Home > Avid Law Center, Foreclosure, Loan Restructuring > Friday Foreclosure Story: San Bernardino Homeowner Wins Back Her Home

Friday Foreclosure Story: San Bernardino Homeowner Wins Back Her Home

San Bernardino homeowner Karen Mena is proof that foreclosure doesn’t have to mean the end.

Mena was foreclosed on but was able to stop eviction proceedings and cancel the foreclosure by fighting Bank of America for a loan modification that would make her home more affordable.

Los Angeles Times reports that consumer attorneys say foreclosure reversals like Mena’s could become more common as they learn to better exploit foreclosure errors.

Karen and her husband, a self-employed contractor, bought their house in 1996 and rode the upward wave of her home investment for nearly 12 years. In 2008, her husband lost his business as many contractors did during the housing bust and their two-income household was forced to survive on one income. She fell behind on payments and applied for a loan modification through her mortgage servicer, Bank of America and was granted a trial modification. She faced some unexpected expenses in February 2009 and missed a mortgage payment, breaching the terms of her agreement with Bank of America, voiding the trial modification.

Unable to make full payments on her mortgage, the Los Angeles Times reports a familiar story:

“Mena submitted her first application through the Home Affordable Modification Program in June 2009 and then again in July after she was told her paperwork was never received. A frustrating process ensued: She would fax financial documents to the bank and wait for weeks or months for word back, only to be told to send the information again because the papers were incomplete, missing or outdated. Mena kept some of her correspondence with Bank of America, a journal of letdowns and false hopes.

In August 2010, the bank began formal foreclosure proceedings against Mena. She reapplied for a loan modification. Her home was scheduled for sale at auction Dec. 6, 2010. The bank asked her for more documents.

She was caught in the gears of the bank’s dual-track process, where a lender continues to foreclose on a home even as it works with a borrower on modifying the home’s mortgage — akin to lining up the mortician as the patient checks into the hospital.”

Karen was soon informed by Fannie Mae – the investor behind Bank of America’s loan – that she no longer owned her home and was given the option to rent her home or accept a “cash for keys” agreement. Unsatisfied with either option, Karen remained in her home and weeks later she was informed by Bank of America that her trial loan modification had been approved.

“She faced a choice: Start making the trial payments or save her money in case she was evicted. Mena decided to begin making the payments, telling herself, “Let’s see what happens. This validates everything I have been trying to do.”

Still, Fannie Mae pressed on, taking Mena to court to get her out of the house. Mena replied with her own lawsuit, written with the help of a paralegal because she did not have enough money for an attorney.

The lawsuit makes a series of arguments accusing Bank of America and Fannie Mae of deception as well as questioning their authority to foreclose. A key contention is that she was accepted into a trial loan modification program even after she was foreclosed on.

But before that lawsuit could be resolved, Fannie Mae won the eviction case. She appealed and lost.”

The next day, an attorney with Bank of America informed Karen that the eviction never happened and BofA repurchased the loan from Fannie Mae and the foreclosure was eventually retracted

Karen is still working with Bank of America on an affordable mortgage modification through HAMP but as of now remains in her home.

Check out the Los Angeles Times for the full story.



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