“I busted my hump all my life to become a homeowner. No one gave me anything. I bought this house for my family and achieved the American Dream, and now to face losing this house . . . it’s been driving me crazy for two years.”
— David Jenkins,* Homeowner, Bedford-Stuyvesant
In early 2008, David Jenkins, who owns a two-family brownstone in Bedford-Stuyvesant, came to Bridge Street Development Corporation (BSDC) for counseling. Mr. Jenkins told his BSDC counselor that he had been paying his home mortgage for more than 10 years and working for the city for more than 20. In 2007, he had decided to refinance—for the second time—and he arranged the refinancing through a friend, a mortgage broker. Mr. Jenkins received about $30,000, which he used to make some home improvements and to pay off a car loan. His friend told Mr. Jenkins he only had to stay in the new mortgage for a year, and then he could go into something with a more affordable monthly payment.
“What his friend did not tell him,” says our counselor, “was that the refinancing was for an adjustable rate mortgage.” On his old mortgage, Mr. Jenkins paid roughly $1,500 a month. With the new mortgage, he began paying $2,500 a month. At the time, he was working a lot of overtime, so he had additional income. But his overtime stopped about six months later—around the same time his mortgage adjusted to $4,500 a month. When he tried to renegotiate the mortgage, his friend told him he couldn’t get out of the program yet.
When he came to BSDC he was one month behind on the mortgage and it became apparent that he didn’t know the type of mortgage he had. The contract was clear, and his mortgage broker had done nothing illegal. But one reason Mr. Jenkins didn’t understand his mortgage is that his lender had not explained all the things he was getting into. Worse, they told him he didn’t need his own lawyer at the closing because they would have a lawyer there. And Mr. Jenkins signed what they advised him to sign.
This is a typical maneuver by a mortgage broker. And although the contract was legal, the mortgage was the wrong type of mortgage for Mr. Jenkins. Once the mortgage adjusted, the monthly payment was much too high for him to handle.
Together, Mr. Jenkins and his BSDC counselor tried many approaches to negotiate with the lender, repeatedly asking to join a special forbearance program. They finally agreed to put Mr. Jenkins into a forbearance program, and he complied with all their payment terms for five months, after which he was supposed to get a modification. But the lender said he hadn’t complied—even though he had certified receipts for all the payments. We sent them again, and though they eventually found the missing one, they still backed out of the loan modification.
“We understand that you did it correctly,” the lender said. “But there is nothing we can do.” Mr. Jenkins’ counselor even sent inquiries to everyone she knew in the Center for NYC Neighborhoods, a non-profit legal group created to coordinate and expand services to New York City residents at risk of losing their homes to foreclosure. But she couldn’t get anywhere. “Two years of work. And each time I think we’ve crossed the bridge and done everything we need to do to get things turned around, my mortgage broker has refused to renegotiate the loan,” says Mr. Jenkins.
Everything stopped until February 2009, when Mr. Jenkins’s lender signed up to participate in the new federal HAMP program (makinghomesaffordable.org) that was scheduled to go into effect in early March. Finally, Mr. Jenkins could move forward. At the end of February, they submitted a hardship letter, two years of tax returns, and his last three months of pay stubs. His was put under review.
Every other week, he came into the office, and they called the lender together. “I’ve authorized my counselor to speak for me, because they’re often very nasty and very rude,” says Mr. Jenkins, “and they try to upset you. I was quick to lose patience with them. Now, I just say, ‘Speak with my counselor.’”
His lender then sold Mr. Jenkins’s mortgage to a group of investors. After waiting to hear if the new group would renegotiate, he finally found out they were willing. At last his loan was renegotiated and for six months, the charges went down. After that, the rate went up slightly, but only half a percentage point, which Mr. Jenkins was ready for.
Because Mr. Jenkins qualified for the federal HASP program, after five years, he can apply to refinance his mortgage at a lower rate. Refinancing with a bank is his ultimate goal. “My lender refused to help me until the President came out with these new programs, which they get money to be part of,” says Mr. Jenkins. “I’m looking forward to refinancing with a bank, because I want to leave this lender behind. Eventually, with BSDC’s help, I’m going to do just that.”
* Not his real name. Since his loan refinancing is still in progress, our client prefers to remain anonymous.