Betty Bohannon had no intention of buying a house. But in 2004, she got an offer to good to pass up. Her landlord brought a loan officer to the home she'd rented for years and asked her to buy it. New Century offered her a zero down, adjustable rate mortgage for 77 thousand dollars. She'd pay $576 a month, and Bohannon says, the loan officer said she could refinance before the rate readjusted and payments went up.
Betty Bohannon: When I signed the papers he sit there and he promised. And I believed in him. Just naive.
New Century declared bankruptcy earlier this year. Bohannon's loan is now serviced by Countrywide Home Loans. Bohannon asked three lenders to refinance her loan, all turned her down. She, like thousands of other homeowners around the country, are now finding they don't qualify or can't afford to refinance out of their mortgage and now want their lender to change the terms of their loan. Bohannon wants Countrywide to change her loan to a fixed rate.
Countrywide Rep on phone: OK... on your request for modification, we just got it assigned for a review today.
Bohannon: (pause) so what does that mean?
Bohannon sits in front of a speaker phone, one of several homeowners on a conference call with a Countrywide representative. The phone call happens every weekday at 3pm as the company and housing counselors from ESOP, Empowering and Strengthening Ohio's People, race to keep more Cleveland area loans from going bad.
Countrywide Rep on phone: We won't have an update status until they start drawing the documents on it., to see if its going to work out.
Betty Bohannon: Oh. I just don't know what to say. It just seems like I'm getting the runaround here.
ESOP's Mark Seifert says lenders are starting to be more willing to change loan terms. But he has little luck with Countrywide, the nation's largest mortgage lender.
Mark Seifert: We get nothing out of these phone calls except Countrywide gets to say, 'We're talking to ESOP on a regular basis.' Well, talking and producing are two different things.
Countrywide declined to comment to WCPN. In a recent press release, Countrywide says it has done 17 thousand loan modifications across the country and plan to rewrite 25 thousand loans by year's end. Since late January, Florida's Ocwen Financial Corporation has been sending letters and making phone calls to reach Northeast Ohio customers in resetting adjustable rate mortgages. Bill Reinhart, a senior vice president at Ocwen, says in some cases, loan modifications make financial sense because foreclosure means a loss of money for everybody.
Bill Reinhart: We don't actually own the loan we service, but we handle the servicing of that loan for a fee. The investor who does own the loan, in 97 out of a 100 cases, is going to lose money if we foreclose. Certainly it's a bad outcome for the customer who loses their home and it's a bad outcome for Ocwen.
Reinhart says Ocwen grants loan modifications to borrowers who can afford them and aren't flippers looking for a break. So far in only 2% of the fixes Ocwen offers do borrowers get their loan terms changed. Moody's Investors Service recently looked at loans that readjusted earlier this year. It found that sub-prime servicers modified only 1 percent of loans. Moody's writes at that rate, it's concerned about more losses down the road as more homeowners like Bohannon decide its better for them to just let their loan go bad.
Betty Bohannon: I've just made up my mind, if they change it, I'm going to go find me a place to stay and then they can just have that house.
Bohannon says a loan modification is her last chance. Things don't look good for her. She just lost her job and penalties on her late mortgage payment are mounting. Her loan modification request with Countrywide is still pending.