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Chase Home Lending – thirteen months in a bad relationship

March 24, 2010: Today marks thirteen months since the day Chase/WaMu first received my request for a loan modification. Back in February 2009 I wanted to get in front of my financial situation. Having suffered a 50% salary reduction in May 2008, I was still employed and supplementing my income with a freelance job; by using savings I could make ends meet, but unless something changed, my savings would be depleted by February 2010. 

The responsible thing to do was to speak with my lender and renegotiate the terms of the loan. No reduction in principal, just a reduction in interest rate so I could ride this out until my salary increased. Since I had no other debt of any kind, was not underwater and the Chase/WaMu loan was my primary and only mortgage (no home equity loan or second mortgage), this seemed like a reasonable request. 

Reason, however, seems to have flown out the window at JP Morgan Chase. Although JP Morgan Chase employs over 200,000 people, not one of them including Chase Bank’s Mortgage Unit CEO, David B. Lowman can provide a straight answer or a loan modification. After thirteen months I’ve drained my savings, devastated my once decent credit rating and spent countless hours chasing answers, yet I can’t get anyone at Chase to meet face-to-face to resolve a loan work-out. It’s a predatory loan and a bad relationship. The resolution to a bad relationship is to walk away and put it behind you, but I can’t. This is my home, and I just can’t walk away.

Hello Chase, I really do live here!

March 4, 2010, 10:45 am:  I called Megan who told me she had “no record of a denial” although there “may be a question as to my residency”. Megan indicated I should only call her; if I called the Customer Service line I would get conflicting information. That may be, but the “conflicting information” I gleaned was often accurate. I offered to provide additional documentation to verify my residence but she said to wait. Chase likes to wait, except when it comes to being paid. 

March 11, 2010, 8:45 am: I called to follow-up; Megan was not in so I left a voice mail regarding the BPO and my residency status. I was starting to panic; I had to be in Florida for business and nothing was happening at Chase. Would they padlock my home while I was away like Bank of America did to the lady with the parrot? 

March 15, 2010, 8:30 am: I called again to follow-up; Megan was not in so I left another voice mail reiterating the need for an answer on the BPO and my residency status. 

March 16, 2010, 8:30 am: I called Megan and she advised that my residency was an issue – Chase was “unable to verify owner occupancy”. I pointed out that I’d submitted three years of Federal Income Tax returns with this address and she agreed. Nonetheless, Chase wanted the following information:

1. Copies of last 4 months bank statements (previously submitted)
2. Copies of last 2 months pay stubs (previously submitted)
3. Copies of most recent utility bills with service address (previously submitted)
4. A P&L for 1099 “business” 

I told Megan this had all been submitted with my modification request in December 2009. I told her I didn’t own or operate a business; I am a W-2 employee who supplements my income as a 1099 employee for another company, as reflected on the tax returns.

Megan steadfastly reiterated the need for all of the information and a P&L regardless of what I said; she also noted she’d be out of the office 3/24/10 to 4/5/10 and I should get this information to her as soon as possible and call to confirm receipt. 

I faxed items 2, 3 & 4; putting my 1099 earnings in a P&L format to satisfy her request. I also took it upon myself to obtain and fax my Cape May County, NJ Voter’s Record indicating my residency since 2005. As I was in Florida on business, I couldn’t access my checking statements but told Megan I would provide them by Saturday 3/20/10 when I returned home.   

A word about voting. I vote, and not just in the “big” elections but all the elections, and care as much, maybe more, about the school board and the sheriff as I do about who will be our next President. Because I vote I had no problem writing to my Congressman and my Senators to both ask for help and express outrage over opaque banking procedures and predatory lending practices. 

March 17, 2010, 1:00 pm: I called Megan to confirm receipt of the information. Megan reviewed the submissions and agreed the information received  (3 pages voter’s records; 5 pages P&L + two months paychecks; 3 pages owner occupied cover memo & utility bills) was in order and legible. I again confirmed that checking statements would be sent 3/20. 

