The subject line of Julie Archila's e-mail said: "Please hear our story and help us save our home!"
Her family's story, since they moved to Charlotte in 2007 from California, is that of many working folks squeezed by the long downturn. Their quest to save their home also illustrates the growing frustration and challenges with a system that's trying to resolve the nation's foreclosure crisis.
Julie and Nicholas Archila, with two daughters at UNC Charlotte, were convinced to take an interest-only loan by a lender that has since filed for bankruptcy. Their home has lost value, partly because of nearby foreclosures. They struggled through two layoffs and exhausted savings to pay bills. And they have wrestled with their mortgage servicer for nine months, trying to reduce payments.
The Archilas almost certainly qualified for a modification when they applied last spring, but the process dragged on until he found a job.
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"We have not missed a payment but are just barely making it," she wrote this month after reading a Save Your Home story about others seeking modifications. "Who do we turn to?"
Save Your Home found the Archilas' best option might be a little-known cousin of the federal modification program. The Home Affordable Modification Program (HAMP) gets most of the attention because it is intended to lower payments.
The Home Affordable Refinance Program (HARP) is designed to help people who can't do a traditional refinance because their home has lost value. Borrowers must be current with monthly payments. Last month, the U.S. Treasury Department reported that HARP has enabled more than 4 million borrowers to refinance, with an estimated average savings of $150 per month.
HARP can mean getting a lower interest rate, which lowers payments. The refinancing program also can get people out of interest-only loans, which typically call for increased future payments or a balloon. Critics say interest-only loans are like renting because borrowers aren't paying down principal, but they have all the risks of homeownership.
The Archilas say the lender told them they had to take an interest-only loan because they were living in California at the time they bought their Charlotte house.
"They said we could refinance after we moved, but that wasn't true," said Julie Archila.
HARP refinances are usually handled by the existing lender. The Archilas' lender is no longer in business, so it's unclear who can do it.
The couple visited Charlotte early in 2007 because they wanted to move from Southern California, and he has family here. They fell in love with a 3-bedroom, two-story house in northwest Charlotte.
They bought the house in May 2007 for $170,000, putting down about $15,000 and financing with HomeBanc, which filed for bankruptcy that year. Their interest rate is just below 7 percent.
She is 38 and a hospital office worker. He is 60 and initially worked for a private school that closed in the spring of 2008. By fall, he landed another private school job teaching Spanish. He was again laid off, last May.
The loss of his job meant their $1,200 mortgage payment, including taxes and insurance, represented about half the family's income.
They contacted their servicer, American Home Mortgage Servicing, a Texas firm started in 2008, about a modification. That started rounds of submitting and resubmitting documents to the firm commonly known as AHMSI.
"No matter what we did, they stated we were missing one form or another," said Julie Archila, who has thick, neat files documenting the process.
A July 13 letter from AHMSI said to "allow 21 days" for review, after which a negotiator would contact them. That didn't happen. Nearly five months later, a Dec. 8 letter asked for more documents. Archila says calls aren't returned, and she can't reach anyone familiar with the case.
The Archilas' complaints echo those in a lawsuit the Ohio Attorney General filed against AHMSI in November. Allegations include "incompetent and inadequate customer service, failure to respond to requests for assistance, failure to offer timely or affordable loss mitigation options to borrowers and unfair and deceptive loan modification terms."
The company also filed suit against the state prosecutor, saying it had been shocked by the AG's earlier demands, which included penalties and a foreclosure moratorium. AHMSI said it "vigorously disputes these allegations and contends that they are without factual or legal merit."
The Archilas also attended the December mortgage modification marathon put on in Charlotte by the non-profit Neighborhood Assistance Corporation of America. They haven't had an update since. NACA didn't respond to several requests for comment.
AHMSI didn't say what delayed the modification.
"We never like to hear that we haven't met a borrower's expectations," said spokeswoman Christine Sullivan.
Responding to Observer questions this month, she said the Archilas don't qualify for a HAMP modification because their income is too high. To qualify for HAMP, the mortgage payment, with taxes and interest, has to exceed 31 percent of income. An Observer review of the Archilas' paychecks indicate they probably qualify, but only by a small margin. So any savings would be small, perhaps needlessly damaging their credit score.
Sullivan said the company assigned the Archilas a new representative and is considering them for other modifications. And that means they have to submit more forms.