Homeowners say banks rebuffing attempts to modify mortgages

Bruce Clemmer thought he was making progress on his loan modification with Merrill Lynch, sending in payments during a nine-month trial period and working on a plan to reduce the principal balance on his Henderson home.

In October, Merrill Lynch started returning his $2,700 payments. Clemmer mailed the payments back by certified mail, only to have them returned again.

"It doesn’t make sense," said Clemmer, an educator with the school district. "They’re not willing to talk at all at this point. It sounds like they want to force me into foreclosure or short sale. They already got their money out of it."

Clemmer is one of thousands of Las Vegas homeowners who feel let down by the government’s Home Affordable Mortgage Program, or HAMP, which would have cut his mortgage by just $80 a month.

Maybe his best option is "strategic default," that is, stop paying the mortgage, like so many other homeowners across the country have done. Some people have remained in their homes for years without making a payment.

They’re flirting with financial disaster, said Paul Harris, president of Residential Capital Mortgage Corp. in Las Vegas.

A lot of people bought homes with a "blending mortgage," he said. They took out first and second mortgages to avoid a big down payment and monthly mortgage insurance premiums.

With housing depreciation, it’s safe to say that virtually 100 percent of those second mortgages have no equity value, Harris said. Many first mortgages are also "underwater," — that is, homeowners owe more on the mortgages than the homes are worth. So homeowners simply throw in the towel and walk away when the bank refuses to work with them.

They think bad times from the mortgage mess are behind them, not knowing that lenders can file deficiency judgments to reclaim losses on the loan. The first mortgage lender has six months to file.

"Most of the banks are so completely overwhelmed with foreclosures that I have not heard of one case of this happening, so the risk is not too great," Harris said. "However, the lender holding the second mortgage has six years to come after the homeowner. So these poor homeowners will walk away from their homes and destroy their credit in the process."

They may spend the next three or four years rebuilding their credit score and saving money for a down payment on their next homes. Then out of the blue they’re served with a judgment for $60,000, $80,000, $120,000 or more from a collection company that purchased the bad debt for pennies on the dollar from the original lender, Harris said.

David Brownell of Keller Williams Realty in Las Vegas said two of his clients received some unexpected good news from their lenders. At the time of their approved short sales, the first-lien holders would not waive the deficiency.

"The lender was announcing in the letter that they were not going to pursue the deficiency, that they were releasing the client from all future claims," Brownell said. "Why is this happening? Single-action state? Lender receiving economic incentive for doing so? I don’t know."

Brian Blume tried to modify terms on a $392,000 mortgage with Deutsche Bank when his commercial real estate business went south in 2008. They wouldn’t talk to him because he hadn’t missed a payment, so he stopped.

Blume offered a deed in lieu of foreclosure, but the bank wouldn’t take it. He filed for bankruptcy on the day of the trustee sale to stop the sale.

"They wouldn’t get my house appraised. They wouldn’t accept offers for a short sale," Blume said. "They filed a motion to lift the stay in court and I asked them to show me the (mortgage) note as required under Nevada law. You have a right to inspect the original note. They delivered an affidavit of the lost note that basically says, ‘Trust us. We don’t know where the note is, but we didn’t transfer it to anybody.’

"The more I looked, the more errors I found regarding the default and sale process. Assignments were made incorrectly," he said. "And I began to realize the penalties for violations of the foreclosure process could mean the note could be voidable."

The stay was lifted and Deutsche Bank was allowed to proceed with foreclosure, though Blume said he’s still fighting the case.

Betty Chan, a Realtor serving the Asian-American community, said she was proactive in working with her lender before deciding to strategically default in early 2009. She tried to modify her loan with Indy Mac for more than a year before the bank failed and was taken over by One West Bank.

"They dragged and dragged, packages after packages, like many stories that we heard every day," Chan said. "They did not give any answer. Until about late 2010, they told me to do a short sale. I never wanted to get rid of my house, but I have no choice, so I went along with them."

