Never had Debra Town missed making a payment, she says. But when she lost her job as an accountant in December 2008, in the midst of the worst stretch of the worst economic downturn since the Depression, delinquency suddenly became a possibility. She realized she might not be able to make the mortgage payments on her home in the suburbs of Atlanta.
Soon, the airwaves buzzed with promises of relief for people in her situation, courtesy of the Obama administration's new program aimed at limiting foreclosures. In March 2009, Town called her lender, JPMorgan Chase, and asked for help.
So began a long, tangled and excruciating experience featuring waylaid documents, ceaseless calls from collection agents, and a bewildering stream of contradictory letters from Chase, she says -- some congratulating her for securing a loan modification, others threatening to foreclose on her property.
That part makes Town typical. From the beginning, the administration's anti-foreclosure efforts have been bedeviled by staggering ineptitude from mortgage companies and hollow promises from Treasury to hold the banks to account.
But one fact makes Town's case both unusual and especially troubling: She amounts to a success story. She is among those who have applied for help under the Obama plan and eventually come out with a so-called permanent loan modification--lowered payments for five years.
The Treasury Department counts more than 520,000 people who have secured permanent loan modifications under its Home Affordable Modification Program, or HAMP. Town is among those who have secured permanently lowered payments from Fannie Mae or Freddie Mac, the government-controlled mortgage companies. Since the fall of 2009, they have collectively delivered about 179,000 permanent loan modifications, according to the the Federal Housing Finance Agency.
"If I'm a success," Town said, "I feel badly for the failures."
Treasury has recently absorbed scathing criticism over its handling of an anti-foreclosure effort that was conceptually flawed at inception. The program's central piece relies on taxpayer cash incentives paid to mortgage companies that agree to lower payments for distressed homeowners. Treasury has never reckoned with the reality that its incentive payments -- $1,000, initially -- are vastly outweighed by the gravy train of fees available to mortgage companies that prolong homeowner agony. The longer a borrower remains in delinquency, the more opportunities for mortgage companies like Chase and Bank of America to order up fresh property appraisals and title searches -- with most of these services funneled through the banks' wholly-owned subsidiaries.
The Congressional Oversight Panel, a watchdog group that tracks federal bailouts of the financial system, this week chided Treasury for the lousy results of its primary anti-foreclosure program. Treasury itself finally acknowledged that the program will help less than one-fourth of the 3 to 4 million homeowners President Barack Obama said would receive aid when he announced the initiative last year.
Town's experience adds an unsettling note to this chorus of recrimination: Even those who supposedly manage to get help have wound up battered and mistreated along the way, highlighting how many more simply give up along the way.
Confronted with the unsavory details from its botched handling of Town's case, Chase stuck to the line that the end result was all that matters.
"Well, she stayed in her home, right?," said Chase spokesman Tom Kelly. "And she paid a lower payment for 20 months. Ultimately, she is in the house she was in, and she is paying less."
Which, when you consider how all that came about, is setting the bar pretty low.
Town is not the sort of person who seems to typify those who got themselves into trouble during the real-estate boom -- people who used their homes as ATM machines, repeatedly refinancing into mortgages with exotically-low introductory rates, pulling out cash they spent on cars and flatscreen televisions. She was not a subprime borrower or a speculator. Three years ago, she moved to the Atlanta area to get her two children closer to their grandparents after her marriage broke up in Iowa.
She bought a brand new home directly from the builder in the middle-class suburb of Locust Grove, some 25 miles south of Atlanta. She paid $193,500. Her loan was fixed at 6 percent for 30 years, though the payments were interest-only for the first ten. The roughly $1,400 a month she had to pay was entirely manageable on her salary as an accountant, which paid some $62,000 a year.
But once she lost her job, she became part of the group that has emerged as the fastest growing slice of the foreclosure epidemic: homeowners with traditionally strong credit who have slipped into trouble simply because they no longer have paychecks.
Her saga began with her heads-up telephone call to Chase in the spring of 2009, during which she alerted the bank that she had lost income and was hoping to work out lower payments. She was then drawing an unemployment check of about $330 a week, plus monthly child-support payments of $1,200 for her two kids.
Chase's response was shocking: Thanks for filling us in, but come back when you have stopped paying.
"They told me point blank that they couldn't even talk to me because I was current on my payments," she says. "They told me to stop making payments, and I didn't even want to do it, because that's not me."
By later that spring, paying in full was no longer an option. Town's savings -- about $15,000, before she lost her job -- were mostly exhausted. Worst of all, her daughter, then 12, had stomach cancer. Even with health insurance from the girl's father, Town was having to pay as much as $600 a month on co-pays and medication.
