The Wall Street Journal seeks clarification on Chase Loan Modification Answers

May 14, 2020: Two days elapsed before Chase came back to the Wall Street Journal reporter with a revised comment on my situation. In the face of the evidence I provided, Chase had little choice but to modify their intentionally misleading answer.

Per the reporter:

“Below is Chase’s latest statement re your loan. Please let me know your thoughts. Thanks. 

Chase: We modified the homeowners’ mortgage in 2008, reducing the interest rate to 6% and locking in until 2013.  The homeowner applied for another modification in 2009.  

In the summer of 2009, in March of 2010, and in May of 2010, we notified the homeowner that she did not qualify for a second modification.  We determined that modifying the loan would produce less value to the loan’s owner than foreclosing, using analysis based on the Treasury’s model.  There also a question about whether it was her primary residence.”

My hair was on fire over this misleading representation of how I’d been strung along and flat-out lied to for over thirteen months. I wanted to run screaming to the reporter but I composed myself. The Wall Street Journal was a conservative publication and the reporter had an obligation to be objective and hear all sides. I was absolutely livid but I composed a measured response:

Thank you for giving me the opportunity to respond. Regarding the statement: We modified the homeowners’ mortgage in 2008, reducing the interest rate to 6% and locking in until 2013. The Loan originated as a sub-prime pick & pay with Washington Mutual on 2/26/06. Over the next eighteen months I received countless marketing solicitations offering to “modify” my loan to a fixed rate; they all seemed to focus on me paying WaMu some lump sum in order to “fix” my interest rate.

By mid to late 2007 I actually understood my loan and the concept of “negative amortization”. I started paying the full mortgage amount each month (the principal and interest) and even made some headway on reducing the negative amortization. Once I focused on the mortgage it was evident that when the loan adjusted, the interest rate was going to jump and the full amount would increase exponentially.

The Washington Mutual solicitations continued and with each “offer” the lump sum amount to “fix” the interest rate kept dropping. By January 2008 I could see that interest rates were going up and I feared the interest rate reset. In February 2008 I folded and paid Washington Mutual $995.00 for the privilege of locking into a 5/1 LIBOR Interest Only ARM at 6.62%.

To call this streamline refinance which I paid for the privilege of getting a “modification” is disingenuous at best; my “mortgage modification” consisted of nothing more than a five-year fixed rate interest only loan with a new higher (not lower) payment. The interest rate was not reduced, indeed, it increased.

Regarding the statement: The homeowner applied for another modification in 2009. This is correct; I initiated a modification request on 2/24/09 and was denied on 8/25/09 because: “Your property equity exceeds our program guidelines.”

Regarding the statement: In the summer of 2009, in March of 2010, and in May of 2010, we notified the homeowner that she did not qualify for a second modification. We determined that modifying the loan would produce less value to the loan’s owner than foreclosing, using analysis based on the Treasury’s model. I stand by my original comments: That is not correct. I have two written letters from Chase, which I have shared with you.

To reiterate: The first denial, dated August 25, 2009, states in one sentence: “Your property equity exceeds our program guidelines.” There is no reference to the Treasury’s model as a reason for denial; nor is there reference to a residency issue. The way Chase has worded this new response is disingenuous at best.  

The second written communication dated March 5, 2010 states “We are unable to offer you a Home Affordable Modification because we are unable to verify that you do live in the property as your primary residence”. There is no reference to the Treasury’s model as a reason for denial; regarding the residency issue, Chase has three years of Federal Income tax returns at the address (I can provide five years worth) & five years of voting records. Chase confirmed my residency was not an issue and reopened the case (which is why they kept working on it and allegedly generated another denial in May 2010).

Regarding: the May 2010 denial Chase references. As previously noted, I have received no written communication of this and know only from a call I placed yesterday (5/13/10) that, per Rafael in Loss Mitigation at Chase, the modification was denied on 5/4/10. It is again disingenuous at best to state Chase notified the homeowner, as, without your intercession, I would STILL have no knowledge of this denial; I waited again for the mailman today before responding and there is nothing from Chase.

Regarding the statement: We determined that modifying the loan would produce less value to the loan’s owner than foreclosing, using analysis based on the Treasury’s model. This has not been communicated to the homeowner in writing at any time. I am aware of this ONLY through your email asking for a comment on Chase’s initial response and subsequently through the above referenced Springboard conference call of 5/13/10. Also, I am not certain but I believe the Treasury’s model applies to HAMP modifications, and was we know, I have never qualified for a HAMP modification.  

Finally, I stand by my statement submitted 5/14/10: The opaque banking procedures practiced by Chase do not help the homeowner, they help only the investors. 

If I knew back in February 2009, or even August 2009, what I know today — that the investors behind my loan find it more profitable to foreclose (negative net present value) than to work with me on a modification — I could have made an informed decision. I would have taken the hit and drained my IRA to bring the loan down to a smaller amount and refinanced while my credit record was excellent. At this point, my savings are depleted and my credit record is distressed; even if I reduce the loan amount, no lender will refinance.