Editor's note: A family member of the reporter was one of the people who applied for a rate modification with United Home Relief but is not a subject of this article.
NEW YORK (TheStreet) -- Failed by her lender, her government and her own better judgment, Rosemary Lundgren is now standing in the middle of a mortgage crisis that's three years running with no end in sight.
Lundgren, a 60-year-old cashier from Astoria, Queens, has been trying to get a mortgage modification for nearly half that time, spurred by news of a federal assistance program that the Obama administration unveiled in February 2009. Since then, she's received no assistance from her lender or the government, and paid a purported mortgage specialist $400 upfront for help she says she never received.
In the meantime, Lundgren's finances have become more grisly, with an out-of-work husband and tens of thousands of dollars in unexpected bills. Her mortgage payments are still the same $1,767 per month, at the same interest rate of 6.75%, as they were when the Home Affordable Modification Program was announced. Had Lundgren gotten even a 5% rate when she initiated her efforts, she would have saved $7,330 in the intervening time.
Lundgren's dilemma is illustrative of what struggling homeowners face today. Often, they must navigate a complex, haphazard system that is fraught with risk.
"If you go to a bank manager, they say it's out of their hands; you have to go through a 1-800 number," explains Lundgren. "And if you go through a 1-800 number, they say they didn't get the paperwork. Then I tell them I sent the papers in and got approved for a mortgage. And then they tell me I have to reapply with all this 'new' paperwork that I already filed."
Lundgren says she first approached her bank, HSBC (HBC) , for a lower rate in April 2009. Representatives told her it would take a significant amount of time to even begin the process because HSBC was first handling delinquent borrowers. Though Lundgren was struggling to make ends meet, she was still current on payments.
"The banks are all tied up," says Lundgren. "We went to the bank four times and they said it'd take at least six months before they could even look at it."
"HSBC has a long-standing commitment to home preservation," says Brazil.
A close family friend recommended she speak with a mortgage specialist named Jim McInerney who could offer a quick fix. He ran a small start-up called United Home Relief Corp., based in a nearby suburb of Smithtown, N.Y.
"I didn't trust the situation in a way because, you know how you're always cautious?" says Lundgren. "But I told my husband, 'Well, we're only out $400 if it doesn't work out.' And at that time, I was already desperate to get on the bandwagon."
Zennie Matematico, who works for the Ronkonkoma, N.Y.-based mortgage broker Atlantic Home Capital Corp., referred two clients to United Home Relief as well. She says they also paid upfront fees for services without receiving any assistance and were also unable to reach McInerney a few months into the process.
"Companies that charge homeowners upfront fees for loan modification services, put homeowners into contracts that don't disclose cancellation rights, or lure consumers with misleading claims violate not only our trust but the law," New York Attorney General Andrew Cuomo, a Democratic candidate for governor of New York, said in a statement last June.
"The complainant was unsuccessful in getting a loan modification," says Robert Clifford, a spokesman for the Suffolk County District Attorney's office. "
"We don't want it getting back to the bad guy that we're looking for him," says spokesman Michael Zerega.
"I'm no longer in business because of a failure of customers to pay," McInerney wrote. "We worked on these files got nothing more then
It say it has has shut down several operations, frozen millions of dollars' worth of assets, entered settlements with other large firms in which they must refund clients' fees and received a default judgment against Infinity Mitigation Services for $8.8 million.
Stephen Kodak, a spokesman for the Federal Bureau of Investigation, indicates that it's not clear where a homeowner should go to report incidents in the first place. He points out that many agencies -- including the Postal Service -- take action against mortgage fraud. The level of investigation and prosecution "all depends on the threshold of money lost," he says.
Meanwhile, she received an unexpected notice from the water company, which says she owes $12,000 in overdue payments. Apparently, the debt had been piling up for years because Lundgren didn't notice that the water bill was no longer consolidated into her mortgage payment, as it had been previously. Her husband, who just turned 65, was injured last year -- leaving one breadwinner instead of two to pay down household debt.
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