Asbury Park Press

Saving Couple's Home A Sad Saga

Asbury Park Press — Sunday, June 22, 2008


It would appear to be an easy business decision for a mortgage loan officer: Allow a Manchester couple facing foreclosure to let another lender refinance them and save the cost of kicking them out of their house.

But it took nine months for two mortgage companies, which had owned the $272,000 loan, to respond to repeated requests to approve the decision. That forced Stephanie and Paul Cannizzaro to the brink of losing their home last month.

"It's been hell," said Paul F. Cannizzaro Jr., 37.

Housing advocates complain that many homeowners, delinquent on their mortgages, have had similar experiences with mortgage companies. Some troubled homeowners are foreclosed on even if they could maintain loans on better terms, advocates say.

Federal officials and industry leaders have continued to urge delinquent homeowners to call their lenders to help work through their problems, but many homeowners and housing advocates have said that getting a lender to speak with them is next to impossible.

U.S. Treasury officials last week, however, announced a new agreement with 27 mortgage lenders that they say will streamline new loan terms or refinancings.

Under the agreement with the Hope Now Alliance – a group made up of lending companies and consumer advocates – participating lenders must answer inquiries by borrowers or housing counselors within 45 days, provide new telephone hotlines, and contact homeowners who are at risk of falling into foreclosure.

Phyllis Salowe-Kaye, executive director of the consumers' group New Jersey Citizen Action, said loan counselors at the nonprofit have waited 13 weeks to hear back from mortgage companies before they could help troubled borrowers. She said the new federal agreements, and other efforts, were needed to clear the desks.

"We're hoping to bypass all this garbage so we can get to someone and then get an answer back," Salowe-Kaye said. "Our experience is that it's been an incredibly difficult process."

Salowe-Kaye said half of the hundreds of borrowers whom the Newark-based Citizen Action attempts to assist end up with a resolution, even if it means they surrender the deed to their house. But the other half of the borrowers languish, sometimes leaving a house before lenders respond, she said.

The Cannizzaros' situation illustrates how the complexity of today's mortgage market has made dealing with lenders a bureaucratic house of horrors.

The Cannizzaros were featured in an Asbury Park Press story in August when they first faced the prospect of not making the payments on their adjustable-rate loan, which started with an 11.3 percent interest rate. Payments came to $2,900 a month.

The loan had been made in January 2007 by New Century Mortgage Company, which specialized in loans to borrowers with weak credit. New Century is now in bankruptcy.

The Cannizzaros claimed the company initially promised them a loan with a lower interest rate, with monthly payments of $1,900, and had sent them paperwork for such a loan.

Then at the closing, the Cannizzaros contended, a representative had them hurriedly sign another set of loan documents that specified a higher interest rate even as the representative told them the documents were the same as they had received previously in the mail.

After their story appeared, First Financial Federal Credit Union of Wall offered to refinance the Cannizzaros' loan with a new one from the credit union.

So much for an easy solution.

New Century had packaged the Cannizzaros' loan with other mortgages and sold them to investors. Months later, the loan was sold again. The actual owners of the Cannizzaros' loan can not be determined by either public or industry records.

Instead, the loan was managed by a mortgage servicing company, which collects payments and deals with the borrowers.

But mortgage servicing companies only make money based on the loans they service and have little incentive to keep staff available to help troubled borrowers, experts said.

"The (mortgage) servicers are not set up to do that kind of work – to manage loans in arrears and figure out what to do with them," said George McCarthy, a program officer at the Ford Foundation, a nonprofit organization based in New York City.

Both the Cannizzaros and Alice P. Stevens, a chief operating officer at First Financial Credit Union in Wall, made dozens of phone calls to both servicing companies that were in charge of the Cannizzaro loan: Everhome Mortgage of Florida and First American Loss Mitigation of California.

"They didn't respond to us," Stevens said. "We faxed them letter after letter. One would say, "We've sold it,' and the next one would say, "We don't have the file yet.' (The Cannizzaros) were in limbo. We were sending letters to anyone we could think to send them to."

Neither Everhome nor First American returned calls for comment.

Finally, with the sheriff's sale of the Cannizzaro home scheduled for May, an officer at First American called back to say he was ready to discuss a deal. But, the company wanted up to $60,000 in back payments, interest and penalties.

Stevens and the Cannizzaros balked. Then the servicing company accepted the deal after an appraisal.

Stevens said she was shocked at the delay.

"If someone had told me this sort of thing went on, I wouldn't have believed it," she said.

The delays, however irritating, provided the Cannizzaros with an important reprieve. They made no mortgage payments for a year, covering a period when Paul Cannizzaro was out on disability from his job as an NJ Transit bus driver.

Stephanie L. Cannizzaro, 34, said she took a job this spring as a clerk at a Wawa, and Paul Cannizzaro returned to work this spring. On their $60,000 annual income, they believe they can afford the 40-year mortgage loan from First Financial.

Stephanie Cannizzaro said the couple, who have three children, have paid down some personal debt and are glad they fought to stay in the house.

"You have to know your rights and fight," she said. "If you walk away, you may never own a home again."

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