Dawn Kyle sits at her kitchen table with a pile of papers splayed out in front of her, tears in her eyes. She’s not exactly sure how she got to this point, but the papers — letters, financial documents and notes — provide a glimpse into how her situation became so dire.
There are cardboard boxes scattered throughout the first floor of Kyle’s two-story home in Glen Burnie. On a recent morning, her father helped her move some of her furniture out.
She has just weeks before she, her 70-year-old mother and her two teenage children must be out of the home they have shared for 14 years.
“We don’t have a place to go, we still can’t find one,” she said.
Kyle, 41, is nearing the end of a two-year struggle to keep her home — a fight she has now lost. It’s been a difficult process she says was filled with broken promises and false hope.
After she defaulted on her mortgage in June 2009, the former county police officer was informed by her lender, Bank of America, that she qualified for the federal Home Affordable Modification Program that would allow her to stay in her house.
Now, after nearly two years of being told that she was a prime candidate for the program, her application into the program was never fully processed due to bureaucratic roadblocks.
“We’ve done everything they told us to,” Kyle said. “I don’t know what else we could have done.”
As foreclosures have become an everyday occurrence, Kyle’s is now a common story.
Although the federal government has introduced a number of incentives for banks to modify mortgages so delinquent homeowners can stay in their homes, Kyle and others like her have discovered the process can be maddening.
Last week, the U.S. Department of the Treasury announced it was withholding millions in financial incentives for Bank of America and two other top mortgage service banks after they failed to help enough people modify their loans.
The Home Affordable Modification Program was launched in 2009 under the Obama administration’s Making Home Affordable initiative. More than 1.6 million troubled homeowners received trial modifications over the past two years.
Roughly 44 percent of those who applied, or about 700,000, have had their mortgages permanently lowered as of April. A majority of the applicants, about 843,000 homeowners, have dropped out of the program.
In Maryland, 24,000 homeowners have made it into the program, according to the latest report by the Treasury. The number of applicants who didn’t make it in wasn’t available, and neither was a break down for Anne Arundel County.
However, it remains clear that many homeowners, like Kyle, applied for the program but couldn’t save their homes because the banks just didn’t process their applications in time.
“It’s not that homeowners are not qualifying. By the time they process it, documents are out of date,” said Mary Hunter, a counselor who works with troubled homeowners for the Housing Initiative Partnership in Hyattsville.
Hunter estimated her group sees roughly 1,500 homeowners a year, many of whom qualify for the modification program. But homeowners are often forced to resubmit forms repeatedly.
“It’s at least half of the applications that we submit are not being processed in a timely manner,” Hunter said.
While Hunter is critical of the banks’ handling of applications into the program, she said the modification program is an effective tool to keep those qualified homeowners in their homes.
She said many homeowners, frustrated by the process, have given up.
“You get people who give up and lose their home when they shouldn’t have,” Hunter said.
False hope
Kyle’s financial problems started more than two years ago.
After nine years on the police force, Kyle was forced into an early retirement on partial disability pay in 2008. Injured in automobile accidents both on and off duty, she developed health problems that include pinched nerves in her lower back and loss of feeling in her both of her legs.
The injuries made it virtually impossible for her to carry her 30-pound utility belt, Kyle said.
Two years before her retirement, she refinanced her home loan at 30-year fixed rate.
With a total monthly income of around $4,000 including her mother’s Social Security check, she fell behind on her mortgage payments in spring 2009.
In June of that year, her bank declared her in default.
A year later, on June 9, 2010, she received a letter from Bank of America explaining that there might still be a way to keep her home.
The letter was one of many financial and legal documents as well as copious notes Kyle shared with the Maryland Gazette to explain her story.
“We thought, ‘Thank you, God,’” Kyle said.
Under the Home Affordable Modification program, borrowers start with lower payments on a trial basis and, if they make them, their mortgages are converted into loans with interest rates as low as 2 percent for five years.
