Sadly, here's yet another in a long string of stories that continue to demonstrate the need for regulation and real oversight in the mortgage servicing industry.
The mortgage industry's primary goal is to make money and concern for borrowers is often completely missing from the scenario. With little incentive to work with borrowers, mortgage servicers do little to help homeowners work out loan modifications with the lender -and the lender appears to do little but condone these abusive and unfair practices. And here, Kevin and Rosemarie Kelly share their experience to help shed light on what borrowers are left to deal with;
Dear HSBC & Fannie Mae: Please Stop this Madness and do the Right thing!
By Guest Bloggers: Kevin and Rosemarie Kelly
After 13 years with Lexis Nexis, my position was outsourced in August of 2008. We struggled, but kept up with the mortgage payments. I had only been late about 3 times since the beginning of the loan, and not by more than one day. Our property is not "underwater", it is probably in positive equity of around $7 to $10 thousand.
By February of 2009 it was clear we couldn't sustain the payments; we knew we had to do something. I contacted HSBC over their secure message center online system. I was contacted by a rep who talked with me about my situation and said she was sending paperwork. In March, I received the financial disclosure package, filled it out and sent it back in April.
I heard nothing, and finally called in July and was told it was "in the works". On 8/13/09, I received the forbearance agreement. I read it carefully and the only thing I wasn't comfortable with was Section G:This section explicitly says that the servicer will report my loan as delinquent if not current under my loan documents. We were not comfortable with that, our credit was great, in February of 2005, our credit scores were 711 (mine) and 773 (Rose), with no delinquencies ever reported. I called HSBC and left a voice mail.
On 8/25 I received a call from David Cory, Loss Mitigation Specialist with HSBC. He was the one who sent us the forbearance agreement. I told him we would not accept HSBC reporting our loan as delinquent. We had been proactive about seeking out a modification to preserve our credit, not to ruin it. I explained that credit reports are factors in hiring managers' decision making. A bad credit report could be the difference between getting a job and not. I told him since I was having such a hard time getting work in my field, that I would probably have to start a consulting firm or other self-employment venture, and our credit was crucial to that also. I told him that if there were no alternative other than destroying our credit, we had options. I have a 401(k) account I could tap into, but obviously didn't want to. He assured me that although the first step in becoming qualified for a loan modification was to enter into a forbearance agreement, since we were not in default upon entering the agreement, that status would prevail throughout the term of the forbearance agreement. I took him at his word.
On 8/26, we signed and mailed the agreement to HSBC, along with the first partial payment. We continued to make the partial payments through November. On 11/12, we received a document from HSBC regarding servicemembers civil relief for default loans.
On 11/16, we received a notice of default including a list of programs available to us and a list of information they needed.
On 11/20, I received a notice of termination from Discover card on a zero balance, $15,000 line of credit, credit card. The same day, Rosemarie received a Bank of America Credit Line Reduction from $26,000 to $8,200, roughly $300 more than our balance with them.
On 11/24, Rosemarie received the same notice of termination from Discover Card on a zero balance, $20k plus line of credit ,credit card.
On 11/28, I left an urgent voice mail for David Cory, the first of 14 voicemails not returned since then.
On 11/30, I looked at our credit report. My credit score is now 623, while Rose's is 615. A serious delinquency had been reported by HSBC, in the amount of $3203. I called David Cory and left a voicemail. Then I called Customer Service, and spoke with Tom for 33 minutes. He treated me with condescension and attempted to make me feel foolish for not understanding Section G. I got nowhere with Tom.
On 12/01, I called Customer Service and spoke with Mark for 89 minutes. I requested that HSBC send a Universal Data Form to the credit agencies to correct the bad credit reporting. He was belligerent and treated me disrespectfully. He told me that wasn't going to happen. When I told him I lost my job, he chuckled. I advised him that Cory had verbally promised me no bad credit reports. He laughed at me and implied I was foolish because it says right there in Section G they will report me as delinquent. I told him I did feel foolish, for believing anything an HSBC rep told me, and not recording it. He told me my only recourse was to find out when that call occurred and call back to get the call records pulled. I pointed out to him that it might be easier for HSBC to check David Cory's phone records for late August rather than have me go through every cellphone call I made, since they had a database of them. He finally agreed, and we determined the call occurred on 8/25 after he looked at the comments on my loan. He promised me he would put in the request to pull the call.