Instead of responding to a short sale, the bank set a foreclosure date, she said. Her attorney filed a motion for temporary injunction, which was issued when bank representatives did not show up in court.

"Believe it or not, they went ahead to foreclose anyway," Chan said. "In other words, even a court order could not stop them. They acted in such bad faith without any consideration that having a foreclosure on my record (would) not just seriously hurt me mentally, but might cause future career damages to me."

Clemmer of Henderson said he’d be willing to stay in his home for another five to seven years if Merrill Lynch would work with him on reducing the principal. The way the loan is structured now, he’ll never have equity in the home, which was purchased in 2005 for about $500,000. A home on the same block recently sold for $190,000 in a short sale.

"In the long run, if they (banks) don’t support the consumer, they’re not going to stay in business," Clemmer said. "They want to take everything off the top and not let anything trickle down."

A call to Merrill Lynch in Las Vegas "could not be completed as dialed." A spokeswoman for Bank of America, which acquired the wealth management division of Merrill Lynch, said she could not locate Clemmer’s loan.

Bank of America announced in March that it would continue to expand outreach programs to help financially distressed homeowners in the hardest-hit regions. The bank opened three new customer assistance centers in Nevada last year and two centers in Seattle and Chicago this year.

"Our efforts to keep financially distressed customers in their homes have resulted in nearly 800,000 loan modifications in the last three years, but the exceptional severity and length of this economic crisis leaves us with much more work to do," Rebecca Mairone, national mortgage outreach executive, said in a company statement.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.

