A Foreclosure Story Cont.
ROUND 3: THE LAST STAND OF THE FECES-COVERED BEAR
I hate to throw in yet another analogy, but I will anyway: Being a young attorney taking on a corporate bank is kind of like Rocky IV, but without the talking robot, the American jingoism, Apollo Creed, and Mikhail Gorbachev suddenly appearing at the end to cheer you on.
The bank is Ivan Drago, Rocky’s nearly indestructible and relentless nemesis, who is nurtured and supported by a massive collection of trainers, helpers, and multimillion-dollar equipment.
Us lowly solo practitioners find our avatar in the aging and decrepit Rocky Balboa, who trains with limited materials, eats raw eggs, drags logs through snow-covered forests, and endures persistent belittling by the cantankerous, mildly racist hype-man Paulie (or, in my case, my parents and former law professors).
Although life is not scripted like a formulaic, feel-good movie, I secretly hoped that I could earn Wells Fargo’s respect through my sheer stubborn resilience. I wanted to inspire fear and trepidation in their fickle hearts. I yearned for them to be shocked and awed by my tenacity, much like Drago was when Balboa withstood fifteen rounds of punishment, thus prompting the now-famous utterance (preferably in a Russian accent): “He’s not human. He’s like a piece of iron.”
For me, it was the beginning of the fifteenth round. The bear was spitting out blood, sweat, and a few teeth. He drank his honey-flavored water from his water bottle one last time, disrobed, and wearily stood up from his stool. The tenacious bugger still had legs, even as his knees had finally begun to buckle. The bell rang.
I waited a week before calling the bank’s loss-mitigation department again, anticipating another spectacle of mind-numbing, head-scratching inanity and countless runarounds.
Surprisingly, the underling I reached was uncharacteristically engaging.
“Oh, we were just waiting for your profit-and-loss statements for the past three months and updated financials.”
“Really? No one informed me or my clients. What exactly do you need for their profit and loss? And didn’t we just send you all of the financials a week ago?”
“Well, since they’re self-employed, we need some proof of income and expenses for their business. And please send us their latest pay stubs and bank-account statements.”
This news was both welcoming and frustrating. Apparently Wells Fargo either really hates trees or really adores fax machines, because in my experience they repeatedly ask you for the same materials you’ve already sent.
It was encouraging, though, because the bank was now also asking for new information, and seemed intent on actually reviewing the financial statements instead of callously feeding them to their computer god, which would instantly condemn the family to foreclosure perdition.
Unfortunately, Natalie had not compiled a reliable profit-and-loss statement in months. Over the course of the week, though, we assembled an accurate three-month snapshot of the Lipkin family business. The family had–just barely–made a small profit, which would ensure they could afford reduced monthly payments to the bank.
I lined up the numbers properly in the Excel sheets and bolded the key information, placing everything in a strong Times New Roman, size 12 font so that even an elementary- school student would be able to find the “income,” “expenses,” and “profit” totals.
I topped off the package with a lengthy legal-demand letter outlining all the potential violations the bank had perpetrated with their “stated income” loan to the family, and reminded them that the house was continuing to depreciate in value and that the family would seek legal options if they were not afforded a good-faith payment plan.
Standing before the fax machine, I held in my hands what I hoped was the final loan-modification package I would have to prepare for the Lipkins. I engaged in my customary ritual: I recited a small prayer, blew it over the papers, double-checked the fax number, punched it in the machine, and sent it twice to appease my OCD.
The bear reeled against the ropes after I hit him with two uppercuts and the final knockout hook. His eyes rolled, his knees weakened, he desperately flailed against the ropes, and finally he went down, leaving a stain on the boxing ring.
The referee started the final count.
1… 2… 3… 4… 5… 6–
And, out of nowhere, unexpectedly, a week later, I received a fax from the bank.
We regret to inform you that the borrower’s application was denied on August 14, 2009 because his expenses were more than his income.
And the bear rose to his feet, smiling recklessly. I swear I heard him say, in a Russian accent: “I must break you.”
The bank’s lethal jab of incompetence made it painfully clear that billions of dollars in bailout money apparently cannot be used to purchase a five-dollar calculator.
Wells Fargo had somehow not only misread the information, but apparently created fictitious numbers out of thin air. The bank had pulled a Merlin, magically conjuring up an extra $3,000 worth of expenses for the Lipkins and inexplicably reducing their verified income, thus inaccurately showing a loss instead of a profit. I was no longer angry, depressed, upset, irritated, or frustrated. I was just confused. How was this possible? I’d clearly highlighted the total income and expenses in both the financial worksheet and the business’s profit-and-loss statements.
I just sat there and shook my head, convinced a team of supernatural ne’er-do-well jinns were intentionally screwing with my absolutely solid loan-modification package.
Alas, this was yet another humiliating scene from the reviled, unending soap opera entitled As the Bank Turns… And Screws You–Again.
Well, I was tired of being messed with by the banks, and so were my long-suffering clients. I used my last remaining morsel of strength to shift my biblical prophet anger to D-5. I laced up my gloves again and stared at the Bear. We ran toward one another at full speed. We would meet at the center of the ring and exchange our final death blows.
This would be the clash of the titans. The end game. All or nothing.
The winner goes home–literally.
I sat and furiously wrote my final legal demand letter:
There is a trustee sale date scheduled for August 25, 2009. The borrower has already submitted a viable loan-modification package that was confirmed as received. The borrower was informed that his loan modification application was denied on August 14, 2009 because his expenses exceeded his income. This conclusion is blatantly incorrect based on the information provided, which shows the client–with the financial assistance of his domestic partner–made an income that is above his current expenses. This denial, based on an inaccurate assessment of the documents, represents either gross incompetence on the part of the Wells Fargo loan-modification department or a fraudulent misrepresentation in order to deny a viable client a suitable loan modification. The borrower is now re-sending a loan modification package with all the appropriate information requested.