March 20, 2010, 10:30 am:  I arrived home to find a denial letter dated 3/5/10 and postmarked 3/8/10 indicating I was denied for a loan modification as Chase was “unable to verify residence“. I immediately called Chase; Megan confirmed I had been denied but the case was reopened as my voting record satisfied “them”. Chase also wanted a contact telephone number to schedule an interior appraisal. I gave the same number I’ve provided since 2/24/09 and asked again about the BPO. Megan indicated it was a 32-page document; she tried to extract a price/value from it while I waited but after putting me on hold and speaking with a co-worker, decided she was unable to do so. Megan said the interior appraisal was important and she would be going away so the sooner I sent the checking account statements, the better. That evening I faxed:

1. Copies of last 4 months bank statements

2. A formal notice indicating my contact phone number for scheduling an interior appraisal

March 20, 2010: The mailbox held a second letter from Chase, dated March 10, 2010, from the JP Morgan Chase Home Lending Executive Office, 2201 Enterprise Drive, Florence, SC 29501.

The subject line: Issue Still Being Reviewed

The letter:

Dear Martha Wright:

I am writing in response to your correspondence we received on December 24, 2009, about a loan modification.

At this time, the matter you brought to our attention is still being reviewed. Please be assured that we will make every effort to provide you with the timeliest response possible.

Chase’s goal is to provide the highest level of quality service to each of our customers. We appreciate your business and value our relationship with you.

If you have any questions in the interim, please contact Megan Valdivia (888) 310-7995, extension 7850, Monday through Friday between 8:00 a.m. and 5:00 p.m., Eastern Time.

Sincerely,

Home Lending Executive Office

Was this in reply to my December 16, 2009 letter to Jamie Dimon, Chairman & CEO JP Morgan Chase, my January 15, 2010 letter to Jamie Dimon, or perhaps my letter to Jamie Dimon dated February 18, 2010? I had no idea, and the letter said absolutely nothing.

Chase, what’s the problem with equity?

March 3, 2010, 8:45 pm:  Keisha Hackney phoned looking for payment. She told me I was denied because I had “the equity” and that I should list my home for sale; a modification was not available for me. I should liquidate my assets and pay up; consider a short sale. I will receive a denial letter and a letter with intent to foreclose. I was denied because I have “the equity” and I “should have refinanced or pulled all the equity out.”

Ms. Hackney had the unique ability to make having equity sound like I had the clap.

I asked if Chase merely serviced the loan and she said no, “this is an asset loan in the portfolio” (interesting, because I strongly suspected this particularly predatory Washington Mutual loan had been sliced, diced, repackaged as a mortgage-backed security and sold down the river.) I said I was going to make a payment March 5 but had been told it would not be applied if it was a partial payment; she confirmed this. I said I could commit to a full payment with late fees by April 5, 2010. She told me she would note in the file I “was not able to make a commitment at this time”. I said I was making a commitment but she would not hear of it. I ended the call.

Chasing WaMu

WaMu becomes Chase!

Phoned Chase/WaMu June 5, 2009 at 9:55 am and spoke with Hank who had fond memories of vacationing on the seven-mile island of Avalon, NJ. Hank confirmed my re-submission fax was received on 6/3/09 and that the loan modification clock starts anew. Hank advised there was nothing for me to do but “be patient and pay my mortgage”. The government had changed all the programs in March and the programs change daily; his department had only been established on May 1, 2009. Hank assured me they are working on it and said it was okay to call back and check in every week.

Phoned Chase/WaMu on June 12, 2009 at 9:35 am and endured a recorded collection message informing me this was an attempt to collect a debt. Note: I had never been late nor had I missed a payment. After the message played I was put on hold for ten minutes when Kim B. picked up. Kim’s sole purpose appeared to be to transfer me and introduce me to someone who could answer my questions. I then spoke with Adam who noted I’d called before. Adam confirmed receipt of my 6/3/09 fax and advised that all paperwork was in hand, WaMu had a “complete” package. Adam said I should have an “update” by end of month; it’s taking 20-25 days for an “update”. I pressed him on what an update meant and he said deny, modify, etc.