They can repay their loans over a longer period. The median savings for those who remain in the program is about $526 per month.
With renewed hope, Kyle applied and was told by several bank employees that she was an ideal candidate.
Over the next two months, Kyle spoke frequently with bank representatives as the August 2010 auction date for her home approached. Each time, she was told that she was in good standing to receive a modification.
In the week leading up to auction, Kyle estimates that she talked to employees at Bank of America every single day. She even tracked down the lawyer handling the auction, who told her that she was still waiting for a call from the bank.
The call never came.
The auction was held Aug. 17 at the county courthouse in Annapolis. The home reverted back to Freddie Mac, one of two government backed agencies that bought and resold mortgages in the years leading up to the real estate crash to promote home ownership. It guaranteed the loans against default.
Kyle was dumbfounded when a Bank of America employee told her what happened that day.
“I couldn’t believe it. I started crying on the phone,” Kyle said.
Yet, bank officials once again gave her some hope.
She said Bank of America employees told her that they would transfer her financial records to Freddie Mac, where she would receive a “rescission” that would ultimately wipe out the foreclosure ruling.
Once the rescission was received from Freddie Mac, her application would go back into consideration for the modification program.
Under the program guidelines, a home cannot be auctioned if the homeowner is under consideration for the modification, Hunter said. While the Housing Initiative Partnership has helped reverse the sales of homes that were wrongly foreclosed upon, the process is extremely difficult.
“You have to work really hard to make sure that happens,” Hunter said. “I would recommend that someone speak to an attorney in that case.”
Final months
In the months after the sale, Kyle called Bank of America repeatedly.
She was told by employees that she was still in good standing to get a rescission and be accepted into the program, she said. But even as bank employees tried to alleviate her concerns, she became increasingly frustrated.
“They’re telling me all along that this is being done, this looks good, just call back,” Kyle said.
Already feeling burned by the bank, her police training kicked in and she began keeping notes of every phone call. She even began contacting Freddie Mac directly, where she was repeatedly told that she could not be considered for a rescission because none of her financial paperwork had been received by Bank of America.
Then in early January of this year, came the next major sign that something was amiss. A Bank of America employee told her on Jan. 4 that she would not receive a rescission, the sale was final and that she would not be able to keep her home. There was no way she could get a modification.
“One of the people I talked to said rescission was not going to be done, that she’s sorry for what other people had told me,” Kyle said.
She called back, convinced that the bank employee didn’t know what she was talking about. Once again, she was told by several different employees that she was still in good standing to receive a rescission and be accepted into the program.
Then last month came a shocker.
On May 20, Kyle received a notice signed by Deena Reynolds, a lawyer representing Freddie Mac, informing her that she must vacate the property within five days.
“It was unreal to me because I was filing everything I was told to … they led us on for over a year,” she said.
Bank of America spokesman Rick Simon said protecting those under consideration for a loan modification from foreclosure sales has been an industry-wide issue.
“At certain points in the modification process, customers are protected against the property going to foreclosure sale, although filings and other processes leading up to the sale may continue,” Simon wrote. “This ‘dual-tracking’ has been an industry-wide issue, and Bank of America is taking steps on loans we own and working with investors to minimize it.”
Simon reiterated Hunter’s sentiment that, once a foreclosure sale is made, receiving a rescission can prove to be difficult.
“Generally, a servicer can request a postponement or rescission of a foreclosure sale, but unless the servicer has delegated authority, the final decision may be up to the mortgage investor,” Simon wrote.
Fixing the process
In response to the Treasury announcement last week, Simon acknowledged the bank’s shortcomings, while pointing out successes in admitting struggling homeowners to the Home Affordable Mortgage program.
“We acknowledge improvements must be made in key areas, particularly those affecting the customer experience. We have made great progress in several key performance areas and, in the first quarter, Bank of America was responsible for one of every four modifications completed under HAMP.”