Neon wraps can light up the night for advertising
Vinyl wrap company 5150 Wraps talks about neon wraps, a new technology that the company believes can boost advertising at night. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Nevada on the forefront of drone safety
Dr. Chris Walach, senior director of Nevada Institute for Autonomous Systems, talks to a reporter at NIAS's new Nevada Drone Center for Excellence of Public Safety, located inside the Switch Innevation Center in Las Vegas. K.M. Cannon Las Vegas Review-Journal @KMCannonPhoto
Motel 8 on south Strip will become site of hotel-casino
Israeli hoteliers Asher Gabay and Benny Zerah bought Motel 8 on the south Strip for $7.4 million, records show. They plan to bulldoze the property and build a hotel-casino. Motel 8 was built in the 1960s and used to be one of several roadside inns on what's now the south Strip. But it looks out of place today, dwarfed by the towering Mandalay Bay right across the street.
Project billed as one of the world's largest marijuana dispensaries plans to open Nov. 1
Planet 13 co-CEO Larry Scheffler talks about what to expect from the new marijuana dispensary, Thursday, July 19, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Oasis Biotech opens in Las Vegas
Brock Leach, chief operating officer of Oasis Biotech, discusses the new plant factory at its grand opening on July 18. (Bailey Schulz/Las Vegas Review-Journal)
UNLV Tech Park innovation building breaks ground
Construction on the first innovation building at the UNLV Tech Park is underway. (Bailey Schulz/Las Vegas Review-Journal)
Caesars Forum Meeting Center
Caesars broke ground Monday on its $375 million Caesars Forum Meeting Center (convention center) just east of the High Roller observation wheel. (Caesars Entertainment)
Technology reshapes the pawn shop industry
Devin Battersby attaches a black-colored device to the back of her iPhone and snaps several of the inside and outside of a Louis Vuitton wallet. The device, installed with artificial intelligence capabilities, analyzes the images using a patented microscopic technology. Within a few minutes, Battersby receives an answer on her app. The designer item is authentic.
Recreational marijuana has been legal in Nevada for one year
Exhale Nevada CEO Pete Findley talks about the one year anniversary of the legalization of recreational marijuana in Nevada. (K.M. Cannon/Las Vegas Review-Journal)
Young adults aren't saving for retirement
Financial advisors talk about saving trends among young adults. (Bailey Schulz/Las Vegas Review-Journal)
President Trump’s tariffs could raise costs for real estate developers, analysts say
President Donald Trump made his fortune in real estate, but by slapping tariffs on imports from close allies, developers in Las Vegas and other cities could get hit hard.
Las Vegas business and tariffs
Barry Yost, co-owner of Precision Tube Laser, LLC, places a metal pipe into the TruLaser Tube 5000 laser cutting machine on Wednesday, June 20, 2018, in Las Vegas. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Nevada Film Office Connects Businesses To Producers
The director of the Nevada Film Office discusses its revamped locations database and how it will affect local businesses. (Bailey Schulz/Las Vegas Review-Journal)
Opendoor isn't the typical house flipping company
Unlike most house flippers, the company aims to make money from transaction costs rather than from selling homes for more than their purchase price.
The Venetian gondoliers sing Italian songs
Gondolier Marciano sings a the classic Italian song "Volare" as he leads guests through the canals of The Venetian in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal)
Building In Logandale
Texas homebuilder D.R. Horton bought 43 lots in rural Logandale. (Eli Segall/Las Vegas Review-Journal)
Indoor farming in Southern Nevada
Experts discuss Nevada's indoor farming industry. (Bailey Schulz/Las Vegas Review-Journal)
Former Fontainebleau could have become a Waldorf Astoria
Months after developer Steve Witkoff bought the Fontainebleau last summer, he unveiled plans to turn the mothballed hotel into a Marriott-managed resort called The Drew. But if Richard “Boz” Bosworth’s plans didn’t fall through, the north Las Vegas Strip tower could have become a Waldorf Astoria with several floors of timeshare units. (Eli Segall/Las Vegas Review-Journal)
LVCVA CEO Rossi Ralenkotter announces plans to retire
Rossi Ralenkotter, CEO of the LVCVA, on Tuesday confirmed a Las Vegas Review-Journal report that he is preparing to retire. Richard N. Velotta/ Las Vegas Review-Journal
Cousins Maine Lobster to open inside 2 Las Vegas Smith’s stores
Cousins Maine Lobster food truck company will open inside Las Vegas’ two newest Smith’s at Skye Canyon Park Drive and U.S. Highway 95, and at Warm Springs Road and Durango Drive. Cousins currently sells outside some Las Vegas Smith’s stores and at Fremont Street and Las Vegas Boulevard. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas home prices to continue to rise, expert says
Lawrence Yun, chief economist at the National Association of Realtors, gives homebuyers a pulse on the Las Vegas housing market. (Eli Segall/Las Vegas Review-Journal)
NV Energy announces clean energy investment
The company is planning to add six solar projects in Nevada, along with the state's first major battery energy storage capacity. Bailey Schulz/Las Vegas Review-Journal
3 Mario Batali restaurants on Las Vegas Strip to close
Days after new sexual misconduct allegations were made against celebrity chef Mario Batali, his company announced Friday that it will close its three Las Vegas restaurants July 27. Employees of Carnevino Italian Steakhouse, B&B Ristorante and Otto Enoteca e Pizzeria, all located in The Venetian and Palazzo resorts, were informed of the decision Friday morning. Bastianich is scheduled to visit the restaurants Friday to speak to employees about the next two months of operation as well as how the company plans to help them transition to new positions.
Nevada has its first cybersecurity apprenticeship program
The Learning Center education company in Las Vegas has launched the first apprenticeship program for cybersecurity in Nevada. It was approved by the State Apprenticeship Council on May 15. (K.M. Cannon/Las Vegas Review-Journal)
Las Vegas union members voting to authorize the right to strike
Thousands of Las Vegas union members voting Tuesday morning to authorize the right to strike. A “yes” vote would give the union negotiating committee the power to call a strike anytime after June 1 at the resorts that fail to reach an agreement. (Todd Prince/Las Vegas Review-Journal)
Small businesses struggle to find qualified candidates
A 2018 survey found that over two-thirds of small businesses in Nevada find it somewhat to very difficult to recruit qualified candidates. Bailey Schulz/Las Vegas Review-Journal
News Headlines
Add Event
Home Front Page Footer Listing
You May Like

You May Like