Chasing assistance

Jude Elliott has not missed a single mortgage payment since purchasing her Cloverdale home eight years ago, even after suffering a debilitating illness that forced her to leave her job.

Now she needs help from her lender or she could lose her home.

Elliott and her partner, Joanne Hexom, have filed five different applications over the past nine months asking JPMorgan Chase to modify the terms of their mortgage and lower their monthly payments.

The answer has been the same every time: No.

That response has infuriated Elliott and countless other borrowers struggling to hold onto their homes. They wonder why banks that received billions in federal bailout money aren't doing more to help borrowers stay in their homes.

"I thought my government was doing this to help people just like me, people who have had something happen to them in life. I've met every obligation. What kind of government program is this? Who's it supposed to help?" Elliott said. "It's made me sick. I can't sleep. I can't eat."

Under the Home Affordable Modification Program, banks are paid incentives to reduce interest rates, extend mortgages, or postpone principal loan payments. Borrowers who stay current on modified loans receive incentives to lower their loan balances.

Launched in March by President Barack Obama, the program is an improvement on previous efforts that have largely failed to ease a record wave of foreclosures, housing advocates said. But despite the new mortgage incentives, foreclosure remains the most likely outcome for homeowners who fall behind on their loans.

"The subsidies haven't been enough to motivate the servicers to do right by families trying to stay in their homes. The problem continues to be that everything remains voluntary. That's not working," said Kevin Stein, associate director for the California Reinvestment Coalition, a low-income housing advocacy group in San Francisco.

100 defaults per week

In Sonoma County, lenders issued 100 default notices every week to borrowers who had fallen behind on their loans in the first half of 2009, a pace that would set a new record in the county.

While more homeowners are getting their loans reworked, banks need to speed up their work and increase the number of loan modifications, federal officials said.

Only 19 percent of nearly 3 million eligible borrowers across the country had been helped, according to a federal report covering the period from March through August.

"Our progress in implementing these programs to date has been substantial, but we recognize that much more has to be done to help homeowners," Michael Barr, assistant secretary at the U.S. Treasury Department, told a congressional panel earlier this month.

Banks contend they are accelerating efforts to help homeowners since details of the federal plan were completed. That includes adding staff and reaching out to borrowers at risk of falling behind on mortgage payments, in addition to those already delinquent. But they acknowledge the demand for help is challenging.

"The sheer volume is huge," said Tom Kelly, a Chase spokesman. "We're still on a learning curve. We know that this is stressful for customers and we're doing all we can to get it done as quickly as we can."

Chase boosted its loan counselor ranks nearly 70 percent and opened 27 offices just for handling loan modifications.

One of those sites is in Oakland, where Elliott and Hexom applied for a change in loan terms and a reduced payment.

Elliott, a school speech and language pathologist, said she suffers from a medical condition that forced her to stop working two years ago. Her disability payments are about half of what Elliott earned in her work.

Revenue sources tapped out

Draining their savings first and then taking cash advances on credit cards, Elliott and Hexom managed to stay current on their mortgage, property taxes and homeowners insurance. But those sources are now tapped out, and the Social Security payments Hexom began taking sooner than planned, together with their combined income are not enough to pay the housing costs.

"I've been trying to just keep ahead. I am finally at a point where I can't pay," Elliott said.

Anticipating the financial pinch, they applied in January to have their mortgage reworked.

Since then, the couple submitted four more applications, the latest in August, as Chase either lost paperwork or required more documents, Elliott said. Just two weeks ago, the bank required proof of Hexom's employment as a high school teacher, a document they previously submitted, Elliott said.

"It's terrible. They have put me through such emotional distress that it's made me sicker," Elliott said.

The couple will miss their first mortgage payment this month, putting them on a path to foreclosure unless they can find a way to bring the loan current, modify the mortgage or sell their two-bedroom house along the Russian River.

Chase officials wouldn't comment on specific reasons for the lengthy review of the couple's request for a lower mortgage payment. Lost documents and incomplete applications slow down the process.

"We're in a back-and-forth tug of war to try to complete a package," Kelly said.

Couple disputes Chase claim

The couple was denied because their total income is too high, according to Chase officials. But Elliott said they dispute the calculation and will not give up their fight to obtain a lower mortgage payment.

That Chase still denied their request after months of repeatedly submitting letters and documents reflects poorly on the bank's ability to help borrowers who pay mortgages on time and now are in financial difficulty, Elliott said.

"We are the people who pay our bills and want modifications. They do everything to make it impossible," Elliott said.

Under the federal program, loans must be reworked if borrowers can afford the lower payment and if the bank will lose less money on a modification compared with foreclosing.

"So we do all we can to keep families in their homes if we can come up with a reasonable alternative," Kelly said.

Chase has reworked 25 percent of eligible loans under the federal program, according to the latest Treasury Department report. The bank offered an additional 8 percent modification, but they had yet to make their first payment. Also, Chase offers to lower payments to struggling borrowers who don't fit all the federal requirements, but meet Chase guidelines, Kelly said.

The federal report indicates uneven performances by banks in reworking loans. Bank of America, for instance, has only done 15 percent of eligible loans and Wells Fargo Bank modified 25 percent.

Wells Fargo has been accelerating its use of the mortgage modification program now that the details have been finalized, said Mike Heid, co-president of Wells Fargo Home Mortgage.

"While the majority of our customers who request help are getting through to us and receiving the help they need, we know we've fallen short of our customer service goals in some cases," he said.

Banks should be doing more

Banks should be doing far more for borrowers in danger of losing their homes due to job and income losses or rising mortgage payments, Stein said. In five surveys of housing counselors, the coalition continues to find foreclosures show no sign of abating, he said.

"They're getting paid to do modifications, but they're not offering them to everyone who's qualified. Every day we can find someone who should have gotten a modification under the president's plan and didn't," Stein said. "That's a lot of money and I think we deserve better responsiveness."

To get help, borrowers too often must navigate a lengthy and frustrating process, he said.

"They could make a loan in a matter of weeks, but to fix a loan takes nine months," Stein said.

You can reach Staff Writer Michael Coit at 521-5470 or mike.coit@pressdemocrat.com.