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For this family, mortgage modification created 'utter nightmare'

Problems plague the Home Affordable Modification Program, centerpiece of the nation's $75 billion foreclosure prevention effort.

By Stella M. Hopkins
Save Your Home
A continuing series by The Charlotte Observer.

More Information

  • She got help, then foreclosure
  • 'An endless déjà vu of hell'
  • Calendar, details keep working against him
  • Effective last week, mortgage servicers licensed by North Carolina are prohibited from pursuing foreclosure while working with a homeowner on a modification. The new rule does not apply to Bank of America, Wells Fargo and other servicers not overseen by the state.

    Often, servicers pursue foreclosure while considering a modification. That can add a lot of fees and other expenses to the homeowners' tab. The dual-track approach also has resulted in unnecessary foreclosures.

    "No big program works smoothly," said Mark Pearce, the top N.C. mortgage regulator and an architect of the new rule. "This one in particular has not."

    Need help?

    Learn about the federal mortgage modification program and see if you meet basic eligibility requirements at .

    Get free help with a modification through North Carolina's main foreclosure-prevention site, or by calling 866-234-4857.

  • This year, Observer writer Stella Hopkins is examining how the nation's massive foreclosure-prevention effort is playing out for homeowners as rising numbers seek to save their homes. Reach her at

Elisha and Michael VanHorn would have tried to sell their family's Matthews home last year after illness forced him to stop working, but the federal foreclosure prevention program looked like a lifeline.

They applied last August to get their mortgage payment reduced.

With him out of work, they probably didn't have enough income to qualify. Yet, on Dec. 23, Bank of America offered a payment cut by more than 75 percent, she says.

"We were like, 'Wow, we don't have to consider selling,'" she said. "Finally, we have a ray of sunshine."

However, the actual payment turned out to be more than his disability check.

Now, 10 months later, they're awaiting word on a new application that includes income her parents offered as help. If this go-round doesn't work, foreclosure could be the next step. Meanwhile, they've missed the prime spring selling season. And the big homebuyer tax credits that might have attracted a buyer have expired.

"It's been an utter nightmare," Elisha said.

For struggling homeowners, the drawn-out modification process can mean dashed hopes, added costs and missed opportunities.

More than a year after the launch, incessant problems plague the Home Affordable Modification Program. Known as HAMP, it is the centerpiece of the nation's $75 billion foreclosure prevention effort.

If the process moved faster, some homeowners might have qualified for a modification. Others might have resigned themselves earlier to giving up their home. They could have conserved the time, energy and money spent chasing a modification.

Service problems mask a more wrenching issue: HAMP simply wasn't intended to address high levels of long-term unemployment, catastrophic illness and myriad other problems confronting homeowners in this protracted downturn. And so, foreclosures mount, eroding the value of communities and weighing on the recovery.

"I told the bank: You don't want my house," said Elisha. "You'll be stuck with it."

The VanHorns moved from New York to Union County in 2007, following her sister and parents - part of the influx that made the county one of the nation's fastest growing.

Michael, 54, had worked years for a century-old firm that appraises and loans against store inventory and sells off excess merchandise. He pulled down a six-figure income and could live anywhere near a major airport.

They chose a new house and put down $173,000, nearly 30 percent of the $590,000 purchase price and took a 30-year, fixed rate mortgage at 6.5 percent.

Elisha, 44, and their children, who are 9 and 13, spent the first year or so learning their way around and making new friends. That first year, Michael suddenly struggled to climb stairs without getting winded. By last May, he had to quit working. He could scarcely breathe. Tests finally revealed he needed a liver transplant.

By then the housing market had tanked. She says they would have tried selling, but they saw no reason to take the hit because a modification offered the chance of reduced payments. Their mortgage, with insurance and taxes, is $2,796 per month. Their monthly income is his disability, $2,322.

As her husband lay dying, she spent hours on the phone with the bank and submitted documents repeatedly. They waited for a liver and a lower payment.

In December, she says the bank called, offering a reduced payment of $600.

"I thought it was the biggest blessing I could receive," she recalls. "I thought the holidays had come early."

A few days later, there was a liver for Michael.

But the modification paperwork never came. She called all the time from her husband's hospital room. After months, the bank said the payment would be $2,500 - an impossibility for the family.

Elisha has since figured out they didn't have enough income to qualify. She wishes Bank of America had told her that upfront.

The bank says the case is under review.

Throughout the ordeal, the VanHorns have been touched by the help of their new neighbors, who have ferried the kids to events and left grocery gift cards in the mailbox.

"A lot of people said, 'This could be us,'" she said. "Illness can strike any family."

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