Phoned Chase/WaMu on June 23, 2009 at 10:30 am and spoke with Brad who advised that as of 6/15/09 the loan was in the Imminent Default department and I should be calling a different number. Per Brad the loan had been assigned to Brad U. – I could see this conversation was going nowhere and asked to speak to someone in Imminent Default. I was transferred to Troy who told me the files had been “sent to Guardian to microfiche” and that should take a week. They are taking pictures of documents and basically my loan is still in the review process. There was nothing he could tell me and nothing I could do. Brad was in Loss Mitigation, now I was talking to Imminent Default and they do not share names. Troy terminated the call by hanging up on me.

Chase the WaMu Bait & Switch

Even as I signed the modification with Washington Mutual I felt niggling questions…why was the payment so high? Over $6600.00 a month is an awful lot of money, but I guess that’s what I needed to pay to clean-up the negative amortization and improve my credit rating.

And we all know your credit rating is almost as precious as your virginity – it must be kept intact.

So pay I did. I paid the February and March payment not only on time, but added in extra money towards the principal. I was making decent money in my new job and aside from this mortgage, my expenses were minimal. I could actually see the loan amount getting smaller. This was a good thing. Of course all good things come to an end, although the end was more abrupt than anything I could have imagined. On March 25, 2008, my new employers informed me they had radically underestimated the operating expenses for the business and they simply could not afford to pay me, the sole employee other than a part-time clerical person, the salary I’d been promised. Effective immediately they needed to implement a 50% salary reduction. I’d been paid for March and had thirty vacation days, so I could get paid another month at full salary but after that, as of May 2008, my salary was cut in half. Not a wage freeze or a 10% or 20% reduction, but a 50% salary reduction.

With only six months in the job I knew if I started a full-on job search people would think I’d done something wrong and that I was a job-hopper or a problem employee. Not good. I had to suck it up, at least until September 2008, when, with a full year on my resume, it wouldn’t look so bad to seek a new job. I had some non-retirement savings, about $60,000, having sold a second home, so what I could do each month was supplement my reduced earnings by dipping into the savings, thus keeping the mortgage current, continuing to reduce the principal and improving my credit rating. And it actually worked, for a while. I took on more freelance work and in order to keep everything going, rented my home again for a summer month and even took in guests while I was in residence.

In September 2008 my official job search began, and I joined the ranks of countless 50+ year-old baby boomers seeking a senior-level, high-paying job. Something else happened in September 2008:

WaMu Assets Sold to JPMorgan in Record Bank Failure  

Sept. 26, 2008 (Bloomberg) — Washington Mutual Inc. was seized by government regulators and its branches and assets sold to JPMorgan Chase & Co. in the biggest U.S. bank failure in history.

WaMu became “unsound” after customers withdrew $16.7 billion since Sept. 16, the Office of Thrift Supervision said yesterday. Branches are open today and depositors have full access to their accounts, Sheila Bair, chairman of the Federal Deposit Insurance Corp., said.

The failure of WaMu, which has $188 billion in Deposits, ratchets up pressure on lawmakers to piece together a rescue package for the nation’s financial system. The government’s inability yesterday to reach agreement on a bailout and the seizure of the biggest savings and loan sparked a sell-off of bank stocks, led by a 27 percent tumble in Wachovia Corp…

Blood Money

Things seemed okay with the Washington Mutual mortgage. I made each monthly payment on time and enjoyed the pick and pay feature because I could pick the low number, but WaMu seemed very big on direct mail solicitations. They sent a lot of stuff. I’d rigorously checked the “do not call’ box in my documents, but there didn’t seem to be a “do not mail” option. I guess they needed to be able to contact you somehow or other. As time passed the direct mail solicitations increased, sometimes with two or three offers a week arriving in the mail. I didn’t read them at first as they all seemed to focus on me paying WaMu some lump sum in order to “fix” my interest rate. The lump sum was large, over $3000.00, and that alone stopped me from reading further, plus I was busy with work and simply exhausted.

