Let me introduce you to a lovely lady I met on October 7th at #OccupyLA. She was there simply to tell her story. Like many people in this economy, she had been finding it difficult to make ends meet, so when Obama’s Loan Modification program began it seemed like a godsend. Little did she know, it would be the start rather than the end of her problems.
She duly completed all the paperwork her bank, Wells Fargo, asked her to, and was told what her reduced payments would be. She continued to pay her mortgage, but at the adjusted rate, as she’d been instructed to by Wells Fargo. She never missed a payment, and was not in arrears.
However, months later, out of the blue, she found out her application, for whatever reason, had been rejected. At this point, Wells Fargo treated her like she had been in arrears, because she’d been paying reduced payments on a mortgage that had failed to be modified. To add insult to injury, Wells Fargo then slapped her with a slew of interest charges and fees, because they in effect retroactively considered her account to be in default because of the Loan Modification decision.
Her bank then suggested she reapply, which she did – twice. Two more times, exactly the same thing happened. Following the third failed application, Wells Fargo began proceedings to repossess her home, even though she had made all her mortgage payments in exactly the way the bank had prescribed.
Turns out, the Loan Modification process is notoriously flawed and has been accused numerous times of causing foreclosures, as was the case here. Richard Gaudreau, an attorney, explains in an essay for Huffington Post exactly why the Loan Modification process fails to help troubled homeowners while lining the pockets of banks (surprise, surprise!):
The government pays mortgage servicers $1,000 for each “loan mod” application. Studies have shown though that mortgage servicers stand to make far more in fees from a foreclosure than they ever will from a loan modification request.
Obviously this kind of behavior is unconscionable. It’s hard to comprehend that a “trusted name” like Wells Fargo would want to force a loyal customer and her family out onto the street in order to make a quick buck on a few fees. But this is happening to untold numbers of people all across our nation at the hands of nearly all the major banks.
My #OccupyLA friend had done everything required of her to meet her obligations, but somehow that wasn’t enough — is that remotely fair? But these days we don’t seem to require fairness, never mind empathy and understanding, from the financial institutions in which we entrust our wealth, our security, and our futures. Clearly this was not an institution worthy of the trust this lady had been placed in it. Is it worthy of yours?
If you need to put a human face on the reasons why you’re being asked to move your money from a big bank to a community institution or credit union on November 5th — Bank Transfer Day — let my #OccupyLA friend be it.
To find a credit union in your area visit: moveyourmoneyproject.org
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