Tough workouts

Lenders all say they want to help mortgage borrowers stay in their homes. But when homeowners contact lenders in search of mortgage modifications, they often find getting help very difficult. Here are some stories from readers who struggled to find solutions.

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Sue Wright - Las Vegas Nev.
Sue Wright - Las Vegas Nev.
The Wright family
A few weeks after the July takeover of the insolvent IndyMac Bank by the FDIC, the agency announced a mortgage modification plan to help the bank's at-risk borrowers keep their homes.

One of the earliest homeowners to apply was real estate agent Sue Wright of Las Vegas Nev., which is one of the nation's hardest hit areas in terms of foreclosures and home-price declines. But because she was current on her mortgage payments, the bank said it couldn't help her and advised her to stop making payments for two months. She did that and called back right after her second payment was overdue.

She was given a plan with a reduced interest rate and told to make the new payments for three months and the modification would become permanent. But after doing that, she received a letter from the bank telling her the modification was off; the investors wouldn't approve it.

"It was the first time I heard the word `investors,' or that the modification needed any further approval," say says.

No specific reason was given for the reversal; it could have been any of 10 or 15 reasons listed on the rejection letter. The crazy part of the story is that the bank should be anxious to work out the mortgage for Wright and her husband, John.

They want to stay in the house; they've lived there for 15 years and, well, it's home. They're way underwater, owing about $510,000 on a property not worth much more than $350,000 right now. All they wanted was an interest rate reduction for five years. They didn't ask the bank to "cram down" their loan to the $350,000. Meanwhile the market in town is just horrid.

"Nothing is selling in Las Vegas," said Wright. "Nobody even goes to foreclosure sales anymore."

If the bank does follow through and repossesses the house, it stands to lose $200,000 or more.

"It's so unnecessary for people who are trying to work this out," said Wright.
NEXT: A.G. Chancey - Longwood Fla.
Last updated May 20 2009: 11:55 AM ET
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