CitiMortgage – Family w/ Autistic Daughter, Father with Alzheimers, Homeless Despite Making Payments
They made 11 trial payments on time, sent in paperwork as requested and stayed in close touch with Citi.
“Citibank gave them a HAMP loan modification and took it away from them – because the house is worth more than the loan, so Citi will financially benefit from foreclosure”
Here we go with the NPV again…
You all ever wonder where those trial payments go?
After struggling with medical crises and recession-related lost income, Susan and Robert Gerke thought they had jumped through every hoop that their bank, CitiMortgage, required for them to get a loan modification.
They made 11 trial payments on time, sent in paperwork as requested and stayed in close touch with Citi. So it came as a rude shock when they received the foreclosure notice on the San Rafael home they’ve owned for 15 years.
“We were so sure we could keep it and that they were really working with us, I just feel blindsided,” Susan Gerke said.
The house is scheduled to be foreclosed upon on Dec. 29, leaving the family of four – the Gerkes, their 22-year-old autistic daughter and Susan’s 86-year-old father, who has Alzheimer’s disease – without a place to live.
Their story mirrors those of thousands of other homeowners who’ve been denied long-term relief under the government’s Home Affordable Modification Program. The pace of conversion from trial plans to permanent modifications has slowed dramatically, dropping from about 55,000 a month early this year to just 28,000 in September, government records show.
What sets the Gerkes’ situation apart is that as longtime homeowners, they have significant equity in their home.
Penalized for equity
In fact, their attorney, Marilyn Sullivan, said the couple are being penalized for that equity.
“Citibank gave them a HAMP loan modification and took it away from them – because the house is worth more than the loan, so Citi will financially benefit from foreclosure,” she said.
Citi spokesman Mark Rodgers wrote in an e-mail discussing the typical approach to equity, not the Gerkes’ case: “In general, a borrower with positive equity in their property has the ability to refinance or sell their property and pay off the loan in full to avoid foreclosure. A modification is still an option if the borrowers’ income can support a payment that passes the (net present value) test when compared against liquidation.”
Net present value is a formula banks use to determine whether foreclosure or loan modification would be better for them financially. Under HAMP, banks may pick the option that nets them more money.