WRONG
TURN
new government institution likely
seemed an attractive option for
an administration that had just
passed its stimulus bill without a
single Republican vote.
But the decision to essentially
turn over administration of the
programs to understaffed and undermotivated mortgage companies
was a tactical disaster.
Many of these companies,
known as servicers, were arms of
the same banks that were bailed
out with little vetting and few
strings attached a few months before. Under the Obama administration’s plan, homeowners would not
enjoy the same relief as the banks.
Instead, they would essentially
need to apply for a loan all over
again, with all the paperwork and
headaches that implies, and survive a “trial” period that was supposed to last three months but often dragged on for a year or more.
Sheila Bair, the former head
of the Federal Deposit Insurance
Corp., writes in a new book that
requiring each borrower to prove
that he or she could qualify for
a new loan was “stupid.” Given
the large number of loans that
needed to be reworked, as well
as the problem of ill-trained and
understaffed servicers, she said,
HUFFINGTON
11.04.12
“the cumbersome process was
doomed to failure.”
The process didn’t work for
Aracelli Davis. In 2010 her husband Ronald, who has Huntington’s Disease, tried to kill
himself in the family’s Apache
Junction, Ariz. home.
Davis had quit her job at a daycare to care for him, but after the
suicide attempt she was forced to
move him into a nursing home, she
said in an interview, her voice quavering. The $632 in disability benefits she had drawn for caring for her
husband stopped, she said. She fell
behind on her mortgage payments.
The family was then “dualtracked” by Bank of America, she
alleges in a lawsuit against the
bank. That meant that even as she
was applying for a loan modification, the bank was proceeding
with a foreclosure. In May 2011,
Davis said a woman in the bank’s
mortgage department told her
that everything was on track for
a modification. “Don’t worry, we
have your papers and will call if
we need something,” Davis said
thewoman told her.
Two days later Bank of America
sold the house at auction. Davis
had five days to pack up her two
kids and all of their possessions