No loan help for thrifty homeowner

04/11/2010 12:00 AM

04/10/2010 9:58 PM

Donna Lancaster didn't buy the tempting new condo, didn't strip the equity from the Matthews house she bought in 1990.She drives a 10-year-old car. She doesn't use credit cards and hangs her laundry to dry.

Lancaster's thrifty ways have enabled her to remain current on her mortgage since being laid off two years ago. But her unemployment is running out and, despite more than 20 years of mortgage work, she's been unable to land a full-time job. She applied last May to her mortgage lender, Wells Fargo, for a modification to reduce her payments. Her goal was to conserve cash so she could keep paying her mortgage.

She's been through the usual wringer of delays and lost paperwork, had a three-month payment reduction followed by a three-month stint with higher payments and a barrage of conflicting responses. Her cherished credit score has been trashed, and it's all been for nothing.

Lancaster, who works part time in a pharmacy and collects unemployment, makes too much money to qualify for a modification - a detail she says no one bothered to tell her during the 11-month ordeal. But when her unemployment benefits expire, she will be hard-pressed to keep up.

She also likely wouldn't have qualified for the temporary payment reductions announced last month under the same federal foreclosure-prevention program. Those reductions are for unemployed borrowers whose mortgage payments are more than 31 percent of their income.

So the massive federal aid for struggling homeowners holds no benefit for a woman who avoided the excesses of the easy-credit boom.

"I do the right thing, not living above by my means, and there's nothing I can do," said Lancaster, 53.

The Observer first contacted Wells about Lancaster's case on March 5. A letter from the bank last month said it had notified the credit bureaus to remove delinquency reports.

"My priority is to get my credit back," she said.

On Thursday, a Wells representative called Lancaster, saying the bank knew of a coming newspaper story and asking what she needed.

"Why couldn't they do that last year?" she wondered afterward.

Twenty years ago, Lancaster was recently divorced when she found the gray, three-bedroom house with a spacious yard where her two young boys could play basketball. She bought the house for just under $70,000 and paid off the mortgage a few years later, using an inheritance from her mother. In 2004, she took a 10-year mortgage at 5.5 percent to pay for windows, a roof, carpet and other home improvements. Her monthly payments are $434, plus about $150 for taxes and insurance. She only owes about $15,000.

About four years ago, she considered buying a condo, closer to her job at the time, underwriting mortgages for Wells, in Fort Mill, S.C. A gut feeling told her to stay with the house that had felt perfect from the beginning. She's very thankful for that decision.

The notebook, where she keeps tidy records of her earnings and unemployment, indicates she has only three weeks of benefits left unless Congress provides another extension. She might search for another part-time job, while continuing the hunt for full-time work.

"I'm blessed, I realize that, to be able to make my mortgage payments on unemployment," she said. "A lot of people wish they were in the situation I'm in. They've lost jobs, homes."

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