In Anne Arundel County, Arundel Community Development Services is a leading agency helping those in danger of losing their homes.
Counselors with the nonprofit, semiprivate county agency work to develop a “plan of action” that can include bankruptcy, forbearance or applying for a loan modification through the federal program.
In the last six months, Community Development Services has helped some 220 county homeowners come up with a plan of action, Executive Director Kathleen Koch said. Roughly 10 percent receive a loan modification of some kind.
Still, Koch defended the modification program as one of several tools to help struggling homeowners.
“It’s a process like any process. Do we have to call three or four times to see a piece of paper move?” Koch said.
“You’re never going to find one tool that works to stop foreclosures … The 10 percent we get into loan modifications — that’s great hope.”
The key to addressing the problem in Maryland is to open communication lines directly between homeowners and the investors that own their mortgages, Hunter said. Such relationships have been forged in other states like Pennsylvania.
“In other states Fannie Mae has created a relationship working with both housing counselors and borrowers to process applications. That would be a great solution for Maryland,” Hunter said. “From what I’ve heard, it’s a better process — more reliable, faster, accurate. A lot of people are denied simply for bureaucratic reasons.”
Lost hope
Kyle has now entered into an agreement through Freddie Mac’s “Cash for Keys” program.
Her family must be out of their home by July 11. Freddie Mac will pay Kyle $2,500.
She hopes to stay in the county so that her son can graduate from nearby Severna Park High School.
“We try to put on face for son or daughter so they don’t freak out,” Kyle said.
Still suffering from injuries to her back, she has had two spinal surgeries in recent years and a third looming.
Unable to rest under all the stress, she now sleeps only three hours a night.
Feeling betrayed, she thinks she may have a lawsuit against Bank of America, but she can’t find a lawyer who will take the case.
Kyle remembers vividly when the family moved into the home some 14 years ago, when her now 14-year-old daughter was just an infant.
“We’ve been on the edge for such a long time … and then all of a sudden, to have the rug pulled out from under us,” she said. “I believed them, they’re the bank, for God sakes.”
There are cardboard boxes scattered throughout the first floor of Kyle’s two-story home in Glen Burnie. On a recent morning, her father helped her move some of her furniture out.
She has just weeks before she, her 70-year-old mother and her two teenage children must be out of the home they have shared for 14 years.
“We don’t have a place to go, we still can’t find one,” she said.
Kyle, 41, is nearing the end of a two-year struggle to keep her home — a fight she has now lost. It’s been a difficult process she says was filled with broken promises and false hope.
After she defaulted on her mortgage in June 2009, the former county police officer was informed by her lender, Bank of America, that she qualified for the federal Home Affordable Modification Program that would allow her to stay in her house.
Now, after nearly two years of being told that she was a prime candidate for the program, her application into the program was never fully processed due to bureaucratic roadblocks.
“We’ve done everything they told us to,” Kyle said. “I don’t know what else we could have done.”
As foreclosures have become an everyday occurrence, Kyle’s is now a common story.
Although the federal government has introduced a number of incentives for banks to modify mortgages so delinquent homeowners can stay in their homes, Kyle and others like her have discovered the process can be maddening.
Last week, the U.S. Department of the Treasury announced it was withholding millions in financial incentives for Bank of America and two other top mortgage service banks after they failed to help enough people modify their loans.
The Home Affordable Modification Program was launched in 2009 under the Obama administration’s Making Home Affordable initiative. More than 1.6 million troubled homeowners received trial modifications over the past two years.
Roughly 44 percent of those who applied, or about 700,000, have had their mortgages permanently lowered as of April. A majority of the applicants, about 843,000 homeowners, have dropped out of the program.
In Maryland, 24,000 homeowners have made it into the program, according to the latest report by the Treasury. The number of applicants who didn’t make it in wasn’t available, and neither was a break down for Anne Arundel County.
