What To Do When A Home Loan Modification Company Keeps Losing Your Paperwork

October 31, 2010
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If your home is in danger of foreclosure, you are probably seeking a loan modification. Many Americans complain that the financial companies keep losing their paperwork. U.S. Rep. Elijah Cummings, D-Maryland, calls this a national crisis.

But there’s a way to get the company to snap to attention and move your paperwork to the front of the line.

Dave Lieber's Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong

That’s the lesson a California couple learned when they sought help from Fort Worth Star-Telegram columnist Dave Lieber, founder of WatchdogNation.com.

For this California couple, the clock is ticking.

Their home loan was sold to a Fort Worth, Texas financial services company that has been slow in responding to their requests for a loan modification. If it doesn’t go through quickly, the couple worry that they will lose their home.

What do you do when the company you’re working with to get a home loan modification doesn’t communicate on a timely basis? How do you get it to help you so you can get more affordable monthly payments and save your home?

Aside from asking Watchdog Nation for help, of course.

Glenn and Marilyn Nystrom of Auburn, Calif., tell me their mortgage payments were up to date until April. Then Glenn Nystrom was laid off. Their real estate agent told them to apply for a loan modification to lower their payments and get back on track.

They applied for a modification with their lender, but in August, that company sold their note to Residential Credit Solutions.  (Watch a Colorado TV station investigation on this company here.)

That’s when their problems began, he says.

Dave Lieber's Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong

Nystrom says he resubmitted all their paperwork to RCS, as he was told. The company wanted pay stubs, a 2009 tax return and recent bank statements.

Nystrom swears he sent the information to the company, but the company informed him it never received the information.

So Nystrom says he sent it again. He called and asked to talk to someone who could confirm its receipt, but he could never reach anyone.

His complaint mirrors some on several consumer websites.

On the www.my3cents.com blog, one Texas resident writes that RCS employees say “they’ll get back to me on that, but never does.”

A post on www.consumeraffairs.com: “I have worked my way all the way to executive VP and they ‘lost’ all the prior information I have provided.”

The company has a D-minus rating from the Better Business Bureau, with 12 listed complaints in the past year. The Texas attorney general has four complaints in the past two years.

Nystrom got aggressive, but it didn’t seem to work.

“I wrote my U.S. senator and newspapers trying to get a response to see if we can get a rise out of this company,” he says. “It looks like their mode of operation is to keep recycling paperwork — and the ultimate goal is to foreclose on your house.”

Not at all, company spokesman Dan Hilley says. The company buys troubled loans at a discount, and its goal is to help people save their homes. He says foreclosure is expensive and doesn’t bring as much profit as turning “nonperforming” loans into good ones.

Dave Lieber's Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong

Dan Hilley

“The thing to understand is that foreclosure is always the last resort here,” he says. RCS “does not want to go there. That’s not what the business is all about.”

Hilley looked into the Nystrom case and gave me a list of dates on which he says the company tried to contact the family for more information. He says the Nystroms did not respond.

“Last week, they were sent an overnight letter giving the company’s position again,” he says. “We want to work with them and get this modified. And we have not heard any response.”

Nystrom says the overnight letter never arrived. The company did call him repeatedly, but it wasn’t to help with the loan modification, he says. It was to get him to make delinquent mortgage payments.

“We’ve had multiple phone calls over the past month,” he says. “But it was nothing to do with loan modification.”

He issued a challenge to Watchdog Nation: “Get one person to call us. Give us an overnight letter we can read. We’re waiting for it.”

For a week, Dave Lieber went back and forth between the Nystroms and the company. Both sides insisted that they were doing what they were supposed to be doing.

Watchdog Nation asked the spokesman to please have someone call the Nystroms and iron out the communication problem. Finally, someone did. Nystrom was ecstatic.

“All of a sudden, magically, after four months, we have a name and a direct phone number and his direct fax number. We’ll see what happens.”

The couple did receive an offer from the company, but it alarmed them: Documents list their new interest rate as adjustable, not fixed.

So what do you do when a company won’t communicate with you?

Dave Lieber, author of Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, suggests that you find the company’s regulators and file complaints.

In it home state of Texas, Residential Credit Solutions is licensed by the Department of Savings and Mortgage Lending, which regulates the licensing, registration and regulation of the state’s mortgage industry. You can file a complaint against a state savings bank, mortgage broker or mortgage banker if you believe you have been wronged.

On the federal level, RCS is regulated by the Treasury Department. The company is also overseen by the Federal Trade Commission and the Federal Reserve Board, Hilley says. All those agencies take complaints, too.

Watchdog Nation suggests that you make a minimum of calls to a company when there is a difficulty. After a while, stop running in circles. Go to the company’s pressure point (state and federal regulators) and squeeze it.

# # #

Here’s how:

File mortgage-related complaints with the home state of the company. In this case, it’s the Texas Department of Savings and Mortgage Lending at www.sml.state.tx.us/ or call 877-276-5550.

If your lender is a national bank, contact the Office of the Comptroller of the Currency at 800-613-6743. Contact your state’s Department of Banking for further information.

Free modification and refinance services may be available through makinghomeaffordable.gov.

Report suspicious activity to your state’s Attorney General, the Federal Trade Commission at 877-382-4357 and the U.S. Department of Housing and Urban Development’s Home Ownership Preservation Foundation hotline at 1-888-995-HOPE.

# # #

Dave Lieber, The Watchdog columnist for The Fort Worth Star-Telegram, is the founder of Watchdog Nation. The new 2010 edition of his book, Dave Lieber’s Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong, is out. Revised and expanded, the book won two national book awards in 2009 for social change. Twitter @DaveLieber

Dave Lieber awarding winning book is called Dave Lieber's Watchdog Nation: Bite Back When Businesses and Scammers Do You Wrong

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3 Responses to What To Do When A Home Loan Modification Company Keeps Losing Your Paperwork

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  3. A victim in Texas on November 6, 2010 at 8:31 am

    Bank of America foreclosed on my home in September of 2010: I am a victim of “robo-signing” in Texas and I’m very grateful for the AG’s current investigation.

    After months of making trial payments and contacting the banks, Bank of America foreclosed on my home. Fannie Mae (who bought it from Bank of America) immediately started the eviction process and did not want to speak with me because they stated, “We DO NOT deal with consumers, only lenders!” For a couple of days after receiving my eviction papers on my door, I thought about “walking away for my home!” I felt that it was “me” against the “big guys” and it is, but I know that I did everything I was supposed to do – so, why should I be penalized?

    So, I’m still fighting to get my home back from Fannie Mae, who bought it from Bank of America and still waiting for my loan modification. It has been a challenging year – but I can’t give up!

    Here’s a link to my story, which our local newspaper featured:

    http://leanderledger.com/2010/11/04/foreclosure-hits-close-to-home/

    For others who are in the same situation – don’t give up! As Mr. Leiber states, “Go to the company’s pressure point (state and federal regulators) and squeeze it.” – I’ve done this and it has at least helped me stay in my home until this is all settled! Great words of advice Mr. Leiber!

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