auctioned off.

They were wrong. On Nov. 2, Nitis' condo was sold for $37,000 to BAC Investments. On Tuesday, she was due to be evicted as the investment group took her to East Mesa Justice Court.

Instead, the investors who snapped up her home for a song agreed to rent it back to her for $650 a month, with an option to buy the place back in March for $53,000.

Scott Williams, BAC's attorney and a guy who does hundreds of these things a month, told me investors often resell foreclosure properties to the people who originally owned them.

"In a good percentage of the cases where people can afford the houses, they do come back and purchase the property," he said.

Naturally, Nitis took the deal. It gives her breathing room to raise the cash and cuts her payments.

But it raises the question: If a group of local investors could in essence modify Nitis' loan - turning a tidy 43 percent profit along the way - why couldn't the bank or the investors who owned the original loan do the same thing, allowing her to avoid foreclosure?

Why wouldn't they want to do it and wind up with $53,000 rather than $37,000?

Well, here's a clue. Menke told me the investor who owned Nitis' original loan was one of the government-sponsored entities: Fannie Mae or Freddie Mac.

Meaning us.

Explains a lot, doesn't it?

by Laurie Roberts The Arizona Republic Dec. 1, 2010 12:00 AM

It's no 'Wonderful Life' for county homeowners

Real Estate News

HootSuite - Social Media Dashboard