The exhaustion turned out to be more than routine fatigue. Over a twelve month time frame my hemoglobin dropped to 4.3 and I received seven blood transfusions. In retrospect I wasn’t thinking straight, but I was thinking about my credit scores and the possibility of identity theft because my scores were not great. I had no credit cards other my American Express card and after refinancing I’d barely used it; when I did, I paid in full – there was no outstanding balance. There were also no car loans, no student loans and no department store credit cards, in fact the only card I did have beside American Express was my debit card. Yet my credit scores were low and getting lower each month. It didn’t make sense. I met with a local banker to understand why my scores were so bad and he explained it to me in no uncertain terms. I was in a pick & pay loan and each month that I did not pay the full amount, my loan amount increased – I was creating and experiencing negative amortization. Even if I immediately stopped picking the small amount and starting paying the full amount, my credit score would improve very little, due to the questionable nature of the pick & pay loan. This was an eye-opener; negative amortization was a new and scary addition to my vocabulary.

That’s when I started to pay attention to the Washington Mutual direct mail solicitations.

I also started paying the full mortgage amount each month (the principal and interest) and even made some headway on chipping away at the negative amortization, but now that I was focused on the mortgage I could see that when the loan adjusted, the interest rate was going to jump and the full amount was going to increase big-time. It was already a reach to pay in full. The solicitations continued, with a diverse array of offers and incentives, but the bottom line was always the same: pay WaMu “X” amount in a lump sum for the opportunity to “fix” your interest rate before it’s too late (and the rate adjusts up).

I obsessed over the impending rate adjustment and thought about how to make more money. I picked up a freelance job in addition to my full-time job, had more yard sales, sofa surfed while renting my home for a month in the high season, baked for a local coffee shop and finally resolved my health issues, although it would take time to become truly fit again. Things were looking up and I started a new job just after Labor Day 2007. This position was with a small, new company and it paid well, at least well enough for me to make the full mortgage payments. I thought about re-financing and saw there was a penalty for anything before the 30 month mark; the interest rate adjustment loomed large yet the penalty to re-finance was prohibitive. I was stuck between a rock and a hard place.

The Washington Mutual solicitation continued, with a curious twist – the lump sum amount to “fix” the interest rate kept dropping, and was now more in the $1200 range. I called for information but deferred on a decision. Washington Mutual redoubled the direct mail efforts and started calling (with my permission) with a new sense of urgency – IF I acted before December 31, 2007, I could get in on a very special deal. I passed, but by January 2008 I could see that rates were only going up. I needed to lock in on something or this mortgage would be out of control.  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%. What the hell was I thinking? I have no idea. I remember the notary calling, offering to meet me in a Starbucks so we could sign the papers. I imagine now they would have sent a notary to the moon to get my signature. But it’s my decision, my responsibility and I own it. All done to preserve my credit rating and keep on top of things… if I only knew then what I know today.

McMansions, Hummers & Hubris

So here’s the deal about a house in Avalon – once an upper middle class, predominantly Irish-Catholic resort town populated with modest homes, station wagons and moms down for the summer with a gang of tow-headed kids taking sailing lessons and pedaling rusty bikes, at some point in the late 90s it went ostentatious, Philly-style. Older homes that once housed multiple generations and extended family were razed to build giant plastic trophy houses complete with elevators, palladium windows and more bedrooms and baths than a boutique hotel. Air conditioners hum 24/7 in the hermetically-sealed houses as late-model BMWs and high-end SUVs glide in and out of garages, the unseen inhabitants always behind glass. No one is outside except for the service people: landscapers, lawn crews, house cleaners and pool boys; the hulking monuments sit empty ten months out of twelve. So there’s little sympathy to be had when you tell someone about your home in Avalon and how you need a loan modification.

What I can say is this: I mow my own lawn, clean my own house, maintain and repair my aging wooden docks; I have an annual yard sale and go to yard sales year-round to hunt for bargains and I live for bulk trash to reuse, re-purpose and recycle.  I don’t have air conditioning, a television or a new car – the cars I do own were bought used and each has well over 100,000 miles; they’ll be driven until the wheels fall off. I’ve always had a job, usually more than one, and I’ve been gainfully employed for over 35 years; dutifully making mortgage payments for over 25 years. Where am I going with this? Not everyone who needs a loan modification bought more house than they could afford, lied on their applications or lived large. At least I didn’t.