On 12/9 we received a Notice of Default that said if my obligation of payment of the past due balance was not received in thirty days the entire balance of the loan would be accelerated and become due immediately.
On 12/15 I called HSBC and spoke with Javed Basha, advising him I was recording the conversation. He told me to ignore the default letters. He told me my loan wouldn't be accelerated because I was in a forbearance agreement. I asked him what the status was on the call log request; there was none. I asked he put another request in to pull it, he said he would. He confirmed that late penalties are not reported to the credit agencies. He confirmed the total amount required to bring it current. After hanging up, I immediately went to the local branch of HSBC and paid the loan current, having borrowed the money from my wife's parents. Based on what happened on the last time a representative from HSBC told me something over the phone that was different than what was on the document in my hand, I determined my only recourse was to bring the loan current or risk foreclosure and further credit destruction.
On 12/16 I received December's statement which said the loan was current. On 12/18, we received correspondence from HSBC regarding the Homeowners Affordability and Stability Plan, advising I call them to discuss. In that document, on the page with the Fannie Mae letterhead, it discussed the plan, including mentioning that there would be no fees for taking advantage of this plan. Although on Fannie Mae letterhead, this was signed by Peter Gutowski of HSBC. I had already been charged over $450 in late fees since September. On 12/20, I received an offer from HSBC for a limited term 0% credit card.
On 12/21, we received correspondence from a foreclosure relief company. On 12/30, I called HSBC to check on the status of the call log request and discuss the most recent correspondence. I was on hold for over 20 minutes. I selected the option to leave a message, and got a message saying the mailbox was full.
On 1/4/10, I received correspondence from Empire Mortgage offering a refi. That same day, I called HSBC and was on hold for over 20 minutes, and had to hang up to go to an appointment.
Between 11/28 and 1 / 4, I left 14 voice mails for David Cory. He has never returned my calls.
We are devastated. Our credit will not recover for seven years. We were lied to at worse or treated with blatant negligence at best. We feel that an organization included in $1.25 trillion dollar pledge for GSE securities purchases by the federal government intended to shore up their assets with the specific purpose of enabling new credit and retaining existing credit (by avoiding foreclosures if possible), has reneged on their obligation. By allowing HSBC to service their assets and deploy these practices (which by design result in predatory fees issued to loan bearers), FANNIE MAE has at the least committed grave negligence and is complicit in unfair trade practices perpetrated by HSBC.
We feel we can't accept anything less than the following outcomes to this debacle:
• HSBC to issue a Universal Data Form to the credit bureaus, erasing the delinquency from our credit report.
• HSBC to write off all late fees. I was never late until I entered into the forbearance agreement. No fees should be assessed.
• Forensic Audit of the mortgage and note documents. I do not suspect the loan is in violation of federal law, but the treatment we've received from HSBC warrant this.
•Since the loan is owned by Fannie Mae, current, and the property is not underwater, we hope for a loan modification refinance based on our income and economic situation, as laid out in the Making Home Affordable program, with no fees assessed by HSBC period. We feel it would be best to wrap the second mortgage into this refi.
•Possible Class Action against Fannie Mae and HSBC for negligence, unfair trade, and whatever the best legal minds can come up with to make the stakeholders and decision-makers within these organizations rethink their strategy, or at least annoy them. HSBC may feel that foreclosures are in their best interest when considering the fees assessed to process a foreclosure are far greater than their servicing fee for managing the amortization of current loans. Fannie Mae is responsible for the organization they hired to manage their loans. Especially when their actions are contradictory to the mandates laid out in the bail-out requirements set forth in the GSE mortgage backed securities program.
In conclusion, we are not going to take this lying down. We are not going to fold under the predatory and unfair trade practices of HSBC and implicitly condoned by Fannie Mae. We are going to fight back every way we can think of.
Anything anyone, including Consumer Credit Counseling can do to help us is very appreciated. We are in a very scared place and feel we need all the help we can get!
Kevin and Rosemarie Kelly