Tom Ross/staff

06-04-2010

With the number of foreclosure filings on the rise in Routt County, a Steamboat couple, Michael and Janelle Buccino, have a cautionary tale to tell about the perils of negotiating over the telephone with large banks to restructure the debt on their home.
Michael Buccino, who owns an interior design business here, said he set out in July 2009 to restructure the interest-only debt on his 4,600-square-foot home in the Hilltop Parkway neighborhood.
After almost 11 months of convoluted negotiations with a variety of people at Bank of America, Buccino and his family have been notified that not only have they been turned down for loan modification, but they also will be foreclosed on in July for reasons they cannot fathom.
“We aren’t embarrassed about being foreclosed on because we never did anything wrong,” Buccino said. “All we ever wanted to do was move from an interest-only loan to a conventional term loan so we would have made about $8,000 of our payment to principal by the end of the year.”
The Buccino family’s problems are not with local banks or the local branches of larger banks, but with large national banks holding their paper where the people working on individual accounts sometimes seem to change as often as the weather. Those bank officials, Michael Buccino said, told him they could not qualify to have their loan modified unless they were behind on their payments and advised them to methodically pay less than they owed so they would be in arrears and qualify for the loan modification program.
Bank of America works with the federal Making Home Affordable program, which made billions of federal dollars available to help well-intentioned working people stay in their homes. However, in this case, Bank of America only was managing the loan on behalf of U.S. Bank, which holds the paper.
Among the people the Making Home Affordable program was intended to help, according to the U.S. Treasury Department, are as many as 5 million who sought to refinance their home loans to afford them lower monthly payments. The program also is intended to help people refinance homes that have lost value in the recession.
Buccino said he never was specifically aware whether Bank of America intended to access federal funds to help restructure his mortgage.
He was in an all-interest loan, he said, because he borrowed against his home in 2007, when the local economy was zooming upward, so he could buy inventory for a new furniture store he opened in conjunction with his design business.
Filings on the rise
Routt County Public Trustee Jeanne Whiddon said last week that she sees clear signs that
the foreclosure problem in the county is deepening. Already this year, her office has recorded 135 foreclosure filings, compared with 195 in all of 2009.
“I’ll be very pleased if we don’t have 300 by the end of the year,” Whiddon said. “I think it’s going to be worse next year. I don’t think we’ve bottomed out.”
According to her records, Whiddon said, the worst year for foreclosure notices ­— technically notices of election and demand, or NEDs — was 1985, when 234 were filed. During her first decade in office, she came to expect 45 filings a year.
Whiddon was quick to point out that not all NEDs result in homeowners losing their homes. Of the 195 filings in 2009, she said, 39 were withdrawn (usually because the homeowner’s default was cured), and 38 properties were returned to the lender. In every calendar year, some of the preceding year’s filings are carried forward into the new year, she added.
Realtor Ron Wendler, of Colorado Group Realty, said he thinks situations like the one the Buccinos are confronting are contributing to the number of foreclosure filings in the Steamboat Springs area.
“Everywhere I go, I hear people saying they want to refinance their loans, but they can’t unless they are three to six months behind on payments,” Wendler said. “I don’t know this for a fact, but I hear clients and other Realtors saying that people are deliberately falling behind in their payments so they can restructure their loans.”
Weeks without a phone call
Buccino emphasized that when he set out to see whether he could get his home loan modified last July, he was current on his payments.
“We were not in default or behind in any payments,” he said.
Buccino recorded notes on his dealings with Bank of America.
By July 11, he wrote, he was notified that he had taken his first step in the modification process, and on Aug. 27, 2009, he received a phone call from a man in the bank’s loss mitigation department. He was told by “Ian” that in order to qualify for loan modification, he needed to enter forbearance for 90 days, a term that implies that he would make only partial payment on his monthly loan amount, in this case, about $995 for each of three upcoming months.
On Aug. 29, 2009, he recorded in his notes: “I made the September payment as requested, as well as the October and November payments. During these three months, the only contact I had was with Ian once to fax the signed forbearance form.”
Beginning in the first week in November, he tried to call Ian on his direct line multiple times, but he never was connected to anyone in loss mitigation or to an answering machine.
Beginning in mid-November, Buccino had phone conversations with different Bank of America representatives and received conflicting advice — some said to suspend forbearance payments, others said to continue. He made all of the reduced monthly payments.
On Dec. 16, he received a letter notifying him that the loan was in default and the total due was almost $13,000. He called personnel in the Home Retention office, and he said they told him only to continue making forbearance payments.
Just after Valentine’s Day 2010, he received a notice of intent to accelerate repayment asking him to pay $17,964. But he said Bank of America’s Home Retention again advised him to continue with forbearance payments until a negotiator contacted him.
“It came as a shock on March 13 when I opened a letter from BOA stating that we were denied the modification,” Buccino wrote in his notes.
He said he contacted the bank immediately and was told that a decision had been made and he would have to reapply.
Finally, on March 25, a new bank representative advised him that he could not refinance his loan because it was in forbearance and gave him a number for the officer of the president of the bank.
Buccino said he found it odd, if not criminal, that the system would put him in forbearance and then tell him that condition ruled out modification of his loan.
By the end of March, Buc­cino and his wife were notified by a loan negotiator that in order to qualify to reapply for loan modification, they would have to make interest payments of $20,000. He consequently filed a complaint with the Colorado Attorney General’s Office and in early May was notified that the office was following up on his situation.
“On April 1, I received a foreclosure notice telling me I had to catch it all up,” Buccino said. “We could have made the payment, but we felt like we’d done nothing wrong.”
On April 7, Buccino received a phone call from someone in the bank’s Home Retention Department.
Four days later, he called the office of the president and received a positive response — a woman in the office named Misha Smith promised him the matter would get resolved within 30 days.
“She asked if I wanted to stay in my home, and I said, ‘Yes, of course.’ She said, ‘OK, let’s work it out.’”
The bank agreed to accept a payment of $8,000 by the end of May followed by monthly payments of $5,856 until January 2011 to get caught up on the loan. He asked for those terms in writing but was turned down. The Buccinos sent in a certified check for $9,500 on April 15, only to have it returned because it wasn’t sufficient to cure the default.
Since then, he has continued to have bewildering correspondence with a series of changing names at the bank.
“I’ve never gotten angry,” Buccino said. “I’ve been extremely cordial. These people are only doing their job. But come on.”
A Bank of America spokesman returned a phone call last week but said it might take several days to research the Buccinos’ files and respond.