Facing Foreclosure Without Missing A Payment: One Couple's Housing Nightmare
HUFFINGTONPOST.COM - For the past 30 days, Kendra and Todd Parker have been trying to figure out what to tell their four children, fearing that they, like millions of other Americans facing foreclosure, could be tossed out of their home.
But unlike the vast majority of homeowners in their predicament Kendra Parker says she can prove she and her husband have not missed a single mortgage payment.
The Parkers' mortgage began like any other that might have emerged from the housing boom: the neighborhood bank that originally issued their mortgage sold the loan, and it eventually landed in the hands of one of the nation's largest mortgage companies.
In industry parlance, the loan was "securitized," or sliced into parts and combined with hundreds, possibly thousands of other mortgages, then sold piecemeal to investors. The complex reality of the modern mortgage system was supposed to have very little effect on the Parkers -- they would simply mail their monthly payment to a mortgage servicer, which would handle the payment on behalf of the investors holding the mortgage securities.
But, along the way, that machinery broke down. No one, the Parkers say, told them their loan had been sold. With no word from the new servicer, New Jersey-based PHH Mortgage, the Parkers sent their first payment to the original bank, which mailed the check to PHH, according to documents the Parkers provided to The Huffington Post.
But that check went missing. The Parkers say that despite the fact that they made every other payment, that missing check led to foreclosure proceedings, and a wrecked Kendra Parker's credit rating.
Soon, the mortgage company informed the Parkers that they were three months past due and owed over $3,000.
As the housing bust led to the loss of millions of jobs, displaced families and eroded U.S. wealth, gaping holes in the mortgage market began to emerge, raising legal doubts about even the most mundane of transactions.
Regulators and banks say that those who are current on their mortgages are almost never foreclosed on, but isolated cases remain.
Last year, court documents exposed potentially massive breakdowns of the mortgage industry. Inundated with thousands of foreclosures, mortgage servicers, some hired by banks, allegedly signed hundreds of foreclosure documents without examining them. These "robo-signer" cases spurred some major banks to temporarily halt their foreclosures nationwide.
All 50 state attorneys general, federal prosecutors and a host of agencies have since launched investigations into foreclosure practices. Investors sued banks over the question of which soured mortgage securities banks should be forced to buy back.
Legal challenges to the fundamentals of the mortgage system have proliferated of late. In January, Massachusetts' Supreme Judicial Court ruled against U.S. Bancorp and Wells Fargo, affirming a lower court's ruling that invalidated two mortgage foreclosure sales.
The court found that the banks, in their capacities as trustees for mortgage securities, did not prove that they actually owned the mortgages at the time of foreclosure. Legal experts say the decision is likely to lead more borrowers to sue for wrongful foreclosures.
Paul Collier, a lawyer based in Cambridge, Mass., who represented plaintiff Antonio Ibanez, said he believes wrongful foreclosures are more common than has been reported.
Collier said Ibanez's house was actually purchased by the bank a full year and a half after the bank foreclosed on it, and that he had heard of other cases in which payments went missing or were applied to the wrong accounts.
The chaos, he said, stretched through the entire life of some mortgages, from the securitization process to wrongful foreclosures.
With lenders and servicers contending with everything from loan modifications to foreclosures, Collier argued, some of this chaos may have seeped into the way servicers deal with customers who have legitimate concerns.
"The utter carelessness," he said. "It would be great theater if it wasn't people's
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