Part I of this series, Part II, Part III.

Before I launch into today’s installment of the portrait of HAMP failure, one happy note. The online investigative outfit ProPublica has been chronicling HAMP stories as well, and Chris Hayes picked up the plight of one, Suzanna Wertheim of California, and profiled her on the Rachel Maddow Show. As a result of that exposure, her bank set her up with a loan modification. It’s amazing what a little exposure can do. So let’s get to it.

Today’s story comes from Jane Powell of Oakland, California. If you find it familiar, maybe you’ve been reading the Berkeley Daily Planet; Jane has been thoroughly documenting her travails with HAMP in a series of articles there which began back in May. She also offered a Cliff’s Notes version here at FDL.

Let me try and boil it down as best I can. Jane, an author of six books and a home restoration consultant, purchased a 1905 Jesse Matteson Arts and Crafts home in Oakland, “an important historic house that I pretty much waited my whole life to own,” for $495,000 back in 2002. She gave a 20% down payment and then refinanced into a fixed-rate loan in 2006 for 6.375%. The house’s approximate value today, according to a search on Zillow.com, is $309,000. Jane also took out a $146,000 home equity line of credit, mainly to pay health insurance that costs upwards of $17,000 a year.

In 2008, the economy crashed, and Jane’s business went south, with her income basically cut in half. She took a part-time job in retail, rented out parts of the spacious home, tightened her budget and basically did what you would expect of someone trying to keep things together after an economic shock. But it wasn’t enough, and she would need more help with her expenses and to keep the cherished home. So she began the loan modification process in October 2009, through NACA, the Neighborhood Assistance Corporation of America. They handled the process with her lender, GMAC. As Jane writes:

After attending the requisite introductory meeting (last October), I first had to fill out a whole bunch of forms online, detailing my income and expenses and so forth. One of the required forms is called a Hardship Affidavit, where there is a whole page of boxes to check off, various reasons why you can’t afford your mortgage payment anymore- essentially asking the lender to take pity on you because your income went down, or you had to take time off to care for your aging parents, or you got cancer, or whatever. There were (number) boxes in total, and I was able to check off nearly all of them. Then on another page you get to explain in more detail why your life totally sucks. By the end of it you feel like a contestant on the old game show Queen For A Day. (For those too young to remember, three women contestants would come on the show and relate their tale of woe- whoever was the most pathetic won a washing machine or something…)

To say the process is not set up for people with multiple income sources would be an understatement- I have writing income, royalties, consulting income, book sales, rental income (I rent out rooms in my house), and a part-time retail job.

This has characterized the frustrating process for Jane and so many others trapped in HAMP – she has had to painstakingly document every scrap of financial information she has. Profit and Loss statements given to GMAC were denied. Online forms had to be supplemented by hard copies of the same sent by fax. Collated bank statements were requested, and basically every single scrap of documentation from your entire life.

Initially, GMAC offered Jane a three-month forbearance (a suspension of payments for three months), which she turned down. They summarily rejected her application and told her to continue paying her $2600 monthly payment (presumably until she hit the default stage; this whole time she has remained current on the payments by dipping into savings). They also told her that any change in income would result in her having to restart the paperwork process all over again, jumping through the exact same hoops.

In July she attended the NACA “Save the Dream” event in Washington, DC, where borrowers and lenders meet face-to-face for a potential workout of the loan. 30,000 people went to DC for this.

There was a good deal of waiting. The GMAC representative was nice enough, but couldn’t really do anything except send my file to someone at Fannie Mae (the investor). Although the affordable 31% payment would have been $1147, she said it was unlikely they would go for it, because the 2%/ 40 year term extension wouldn’t be enough to get there, and they were unlikely to take $100K off my loan, even as a balloon payment. (Yeah, I’d be able to pay that off when I’m 84, using my non-existent Social Security, courtesy of Pete Peterson.) She said maybe they could go to 38% of my income- more like $1800. Well, it ain’t great but it’s damn sight better than the $2600 I’m paying now. She said it would take about a week to get an answer- apparently they do respond a little faster to requests that come from these events.

Of course, the initial approval would be for a temporary modification, not a permanent one. And we know how the trial payments don’t read as payments on the loan, and put the borrower into delinquency, and if the permanent mod isn’t approved, the borrower has ruined credit, owes back payments and penalties and fees, and faces foreclosure if they aren’t paid immediately.

Since the NACA event, Jane has had three more requests for paperwork. She had to supply rental agreements for all her tenants, personal letters from the tenants about their rental agreements, additional bank statements including the rental income, and updated profit and loss statements. From an email:

I’ve been working on this since last October and I haven’t even been offered a temporary modification yet. I’m well aware it will ruin my credit if I get one. My FICO score was 818 when I took out this loan, and I am not the one that crashed the economy. I got a part-time job, I cut out every expense I could think of, I’m dipping into what’s left of the money I inherited from my father to keep up the payments ($2600 a month).I used my HELOC to pay for my health insurance ($17,000 a year- thanks Obama for that lovely single payer health care…) If this were any other house I would walk away, but it’s an important historic house that I pretty much waited my whole life to own, and I’m not giving up on it. Oh, and by the way, I have cancer-apparently even that doesn’t get you any leeway from the bank.

Jane closed her story by telling me, “I spend every day fighting off despair- I’m exhausted from the whole ordeal, but I’m too stubborn to give up.”

She’s spent 10 months waiting for just a trial modification, and the banks have used every request they could for more paperwork to finalize things. And GMAC has not been sanctioned in any way for this behavior from Treasury or any federal regulator. Homeowners are falling into a terrible trap.

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.