However, it remains clear that many homeowners, like Kyle, applied for the program but couldn’t save their homes because the banks just didn’t process their applications in time.
“It’s not that homeowners are not qualifying. By the time they process it, documents are out of date,” said Mary Hunter, a counselor who works with troubled homeowners for the Housing Initiative Partnership in Hyattsville.
Hunter estimated her group sees roughly 1,500 homeowners a year, many of whom qualify for the modification program. But homeowners are often forced to resubmit forms repeatedly.
“It’s at least half of the applications that we submit are not being processed in a timely manner,” Hunter said.
While Hunter is critical of the banks’ handling of applications into the program, she said the modification program is an effective tool to keep those qualified homeowners in their homes.
She said many homeowners, frustrated by the process, have given up.
“You get people who give up and lose their home when they shouldn’t have,” Hunter said.
False hope
Kyle’s financial problems started more than two years ago.
After nine years on the police force, Kyle was forced into an early retirement on partial disability pay in 2008. Injured in automobile accidents both on and off duty, she developed health problems that include pinched nerves in her lower back and loss of feeling in her both of her legs.
The injuries made it virtually impossible for her to carry her 30-pound utility belt, Kyle said.
Two years before her retirement, she refinanced her home loan at 30-year fixed rate.
With a total monthly income of around $4,000 including her mother’s Social Security check, she fell behind on her mortgage payments in spring 2009.
In June of that year, her bank declared her in default.
A year later, on June 9, 2010, she received a letter from Bank of America explaining that there might still be a way to keep her home.
The letter was one of many financial and legal documents as well as copious notes Kyle shared with the Maryland Gazette to explain her story.
“We thought, ‘Thank you, God,’” Kyle said.
Under the Home Affordable Modification program, borrowers start with lower payments on a trial basis and, if they make them, their mortgages are converted into loans with interest rates as low as 2 percent for five years.
They can repay their loans over a longer period. The median savings for those who remain in the program is about $526 per month.
With renewed hope, Kyle applied and was told by several bank employees that she was an ideal candidate.
Over the next two months, Kyle spoke frequently with bank representatives as the August 2010 auction date for her home approached. Each time, she was told that she was in good standing to receive a modification.
In the week leading up to auction, Kyle estimates that she talked to employees at Bank of America every single day. She even tracked down the lawyer handling the auction, who told her that she was still waiting for a call from the bank.
The call never came.
The auction was held Aug. 17 at the county courthouse in Annapolis. The home reverted back to Freddie Mac, one of two government backed agencies that bought and resold mortgages in the years leading up to the real estate crash to promote home ownership. It guaranteed the loans against default.
Kyle was dumbfounded when a Bank of America employee told her what happened that day.
“I couldn’t believe it. I started crying on the phone,” Kyle said.
Yet, bank officials once again gave her some hope.
She said Bank of America employees told her that they would transfer her financial records to Freddie Mac, where she would receive a “rescission” that would ultimately wipe out the foreclosure ruling.
Once the rescission was received from Freddie Mac, her application would go back into consideration for the modification program.
Under the program guidelines, a home cannot be auctioned if the homeowner is under consideration for the modification, Hunter said. While the Housing Initiative Partnership has helped reverse the sales of homes that were wrongly foreclosed upon, the process is extremely difficult.
“You have to work really hard to make sure that happens,” Hunter said. “I would recommend that someone speak to an attorney in that case.”
Final months
In the months after the sale, Kyle called Bank of America repeatedly.
She was told by employees that she was still in good standing to get a rescission and be accepted into the program, she said. But even as bank employees tried to alleviate her concerns, she became increasingly frustrated.
“They’re telling me all along that this is being done, this looks good, just call back,” Kyle said.
Already feeling burned by the bank, her police training kicked in and she began keeping notes of every phone call. She even began contacting Freddie Mac directly, where she was repeatedly told that she could not be considered for a rescission because none of her financial paperwork had been received by Bank of America.