I sent off the new letter along with the same financial documents and waited. The foreclosure sale was only a week away.
A day before the foreclosure date, I called the bank. Would they relent and extend the foreclosure date again? Was this the end of the road for the Lipkin family? Had I been able to score a Slumdog triumph?
The robotic voice came on the line.
The atrocious elevator music soothed me.
A female underling took the call and asked the monotonous, routine questions. I answered them. I paused. I closed my eyes. I hoped for the best. I exhaled. And then I asked about my clients’ status.
“Oh, your clients have been accepted into the HAMP. The material was sent out yesterday.”
“Uh, what? Excuse me? What about the foreclosure tomorrow?”
“Oh, no, the foreclosure sale has been lifted. There’s no foreclosure date anymore. Your clients have been approved for a temporary program. As long as they can make payments of two thousand dollars for three months, they can stay in their home. And the bank will be willing to negotiate after that.”
“Wait… are you serious?” I asked, losing my professional composure.
“So, uh, there is no foreclosure?”
“Okay, thank–thank you.”
I hung up. I couldn’t believe it.
In fact, I didn’t believe it, so I called twice more and endured nearly thirty more minutes of excruciating elevator music and two more underlings, who both confirmed the news: the Lipkins’ house would not be foreclosed. President Obama’s newly minted Home Affordable Modification Program had allowed their loan to be modified at last.
I called the Lipkins up to tell them the good news.
“Okay, Carl. You want the good news or the bad news?”
“Oh, man. Bad news first. Just hit me with it.”
“Bad news: there is no foreclosure sale.”
“Wait–isn’t that the good news?”
“No. The good news is that you’ve been accepted into the HAMP for three months. As long as you make the payments, you can stay in the house. Eventually they’ll work out a long-term arrangement with you, but for now we’re safe.”
“Wajahat, I love you! I love you! Oh, man, this is great news! Thank you! This is the best news I could have gotten! Thank you!”
I told him to enjoy himself. To tell his family to relax.
“Will do, Chief!”
I turned off my ailing BlackBerry and sat back on my chair–exhausted, bewildered, relieved, and fulfilled.
A family that had been repeatedly ignored by the bank and told that nothing could be done to stop their foreclosure had just been accepted into HAMP. A family that a few months ago only had three days left before their foreclosure could now sleep peacefully in their home for a few more months, without fear of a trustee sale creeping around the corner.
The Lipkins sent their second payment in this week, thus ensuring that they’re making good on their new temporary contract with the bank. Yesterday the bank informed me that after having originally denied the loan-modification package on the Lipkins’ second loan, they had entered them into a two-year forbearance program. The family will now pay half of the original amount per month. On the principal loan, they are now paying less than 40 percent of their original amount. Overall, their monthly mortgage payment has been reduced by nearly $1,600.
The bank’s pattern of behavior signals a desire to enter into a binding long-term agreement with the Lipkins, thereby ensuring lowered monthly payments and an ability to accommodate their financial situation.
Everyone wins. The bank saves tremendous costs in not having to foreclose and ensures that it will receive regular monthly payments. The family no longer lives under the specter of impending eviction, the children are not uprooted from their schools and friends, and the Lipkins are finally on a path to reclaiming their home as their own.
And the terrified, inexperienced, snot-nosed, Pakistani-American lawyer who wears white high-tops with his clearance-rack Banana Republic sports jacket and has eight dollars in his savings account? Who survives on his mother’s food?
His five-o’clock-shadowed face is plastered with a twelve-year-old boy’s smile as he sticks out his chest and rests his foot on the belly of a shit-covered bear, temporarily defeated. And his white high tops shine without a stain.
– – – –
After an epic, brutal and exhausting 14 month fight, the shit-covered bear known as Wells Fargo has relented and agreed to a long term loan modification for the Lipkin family. A family that only had three days until eviction last July, now has a new, 40 year contract. Although the bank didn’t agree to a principal reduction–very few banks agree to a principal reduction nowadays–they extended the terms of the contract by 15 years and lowered the interest thus making the monthly payments affordable and reasonable. My clients were paying nearly $4,100 a month on a ludicrous 8.095% interest rate. Their current payment is now $2340/month with a 2% interest rate. The interest rate will cap at 4.35% on the 8th year and remain for the remainder of the contract.
THE LIPKIN FAMILY’S STORY WOULD BE DIFFERENT IF WELLS FARGO FORECLOSED TODAY.
On October 13, Governor Schwarzenegger signed SB 94, coauthored by the chairman of the California Senate banking committee, Senator Ron Calderon, and Senator Lou Correa of Anaheim. The bill prohibits anyone from accepting advance fees for working on loan modifications–meaning the Lipkins could not have legally hired Ali unless he was willing to work months without pay. The legislation is intended to prevent predatory loan modification scams from taking advantage of homeowners. But the language lumps lawyers with brokers, meaning lawyers will be unable to charge retainers. The bill is likely to reduce the supply of lawyers working on loan modifications, and thus decrease the actual number of modified loans, because lawyers can now ask for money only after their job is finished–successfully or not. This could mean months of work in the hope that at the end, a client who is by definition a credit risk will find the money to pay. SB 94 will, though, impede certain types of fraud. The law would have prevented the Lipkins’ trouble with Rodis Law Group, the lawyers the family retained before they found Wajahat. Ron Rodis was disbarred October 15, and Rodis Law Group is under Federal Trade Commission investigation.
Wajahat Ali is the author of “The Domestic Crusaders.”
Originally published in McSweeney’s SF Panorama