At the end of April 2009, by then in arrears, Town submitted the paperwork to Chase and was swiftly approved for a so-called trial loan modification under the Obama plan, she says. Under its terms, she was to make three monthly payments of $959. Assuming she delivered, the trial modification was supposed to convert to a permanent one.
But after making the third payment on time in July 2009, Town had yet to receive notice from Chase that her loan modification had become permanent. Concerned, she called the bank, where a representative assured her that the paperwork for her permanent modification was on the way. In the meantime, she was told to just keep paying.
When she went online to check her account, however, she was puzzled to see that the payments she had been sending the bank were somehow not being applied to her balance. Instead, they were landing in something called a suspense account.
Soon, Chase collections agents were calling demanding money, she says. When she explained that she had been granted a loan modification, they insisted there was no record of this. Even when she faxed the collections department a copy of the paperwork, the calls continued, she says.
"It was the right hand not knowing what the left hand was doing," Town said.
This sort of frustration and anxiety would take a toll on anyone, but for Town it added to an already unbearable anguish: In May 2009, her daughter died. The tactics of the collection agents repeatedly tore at this wound.
"Some of them were just downright ugly, calling me a deadbeat and no-good parent," she recalled, her voice catching, "because I couldn't afford to have a roof over my children's head."
Chase eventually told her that she had to reapply for a new trial loan modification, the paperwork for the permanent one somehow having disappeared, she says. She sent in fresh documents and began anew.
By the summer of 2009, Chase offered her a better deal under a so-called forbearance arrangement, lowering her payments to about $500 a month. She had managed to secure a part-time job that brought in $25,000 during the summer of 2009, but when that job ended, she was again without income, justifying the lower payments, she says.
Again, her paperwork expired without a permanent modification being granted, she says. Again, she had to start all over. For the first three months of this year, a new trial modification took effect, with payments of $959 a month.
And so it went, fresh documents, new trial periods, and no certainty. The collection agents kept calling, sometimes more than once a day.
Last summer, Town spotted a notice taped to the door of a house in her neighborhood, one that had already fallen into foreclosure: Fannie Mae was holding a foreclosure-prevention event at a Marriott hotel in Atlanta. It invited distressed borrowers to come and gain Fannie's help in working out lower payments with their lenders.
On a steamy late-July morning, Town drove into Atlanta and joined a throng of thousands of frustrated homeowners. She carried files stuffed with the paperwork for her various modifications.
"The lenders were all there, pretending that they cared, and they were taking applications for new modifications," she said. "I explained 'til I was blue in the face that I didn't need an application. I just wanted to get my existing modification made permanent so I could get on with my life."
She made enough of a scene, she says, that the Fannie Mae and Chase representatives both promised to follow through, and the paperwork soon came for a permanent modification, this one through Fannie Mae. She did not qualify for the Obama plan, says Chase, because her home had lost too much value.
Her first payment under her now permanent modification was due on October 1. For a couple of blessed weeks, it seemed her nightmare was finally over, her telephone silenced.
But then, on Oct. 18, another Chase collection agent called, telling her that her bill was $22,000 past due.
Frantically, she explained that she had a loan modification, and the agent said that his call was probably an error and she could disregard it, she says.
But on Oct. 30, Chase sent her a letter once again threatening to foreclose. Town called immediately, she says, eventually speaking to a Chase representative who scoffed at her protestation that she was under a loan modification agreement. The agent mocked her, she recalls, calling her a liar and laughing about the number of people who routinely made such claims.
Again, she faxed in the paperwork and waited for a fix. Again and again and again, she called Chase, escalating her case from supervisor to supervisor until she finally reached a man in Chase's executive offices. His name was Rod Mills, and he had a smooth and reassuring phone manner.
"He said, 'Please be patient with us while we research your situation,'" she recalled. "I said, 'What is there to research?' and he said, 'You don't expect us to just admit that we made a mistake, do you? This happens all the time, and we just have to research it.'"
According to Town, last week Mills delivered the verdict: Chase made a mistake. She was indeed entitled to a permanent loan modification.
Reached by phone, Mills referred all questions to Chase's corporate spokespeople.
Kelly, the Chase spokesman, declined to say whether Chase had indeed made a mistake, while repeating that, in the end, everything worked out as intended.
Town is still waiting for the paperwork. She will feel no peace of mind, she says, until Chase's assurances are verified by action.
"I don't trust them for anything in the world," she said.