In retrospect, what I did do was stupid, but it was done with the best of intentions. After many years working in any and every state except my home state of New Jersey, I got a job in Cape May County, ten miles from my home. The prior four years had been a struggle to make ends meet so I’d run up a little credit card debt with American Express and the rate on my existing mortgage was high and set to increase. It was the right time to consolidate and re-finance, and it was not especially easy. My mortgage broker recommended a program with Washington Mutual, a first-class, very reputable bank that didn’t grant mortgages to just anyone. Indeed, we jumped though many hoops, including writing a letter of intent regarding the purpose of the loan, the fact that I now had a great job “at home”, wished to clean up a small credit card balance, etc., etc. It was a stated income, asset-based jumbo “no-doc” loan, with an awful lot of documentation; in fact, this is when I learned the importance of copying and submitting EVERY page, even the pages that say “This page intentionally left blank”. 

After reams of paper went back and forth, one happy day the mortgage was granted and paperwork signed. My mortgage broker explained the fascinating aspect of this loan – you could “pick & pay” the amount you wished to remit each month. And yes, the interest rate would re-set once a year but that was no big deal, because after 30 months you could re-finance and the way things were going, that would be a no-brainer. The no-brainer in the room was me, a lesson learned much later.

Barn-raising

Welcome to my world. At the moment it is very small and focused on only one thing – keeping my home. It used to be a much bigger world, especially back in the 90s when finally, after working since the age of sixteen and saving virtually every penny earned, I was able to achieve my dream of having a house “down the shore”. Even that was not as neat and orderly as it sounds; as in so many stories, there were twists and turns along the way.

I wanted to buy an old house, not build one, but after searching for years, writing letters and even knocking on doors of the remaining bay front homes still rich with character and charm, it became obvious the last ones standing were much-loved and not for sale. In 1998 I bought a 60’ x 110’ plot of land in New Jersey on the seven-mile barrier island shared by Avalon & Stone Harbor, a plot on which there had never been a house. For a while I tried to move an old cottage onto the lot, but cottages were few and far between and the lot had two beautiful trees that would need to go in the face of a house, even a small cottage, being dropped on site.

My next idea was to hire an architect to re-interpret and design for me a riff on a Craftsman bungalow I’d rented for several years, a real charmer with porches and gables and knee walls. The architect and a very capable builder were hired and we were good to go – until I lost my high-paying job of eleven years. Sitting at home stewing and reading newspapers, I tried to figure out what to do next in my life. While perusing the classifieds in a local paper I saw an auction ad – it included two barns that were to be dismantled and moved in order to clear the land. I went to the auction preview toying with the notion of buying one of the barns, dismantling it and moving it to my lot on the bay. My architect and builder were called in to review and endorse this idea; instead they politely pointed out the barns were termite-ridden and if I really wanted a barn, they could build something designed to withstand salt water and bay front weather.

A barn was sketched on a cocktail napkin, turned over to the architect for engineering plans and off we went. As the house took shape, I developed a concept that evolved with the construction: somewhere there was a “big house” owned by a moderately well-to-do family living in the 50s and 60s, and as they improved the big house, the cast-offs were relegated to the barn. Things like a cast iron skirted tub from the 20s, a GE monitor-top refrigerator from the 30s and a Chambers range from the 40s. Each of these components and many more vintage features were integrated into the home, with a master carpenter on-premises for over a year. I went to San Francisco for another big job, flying home on weekends to supervise construction of my beautiful barn, leaving post-it notes and books filled with barn details and other inspiration scattered amongst the construction. The house was completed in May, 2000 to critical acclaim. It is not reflective of the McMansion style of building overtaking Avalon and Stone Harbor.

The house was featured as the cover story in the September-October 2001 issue of Coastal Living magazine. It was also featured in The Avalon Garden Club Tour of Homes in September 2001.  

In 2006, the house was included in the book Island Living by Linda Leigh Paul. Island Living was published by Universe Publishing, a Division of Rizzoli International Publications, Inc. 

In July, 2008, the house was part of the Jewels of the Island Avalon Yacht Club Auxiliary 12th Annual House Tour and Luncheon.

The footprint of my home is 19.5 ft. x 30.0 ft. The house sits on pilings 11 ft. above ground atop a 360 degree deck. The first floor features a galley kitchen, an open living/dining area and the bathroom. The second floor consists of two bedrooms.