Then in early January of this year, came the next major sign that something was amiss. A Bank of America employee told her on Jan. 4 that she would not receive a rescission, the sale was final and that she would not be able to keep her home. There was no way she could get a modification.
“One of the people I talked to said rescission was not going to be done, that she’s sorry for what other people had told me,” Kyle said.
She called back, convinced that the bank employee didn’t know what she was talking about. Once again, she was told by several different employees that she was still in good standing to receive a rescission and be accepted into the program.
Then last month came a shocker.
On May 20, Kyle received a notice signed by Deena Reynolds, a lawyer representing Freddie Mac, informing her that she must vacate the property within five days.
“It was unreal to me because I was filing everything I was told to … they led us on for over a year,” she said.
Bank of America spokesman Rick Simon said protecting those under consideration for a loan modification from foreclosure sales has been an industry-wide issue.
“At certain points in the modification process, customers are protected against the property going to foreclosure sale, although filings and other processes leading up to the sale may continue,” Simon wrote. “This ‘dual-tracking’ has been an industry-wide issue, and Bank of America is taking steps on loans we own and working with investors to minimize it.”
Simon reiterated Hunter’s sentiment that, once a foreclosure sale is made, receiving a rescission can prove to be difficult.
“Generally, a servicer can request a postponement or rescission of a foreclosure sale, but unless the servicer has delegated authority, the final decision may be up to the mortgage investor,” Simon wrote.
Fixing the process
In response to the Treasury announcement last week, Simon acknowledged the bank’s shortcomings, while pointing out successes in admitting struggling homeowners to the Home Affordable Mortgage program.
“We acknowledge improvements must be made in key areas, particularly those affecting the customer experience. We have made great progress in several key performance areas and, in the first quarter, Bank of America was responsible for one of every four modifications completed under HAMP.”
In Anne Arundel County, Arundel Community Development Services is a leading agency helping those in danger of losing their homes.
Counselors with the nonprofit, semiprivate county agency work to develop a “plan of action” that can include bankruptcy, forbearance or applying for a loan modification through the federal program.
In the last six months, Community Development Services has helped some 220 county homeowners come up with a plan of action, Executive Director Kathleen Koch said. Roughly 10 percent receive a loan modification of some kind.
Still, Koch defended the modification program as one of several tools to help struggling homeowners.
“It’s a process like any process. Do we have to call three or four times to see a piece of paper move?” Koch said.
“You’re never going to find one tool that works to stop foreclosures … The 10 percent we get into loan modifications — that’s great hope.”
The key to addressing the problem in Maryland is to open communication lines directly between homeowners and the investors that own their mortgages, Hunter said. Such relationships have been forged in other states like Pennsylvania.
“In other states Fannie Mae has created a relationship working with both housing counselors and borrowers to process applications. That would be a great solution for Maryland,” Hunter said. “From what I’ve heard, it’s a better process — more reliable, faster, accurate. A lot of people are denied simply for bureaucratic reasons.”
Lost hope
Kyle has now entered into an agreement through Freddie Mac’s “Cash for Keys” program.
Her family must be out of their home by July 11. Freddie Mac will pay Kyle $2,500.
She hopes to stay in the county so that her son can graduate from nearby Severna Park High School.
“We try to put on face for son or daughter so they don’t freak out,” Kyle said.
Still suffering from injuries to her back, she has had two spinal surgeries in recent years and a third looming.
Unable to rest under all the stress, she now sleeps only three hours a night.
Feeling betrayed, she thinks she may have a lawsuit against Bank of America, but she can’t find a lawyer who will take the case.
Kyle remembers vividly when the family moved into the home some 14 years ago, when her now 14-year-old daughter was just an infant.
“We’ve been on the edge for such a long time … and then all of a sudden, to have the rug pulled out from under us,” she said. “I believed them, they’re the bank, for God sakes.”
