Loan negotiation proves fruitless

Call it a crusade. Kalispell Realtor Paul Heidegger is fed up with how homeowners in foreclosure are being treated, and he wants to get the word out so something can be done to fix the system.

One case particularly angers him. It began Dec. 1, 2011, when one of his team members knocked on Molly Hill’s home in Kalispell to offer their help in handling her foreclosure. But Hill didn’t know she was facing foreclosure.

“This was the first time we had encountered someone who didn’t know their home was getting foreclosed on, and the shock was brutal and obvious,” Heidegger said.

Hill and her husband paid $39,000 for their three-bedroom, two-story home in 1986. They refinanced it for $50,000 in 1993, and the last appraisal came in about $100,000, she said. Over the years, as the family grew with eight children, they finished the basement and came up with six “bedrooms.”

Hill said she always paid the mortgage bills, but her husband said he would take over the payments in 2010. She learned later he didn’t make all the payments, and the couple filed for Chapter 13 bankruptcy in 2010.

“We wanted to save our home,” she said.

Following the bankruptcy, Hill’s husband again failed to make the mortgage payments after he said he would. By the time he left the family for a much younger woman in August 2011, Citi-Mortgage had petitioned to foreclose on their home.

Hill owed $30,000 and wanted to stay in her home, “like 99.8 percent of people do,” Heidegger said, so he advised her to try to get the bank to modify her loan.

“She followed our suggestion and was encouraged,” Heidegger said. “She got a caseworker and got access to the bank underwriting her loan.”

Hill continued to work on modifying her loan after she learned Citi-Mortgage planned to sell her home by auction on Feb. 10. Beginning the first of the year, she followed Heidegger’s advice and called Citi-Mortgage at least every other day to get an update. She was told that once a client gets to her stage, the sale would be canceled, but the bank couldn’t do that until 24 hours before the sale.

“Up until Feb. 9, Citi-Mortgage told her they were canceling the sale,” Heidegger said. “Then they sold the house on Feb. 10.”

Hill learned her house had been sold on Feb. 12 when the new owner showed up at her door telling her to move. A single mother with two children still at home, little money and bad credit due to her bankruptcy, Hill was also disabled and unable to work because of lupus. She temporarily moved into the basement of her daughter’s house until she could find a place to rent.

“Her story put me over the top,” Heidegger said. “This is wrong. Molly had choices.”

A short sale would have covered the $30,000 Hill owed Citi-Mortgage and any sales fees and still left Hill with some money to find a place to live and start over, Heidegger said.

“We would have gotten a lot of money for Molly and still had a good investment for the buyer,” Heidegger said.

Hill said she never heard back from the Citi-Mortgage caseworker after the sale. She did receive a form letter saying the bank was “sorry” her loan modification was turned down. The form letter provided an explanation in a different font saying the borrower had “declined” the loan offer.

“If the mortgage company had been honest, I would have gotten something out of my house,” Hill said. But looking back at all the circumstances leading up to the sale, she said, “I’m not sure what I could have done differently.”

Hill said Heidegger was very helpful, and she advises anyone facing a similar situation to seek help from a knowledgeable person. She said she found lots of advice online, sometimes with information specific to different mortgage companies.

“But beware of scams,” she said. “If they ask for money, watch out.”

Hill also contacted Sen. Jon Tester’s office and was told they will investigate her case.