After medical problems and a lost job, Edwin Garcia has struggled to stay current on his mortgage in recent years.
Behind $2,500 on his payments, the 57-year-old from Irmo, S.C., received a letter from Wells Fargo inviting him to a “Homeownership Preservation Workshop” at a Columbia hotel. Although he said he had low expectations, he departed Thursday with a loan modification.
“I’m going to dance my way out of here,” said Garcia, whose monthly payment is set to drop to $420 from $530. The past-due amount will be rolled into a new 30-year fixed-rate mortgage.
Garcia’s outcome is a bright spot for an industry under pressure to stave off a crush of foreclosures that continue to rack the U.S. economy and housing market. Like other big loan servicers, Wells Fargo has been ordered by regulators to improve its operations and is in talks with state attorneys general over a possible multibillion dollar settlement.
One step that Wells, Bank of America, Citigroup, JPMorgan Chase and other lenders are taking is to hold outreach events like the one Thursday at the Embassy Suites hotel near the Riverbanks Zoo. Banks are also opening permanent offices that give homeowners a chance to meet with bank representatives face to face.
It’s a response to complaints that lenders give customers the runaround when they contact call centers, lose paperwork and fail to send necessary materials. Wells Fargo announced its latest event after S.C. Supreme Court Chief Justice Jean Toal ordered lenders not to move forward with foreclosures until they could show they had given homeowners a meaningful opportunity to modify their loans.
While consumer advocates continue to press banks to do more for borrowers, some are skeptical of the bank-sponsored events. Diane Thompson of the National Consumer Law Center said the workshops tend to be long on promises and short on results.
“A lot of people come out. It gets people’s hopes up. It’s good PR for the banks,” Thompson said. “But the follow-through is inadequate.”
Bank resources would be better spent processing modification applications they have already received, she said. “You shouldn’t have to take a day off and show up at an event to get more promises,” she said.
Wells Fargo has made significant strides in improving assistance for struggling borrowers, said Joe Ohayon, a senior vice president responsible for the bank’s workshops. Since January 2009, Wells has added 10,000 employees to work with troubled borrowers, bringing its total to 16,000. The bank has also moved to provide customers with a single point of contact during the modification process. The Columbia event is the 12th of more than 30 planned nationwide this year, including one to be scheduled in Charlotte, N.C.
Call centers remain the primary way the bank works with homeowners, but workshops provide an option for customers who want to meet with a bank representative in person, Ohayon said. It can also speed up the process for the bank because it can be easier to make sure customers have the necessary documents.
The events are “a significant investment by the company but one certainly worth every dollar for the impact on customers and communities,” said Ohayon, who is based in Maryland. Avoiding foreclosure is best for the borrower, the bank and the loan’s investor, he added.
Nationwide, the Durham, N.C.,-based Center for Responsible Lending estimates 4.8 million mortgage holders, or one in nine, are at risk of losing their homes, based on Mortgage Bankers Association delinquency and foreclosure data. That’s below the peak of about 6 million in 2009 but far above the 1.6 million at risk at the beginning of 2007.
More than 120,000 homes are at risk in North Carolina and more than 66,000 in South Carolina, using the center’s methodology.
Nonprofits such as the Neighborhood Assistance Corporation of America and government agencies held some of the first outreach events, gathering multiple banks at one location. Wells and other banks still participate in those workshops but have also launched their own.
In Columbia, Wells invited about 1,400 people, and more than 100 registered. Walk-ins were also expected.
After workers scanned in customer documents, bank specialists talked with customers at desks draped with black curtains for privacy. About 25 percent receive a decision on the spot, Ohayon said. About two-thirds of attendees receive a work-out, with the vast majority resulting in loan modifications.
The main reason customers can’t get a decision on the spot is missing documents, Ohayon said. The bank tries to provide an answer within 15 days. If the customer doesn’t qualify for a modification, the bank will work on other solutions such as short sales to avoid foreclosure.
As of March 31, Wells said it had initiated more than 665,000 active trial or completed loan modifications since the beginning of 2009. Of the 9 million loans it currently services, about 7 percent, or about 630,000, have payments that are 60 days or more late.
Stella Adams, a longtime N.C. housing advocate, said borrowers should attend bank events but take an attorney or counselor with them.
“The consumers are not always aware of all of the possible solutions and are relying on the bank to tell them what they qualify for,” said Adams, chief executive of Durham-based S J Adams Consulting.
At the Wells Fargo event, counselors from the Family Service Center of South Carolina were on hand for any customer who wanted to talk to them about their modification or other financial issues. By noon, the two counselors had talked to a SunTrust customer who had mistakenly come to the event, but hadn’t been asked about any modifications.
The Columbia workshop was similar to a Bank of America event held in Charlotte last month. The bank said its attendees receive an on-site decision about 18 percent of the time. If not, its goal is to make a determination in 30 days.
Rick Bagley’s experience illustrates the complications that can occur.
The Rock Hill, S.C., resident didn’t take all the necessary documents to the May 13 session, but faxed them in later that night. Bagley said he had to send in the materials two more times before the bank received them, although he concedes he could have punched in a wrong number.
A Bank of America representative told him his modification is now under review.
“It’s still kind of up in the air,” Bagley said.
Source: McClatchy-Tribune Information Services.