I want to thank everyone who got in touch with me after I put out the call for stories about their problems with HAMP. I encourage you to keep doing so. I plan to keep telling these stories, of forgotten people who the Treasury Department sees as data points along the road to getting the banks healthier. They need to know about the carnage this has caused in the country.

Today’s story comes from Sean, who lives in Massachusetts, about an hour outside of Boston. This was not a bubble state, and Sean wasn’t underwater on the home, which he bought in 2000 for about $90,000. The last appraisal put it at $110,000, though it probably rose and fell in there somewhere.

This story is driven by unemployment. I’m going to quote Sean at length:

After being out of work for longer than I like to think about, my wife got a job last September in a local hospital. Things were going very nicely, since we were suddenly able to make payments on time for more than a month or two in a row to Wells Fargo for the first time in years. Due to some downsizing, and her being a recent hire, she suddenly found herself back out of work after only a few months. We started to fall behind on the mortgage again, and were looking around for options when we got a call from someone (I don’t remember the name, but they didn’t charge us anything for the info) about the HAMP program, and how it would enable us to keep the house, and lower our payments, based on the idea that the bank would adjust the mortgage to match the fact that we only had one income.

At the time we applied for the modification process, we had paid back up to being about three months behind on the mortgage. We got put almost immediately in a temporary program while our paperwork was being processed. While we were waiting for things to be processed, we did get an occasional automated call about falling behind, but when we called back, we were assured that things were OK, and this was basically just a formality.

This is a familiar theme of these stories, because the trial modifications are not seen as payments on the mortgage, and as far as the lender is concerned, read as missed payments. So starting in December 2009, when Sean got approved for the trial modification, he was seen as missing payments on the house. Eventually, this temporary modification got extended out to April 2010. This whole time, Sean was promised that his permanent mod would lower his payment to around 31% of income, a savings of a couple hundred dollars a month on the somewhat small mortgage (the payments were $850 a month).

Sean continues:

Near the end of February, my wife got another job, and it was when we went looking for the 2nd car we’d need to make everything work, that we found out Wells Fargo had been reporting us late on the mortgage every month that we had been in the temporary extension. As far as any of the credit rating organizations were concerned, we were now 6 months behind on our mortgage payments, and not worth extending a loan
to. Thanks to a bit of hep from my side of the family, we ended up being able to get a loan for a beat up junker that lasted about 4 months before the brake lines basically rusted apart.

Considering how long the process had taken already, and that we weren’t sure if this job would last any longer than the last one, we decided to send any new paperwork; we figured that regardless of whether the job lasted or not, sending in the paperwork would re-start the process, which would mean another 3-4 months of being reported late on our payments. And in the worst case scenario (to us) she wold lose the job after we sent in updated paperwork, and we’d get denied for the 30 or 60 days when she’d had a job.

Around the 3rd week of April, we got a letter from Wells Fargo saying that the modification hadn’t been approved. I forget the exact wording, but the reasoning amounted to not having proved to their satisfaction that she had actually been laid off of her previous job.

And oh yeah, they wanted the six thousand in back mortgage payments that we owed them in the next 30 days, unless we wanted to sign up for an in-house modification, which would enable us to pay off the loan in 6 payments, on top of the regular payments that we were going to have to make.

So not only was Wells Fargo basically threatening the family to pay up $6,000 immediately or take their in-house modification with worse terms, the five months of trial modifications blew a hole through the family’s credit rating, such that they couldn’t buy a car. And that credit rating doesn’t quickly improve.

Here’s Sean’s close to the story:

Our story takes a much happier turn than most at this point. My mother took some money out of what was supposed to have been a retirement account, and gave it to us to pay off the bank in a lump sum. The most lasting problem we have now is that when the shingles on our roof started to fall off this summer, we could not get a loan to hire a roofer to do the repair work, without having my wife’s mother put her house up as collateral. The reason? Too many missed months of mortgage payments on the credit report.

I admire Sean for looking on the bright side, because it doesn’t sound like much of one to me. His mother had to cash out a retirement account to keep him afloat, and their credit rating remains horrendous. Anything which requires more cash than they have on hand becomes extremely troublesome. And again, this is a family who made every payment they were asked to make inside the trial program, who just wanted to get some help in a time of struggle, when Sean’s wife was out of work.

Sean told me that he considers the whole process “a horrible breach of trust.” A lifelong Democrat, he says that “the worst part of all this for me is the sense of a broken promise…. this is the first time I feel like I’ve really needed something from my government, and getting screwed in a moment of need just makes it that much worse.”

It may look fine from reading balance sheets in a conference room at the Treasury Department, but at the ground level, the awfulness of this program, and what it’s doing to American conceptions of their government, really hits you.

I want to tell more of these stories. If you or someone you know has experience with the HAMP program of any kind, please contact me at david-dot-dayen-at-gmail-dot-com.