Homeowners at a loss

Gregory Lemke lost his second job.

Stacia Lemke lost shifts at work.

Then the married couple lost a housemate — another source of income gone.

Now, the Lemkes are on the brink of an even bigger loss. They don’t know if they can keep their house, located on a quiet block in Arlington.

“Frankly, we’re scared,” Gregory Lemke said.

This is how it feels to lose a home.

The Lemkes, who home-school their two young daughters, are several months behind on their mortgage payments. And they feel like there’s not much point to even try to catch up.

Bank of America has already sent a “notice of intent to accelerate,” a letter marking their loan in default by more than $11,500. The notice is an omen; it means foreclosure is coming.

The notice was sent May 6, one day after Bank of America sent another piece of correspondence. That letter assured the family that a representative in the bank’s retention division was “actively working” on their application for loan modification.

“Please accept our apologies for any service we provided that did not meet your expectations,” said a letter signed by Robert Dover.

Gregory Lemke says Bank of America isn’t his only source of mixed messages. He’s frustrated with rhetoric from Washington, D.C., where mortgage modifications are a constant talking point for the president and some members of Congress.

A year ago, the Obama administration launched a consumer-aid plan to assist those hard-hit by a recession growing worse week by week. Part of that plan was subtitled “Making Home Affordable,” a government-backed program that lets homeowners refinance their mortgage pending bank approval.

Despite the government’s efforts, a record number of foreclosures were reported in the first quarter of this year. A report released earlier this month from the Mortgage Bankers Association noted that if you combine foreclosures with mortgage delinquencies, it shows 14 percent of homebuyers are in serious financial trouble.

That’s about one in seven.

Lemke applied for a modification under the Making Home Affordable act earlier this year after he lost a second job. He and his wife work at Providence Regional Medical Center; he’s a security officer, she’s an admitting clerk also working fewer hours.

Frustration has plagued the family since applying for modification. Greg Lemke said he doesn’t believe banks are interested in helping, even after receiving government bailouts.

“They created this bubble and now they’re benefiting from it,” he said.

This week, a Bank of America representative advised him to cancel his modification application and apply for a different one that could result in lower payments. That advice came the same day The Herald called Bank of America about Lemke’s application.

Bank spokesman Rick Simon said the first application was working its way through the bank, a process that could take months.

“He’s asked us to review him for other modification programs,” he said.

Lemke said he’s skeptical about his refinancing chances. He dropped his first application after being told a bank-monitored program could decrease his payments “significantly.”

Hundreds of thousands of homeowners have sought government refuge, but the Making Home Affordable program has seen mixed reviews.

For many homeowners there have been long waits that sometimes end in rejection.

The scope of the program is vast — a single stab at stabilizing the nation’s volatile real estate market. One of the program’s more controversial features: $75 billion earmarked to help lenders lower the payments of troubled homeowners.

Earlier this month, the federal government released data saying that about 300,000 homeowners have permanently refinanced under the program. But it’s estimated that about 1.7 million households qualify for permanent aid.

In order to achieve permanent refinancing, a borrower must consistently make payments during a trial period. The number of homeowners who have defaulted on payments during their trial was estimated at around 278,000 earlier this month.

The Lemkes are considering the possibility of a short sale, selling the home for less than what they owe.

“Foreclosure might be better,” Gregory Lemke said. “But it would be a major ding on our credit rating.”

With a short sale, he’d have to move his family into a rental unit and start over.

“We’d be back at ground zero,” he said.

Read Amy Rolph’s small-business blog at www.heraldnet.com/TheStorefront. Contact her at 425-339-3029 or arolph@heraldnet.com.

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