Saving Grace, but not her home

Bank of America is likely to acquire this home in a foreclosure, and sell it for less than the mortgage amount.

Grace spent part of yesterday cleaning her house.

But it was not a typical spring-cleaning.

Instead, the sweeping and scrubbing as a way of saying goodbye to her house, the first she ever owned.

“I want it to look presentable for showings,” Grace said. “Plus, it was the right thing to do.”

Foreclosure sale looms

Grace, 43 and single, who spoke openly to me on the condition I not use her last name, is losing her home in a foreclosure, after months of unsuccessfully trying to modify her loan It’s currently on the market as a short-sale, listed  for about 36 percent less than she paid for it less than two years ago. A short sale is when a lender agrees to make less than the amount of the mortgage.

Grace wishes it wasn’t so.

“I love my house. I love my neighborhood. I love my neighbors,” Grace said.

Grace moved to Denver from the Carbondale area in 2008. Even though she did not have a job at the time, she was able to buy the cute little, one-bedroom, one-bath home in the Sunnyside neighborhood in northwest Denver for about $128,000. Anyone who has paid any attention to the stricter loan underwriting, knows that would not happen today.

But she soon found a job in the non-profit sector, where she had worked for the past 20 years.

Almost as quickly, she was laid off.

Job loss root of problem

She told her lender, Countrywide, that she would likely have problems paying her mortgage. She  expected to get back on her feet quickly.

“Never did I imagine that I would be out of work for eight months,” she said. “I probably sent out 400 resumes and had maybe five interviews.”

As she fell farther behind on her mortgage payments, she called the Colorado Foreclosure Hotline, 1-877-601-HOPE. The hotline put her in touch with a HUD counselor at NEWSED Community Development.

“I met with a lady at NEWSED,” Grace said. “She had me together my information on income and taxes and bank statements. I was calling her every week or so, because I was unable to get a hold of anyone at Countrywide,” which had been bought by Bank of America. “Finally, she stopped calling me back. But I don’t blame her. She was over-loaded with cases similar to mine.”

After she found work, she was four months behind on her mortgage. But there was a ray of hope. She was told by Bank of America that she might qualify through the Obama Administration’s Home Affordable Modification Program, or HAMP.

Through February, 2,613 households in Colorado have received permanent loan modifications through HAMP, as I blogged earlier. (For that blog, please visit this link.) Another 11,707 are in active trials, the first step before getting a permanent loan modification, where interest rates in many cases are initially dropped to 2 percent, for a total of 14,320 in the state.

“I find it surprising that I’m not one of those people,” Grace said. She said based on her gross pay of $38,000 a year, she was deemed as making too much money to qualify for a HAMP modification. On a national basis, Bank of America has 261,216 loan modifications in either active trial or in a permanent status, more than any other loan servicer in the country, according to government statistics.

Grace upside down on loan

But in one respect, simply lowering her interest rate wouldn’t get her on strong financial footing, at least on paper.

Her home, which public records list as having 505 feet of finished space and a 166-square-foot unfinished basement, is being listed as a short-sale for $78,888, according to MLS.

“So even if I got a loan modification, I would still be upside down,” she said.

I asked her if she would like to be able to buy her home for $80,000.

“Yes, I would love that,” she said.

Unfortunately, that is not in the cards. Even in HAMP, lenders seldom lower the principal amount.

She said that the home had been scheduled to go to a public trustee auction sale in February and March, at which time Bank of America would likely own it, but it was delayed.

“I don’t know if it is going to auction on April 1, or it will be delayed again,” she said.

Fears eviction

But she decided with no hope of keeping her home, she didn’t want to risk a sheriff deputy knocking on her door, evicting her and tossing all of her belongings on the front lawn.

“I decided I’m just going to move out,” she said.

And that is what she did last weekend, trading her $919 monthly mortgage for $845 in rent for a slightly smaller house in Wheat Ridge. “There’s really not that much difference between my mortgage and my rent,” she said.

She knows that some people trash their homes when they leave, but she never had any intention of doing that to the little house that she still loves.

Grace said that if anyone finds themselves in her predicament, she would advise them to write down the name and time of everyone they talk to at their lender.

“And be the squeaky wheel,” she said. “I don’t believe you will get anywhere unless you are the squeaky wheel.”

Despite her ordeal, she hasn’t given up on the American Dream.

“I hope to buy another home,” she said. “I’ve been told it probably be able to qualify to buy another home in two years.”

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.