Donna Whitaker applied for a mortgage modification on April Fools' Day. The joke was on her: Her bank, JPMorgan Chase, lost her paperwork and then denied her application on May 8 because it was incomplete. She has reapplied twice and each time the bank has claimed it is missing documents that Whitaker says she sent more than once.
Now Whitaker, who provided the Huffington Post with a stack of paper backing up her story, is staring foreclosure in the face.
"I think I'll be served with some kind of papers, then there will be a note on my door saying my home has gone up for auction," Whitaker told the Huffington Post. "That's what happened to a friend of mine."
Whitaker, who is 63 and lives in Sacramento, Calif., is one of thousands of distressed homeowners who've sought help on their mortgages via the Obama administration's initiative to reduce foreclosures, the Making Home Affordable program. Only nine percent of 2.7 million eligible borrowers who'd missed two payments won modifications from the start of the program to July 29, the government reported last month. On Wednesday, the House Financial Services Committee will hold a hearing to examine the effectiveness of the program, which gives borrowers $1,000 in cash for each loan modified and another $1,000 each year for three years.
According to the Treasury Department, Chase modified 117,259 mortgages -- 20 percent of those eligible and more than most banks participating in the program. Bank of America, for instance, modified loans for 4 percent of eligible borrowers.
New data for August will be released with witness testimony on Wednesday morning.
"We've made tremendous progress in helping many homeowners," said Chase spokesman Tom Kelly. "But we know that there's more work to do and we have added staff and improved our processes to do even better."
Kelly had no comment on Whitaker's case.
Whitaker applied for a modification in April because she was running out of money and worried that she would soon be unable to make her $1,226 monthly payment. She owes $172,000 on a house most recently assessed at $131,654. She'd logged on to www.makinghomeaffordable.com and learned that she qualified for a modification because her situation met several criteria, including that her monthly mortgage payment was more than 31 percent of her gross income.
On May 28, Whitaker rounded up the required documentation a second time and filled out another application. In her hardship letter, she wrote that she's never missed a payment since she bought the house in 1992. She stopped working in May of 2007 after her youngest son committed suicide. She wrote that she was bringing in $322 in unemployment benefits on top of a monthly social security check for $1,106, and $500 a month from her older surviving son. She'd also been taking out $800 a month from her 401(k).
"I am 63 years old and love my home," she wrote. "My son that took his life spent many hours remodeling and fixing things around here. If I had to leave, it would be a great heartache. I have so many memories here."
Whitaker handed the second application to a Chase rep at a branch in Sacramento. According to Whitaker, the rep said everything appeared to be in order. Three weeks later, in June, Whitaker called the bank's 800 number and was told the file had not been reviewed. Then, in July, she was told that her application had been closed out -- but it wasn't clear whether the person on the other end of the phone line was referring to the first application or had gone ahead and closed the second one, too.
She sent an email to the employee who'd personally told her everything was in order on her second application.
"Unfortunately I am at the point where I can no longer make my payments," Whitaker wrote. She explained that her son was retiring and that her 401(k) would be depleted within two years at the current rate. "My income will realistically be around $1500.00 per month. I will be dropping my health insurance as I can no longer afford that either. I will have to pray I don't get sick until I turn 65 and get Medicare."
In response, the Chase rep said the best thing to do would be to file yet another application. So, on Aug. 1, that's what Whitaker did, by certified mail.
On Aug. 4, the Chase bureaucracy sent Whitaker a letter informing her that she was in danger of losing her home because she'd missed two monthly payments. They also sent a sympathetic note:
"You are going through tough times -- we can help," the letter said. "In fact, we believe your home loan may be eligible for a loan modification program."
Then, a few days later, Chase asked Whitaker to resubmit a statement about her current employment status. The following week, Chase asked Whitaker to resubmit a tax return. So she did. As far as Whitaker knows, her third application is still in process.
On Sept. 1, when she was officially 90 days past due, Whitaker said the debt collectors stopped calling.
"They were calling continuously several times a day," Whitaker said. She thinks it's a bad sign that the phone calls stopped. "I have a feeling I'm probably going into foreclosure now."
"I'm an honest person," she said in a phone interview on Tuesday. "I've worked all my life. I'm going to Starbucks this afternoon to follow up on a job application."