Bank evicts, then offers Boca Raton couple a loan mod

Updated: 10:34 p.m. Saturday, Dec. 4, 2010

In hours of congressional hearings last week, the nation’s banks were repeatedly condemned for dual-track loan modification systems that give hope to homeowners seeking lower monthly payments while at the same time foreclosing on their properties behind their backs.

“Unacceptable deficiencies,” is how the acting director of the Federal Housing Finance Agency put it. Failed oversight, ineffective practices and insufficient staffing were criticisms added by other top regulators and legislators.

Boca Raton resident James Strass­burger could have told lawmakers all that. He just wishes they were listening this year when One West Bank sold his home at foreclosure auction during negotiations for a loan modification.

Strassburger, 56, and his wife, Deborah, 58, who lived in their home for 19 years, were ordered out in May, holding two yard sales so they could squeeze into a rented apartment.

But the real kick in the gut came in August, six months after the auction, when they got a letter congratulating them for earning a trial loan modification. It was followed by a note alerting them to a hearing­ that would essentially give them their home back. Their mortgage payment was due Sept. 1, the letter reminded.

“This all could have been avoided. We could have been living our lives,” said James Strass­burger, a former business owner whose flooring jobs dropped off when the economy fell. “It’s not a good feeling. I don’t like seeing my wife cry.”

One West Bank said it was looking into the Strass­burgers’ case, but did not respond to a request for comment for this story.

Washington lawmakers began paying earnest attention to the nation’s foreclosure nightmare this fall as banks pulled back on their home repossessions after acknowledging assembly line-like processing systems had potentially illegal shortcomings.

Hastily prepared court documents, as well as the dual-track foreclosure and loan modification process, were discussed Wednesday in a hearing of the Senate Committee on Banking, Housing and Urban Affairs, and Thursday in the House Judiciary Committee.

Federal agency heads said the loan modification concerns are not new.

The $50 billion Making Home Affordable program, announced in March 2009, was expected to help up to 4 million homeowners through 2012.

So far, the government has spent only about $600 million, with about 483,000 homeowners nationwide on permanent loan modifications. In South Florida – Palm Beach, Broward and Miami-Dade counties – only 22,175 permanent modifications had been awarded through October. Palm Beach County alone had 30,227 foreclosures filed last year and more than 16,000 through September of this year.

“Why haven’t you done more to insist on servicer performance?” asked Senate Banking Committee Chairman Christopher Dodd, D-Conn., during the hearing. “Why haven’t you done this? You’ve got the power to do this.”

Terry Edwards, an executive vice president with Fannie Mae, said the mortgage giant was trying to do it with “influence.”

Phyllis Caldwell, chief of the Treasury Department’s Homeownership Preservation Office, said an Oct. 6 letter went out to servicers “clearly reminding” them they are not to sell a foreclosed home until they have tried other options.

But banks and servicers are under only voluntary contracts with the federal loan modification program, and some representatives, such as Freddie Mac Executive Vice President Donald Bisenius, defended the dual-track system.

“Unnecessary delays in an already lengthy foreclosure process would be counterproductive,” he said in remarks prepared for Wednesday’s hearing.

It took One West Bank less than a year to get a final foreclosure judgment on the Strassburger’s $289,600 loan and repossess the home.

The couple, who refinanced to an adjustable rate mortgage in 2006, realized they were in trouble in early 2009 when their interest rate was about to climb and James Strassburger’s business tanked.

That’s when they started talking about a loan modification and were under the impression it was being negotiated when the bank was the high bidder on their house at a February 2010 auction.

When the Strassburgers protested the sale, Palm Beach County Circuit Judge Meenu Sasser ordered mediation with the bank. When no resolution was reached, the Strassburgers were forced to move out in May.

Now that the bank has given the couple a trial modification, it also requested from the court, and was awarded, an order vacating the foreclosure sale and issuance of title.

Strassburger said he was never even notified of the final order. He didn’t learn that the sale and title transfer were officially canceled until a Palm Beach Post reporter located the order that was signed Aug. 31 and recorded on Oct. 14.

The Strassburgers still live in their apartment and feel as if they are in limbo. They’re not sure what to do next. The last correspondence they received from the bank was Nov. 25, a notice that they need to pay for fire insurance. The Palm Beach County Property Appraiser still lists the bank as the owner of the home.

“The transition we’ve been through, the fighting, we’re like, ‘You’ve got to be kidding me,’ ” James Strassburger said. “It’s like we’ve lost part of ourselves because someone wasn’t doing their due diligence.”