A Tale of Four Trial Modifications at IndyMac Bank

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It was the best of times and then it was the worst of times, until it was the best of times again, before returning to the worst of times, which lasted until it was the best of times once more, and then settling into being the worst of times… which became the best of times and then…

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The Story You Are About to Read is 100% TRUE…

IndyMac Bank, now One West Bank, whose major shareholders include liberal billionaire George Soros and his young ward, computer industry all-around good guy, Michael Dell, appears to have embarked on a mission to defraud as many people as possible out of their homes through a clever trial loan modification scheme.  Here’s how one homeowner was introduced to the bank’s underhanded tactics.

This is the story of how IndyMac offered a homeowner in the Inland Empire region of Southern California four separate trial loan modifications over the past six months.  Let’s say that they’re family name is Geithner, just for fun… The Geithner Family.  They have two kids.  We’ll call them Danny and Fanny.

The Geithners had owned their home for a decade, having purchased it with 6% down back in 1999.  Their 700 FICO score, as of six months ago, showed that they always made their payments on time. They refinanced a few years back with a loan from IndyMac, who apparently felt that the Option ARM mortgage design was the young family’s ideal option.

Their starting payment was around $1800, but roughly a year later had jumped up unexpectedly to $2200.  When Mrs. Geithner’s father fell, injuring his neck quite seriously, what else could the family do but invite him to move in with them where he could be waited on hand and foot and ultimately nursed back to health.  They decided perhaps they could qualify for the President’s loan modification program.

Since they started working towards getting IndyMac to approve a loan modification, they’ve done absolutely everything the bank asked them to do, made every single one of their payments on time and as agreed, and never touched their noses unless the bank said “Simon Says.”  But now, regardless of all that, their home is due to be sold out from under them on November 19th.

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Our story begins last February…

It was February of this year when the Geithners retained an attorney to help them negotiate a loan modification with IndyMac Bank.  His name was Robert Scurrah of CDA Law Center, and he had been practicing for roughly thirty years.  On March 3rd, Mr. Scurrah’s office arranged for a conference call with the nice folks at IndyMac Bank to review the family’s financial situation.  The bank offered the Geithners a two-month trial modification with a trial payment of $1469.99, and the Geithners agreed.  (Yay!)

The very next day, the Geithners received a letter in the mail from IndyMac Bank.  It read: “We want to help you stay in your home.”  The letter offered a trial payment of $1711.52, so imagine how pleased the Geithners were that they had been offered and agreed to a payment of $1469.99 only one day earlier and they continued making their agreed to payment.

On April 20th, the Geithners received another letter in the mail from IndyMac.  This time the letter said that the bank was denying their request for a loan modification.  Apparently, the bank believed their home to be vacant, which as you might imagine came as quite the shock to the Geithner family who was living there at the time.  (Oh no.)

Two weeks later, however, on May 6th, the Geithners received another friendly letter from IndyMac, with the now familiar headline, “We want to help you stay in your home”.  Thank goodness for that, the family thought.  This time the trial payment offered was $1467.32.  (So, yay!  Again.)

That very same day the Geithners received an agreement in the mail.  It was the “Stipulated Forbearance to Loan Modification Agreement,” and it outlined the terms of the loan modification.  The Geithners mortgage would start at 3% fixed and remain there for five years.  In year six the interest rate would go up a point to 4% fixed, and after that, it would increase to 4.75% for the remainder of the loan.  (Again, yay!)

The Geithners readily agreed to the terms of the loan modification IndyMac had offered, so they signed and dated the modification agreement and returned it to the bank on May 11th along with their cashier’s check in the amount of the modified payment, which IndyMac deposited.  And everything was good.  (Major yay!)

But then on July 9th, the Geithners received another letter from IndyMac.  It said they had been declined for their loan modification yet again because the bank said they never received the check they deposited, nor did they receive the signed agreement they had received with the check they deposited but never received.  (Oh no.)

Then on August 11th, they went to their mailbox to find another letter from IndyMac, and again read that the nice folks at the bank were saying: “We want to help you stay in your home”.  This time the letter offered a trial modification with a trial payment of $1395.98.  (So… yay?)

The Geithners, figured they might as well give it another trial, so they made both the August and September payments on time and in the amount of $1395.98.  (Okay… one more time, yay.)

But on October 2nd, the Geithners, who had by now developed a case of letteraphobia, a fear of receiving anything in the U.S. Mail, received yet another letter from good old IndyMac Bank.  Again, they were being denied a loan modification.  This time, however, no reason was given.

They called their attorney immediately who in turn contacted IndyMac Bank.  Not too worry, Mr. Scurrah was told by the bank’s representative, it was just a mistake… must have crossed in the mail, or in the system, or something like that.  You can just imagine the Geithner’s relief upon hearing the news… I’m sure everyone had a good laugh.  (Oh what the hell… yay.)

Except that a few days later, upon returning home at the end of a long October day at the office, the Geithners found a notice pinned to their door saying that their home would be sold out from under them on November 19, 2009.  (You’ve got to be kidding me.)

Again, they placed a call to their attorney, who again contacted IndyMac Bank.  This time he asked two things: Whether the bank’s bipolar disorder was causing it much trouble when socializing with the other banks.  And why… this time around… had the evidently schizophrenic financial institution denied the Geithner’s loan modification, after approving it, before they had denied it, before they had approved it, which was before they had denied it, which was right before they had approved it, only to deny it.

Scurrah inquired as to why the modification was being declined again.  After all, he explained, they had signed and paid as agreed all four times they had been granted trial payments and modifications.  IndyMac’s representative explained that it was all quite simple really.  At $6,100 a month, Mrs. Geithner made too much money to qualify for a loan modification.

“Well,” said Mrs. Geithner, “that’s a relief.  Why didn’t you say so sooner?  When do I start making the $6,100 a month?  Because as soon as I do, the payments will be no problem.”  Unfortunately, IndyMac was wrong.  Mrs. Geithner’s paycheck stubs and W2 showed that she only made $4,100 a month, but she was perfectly willing to forego the whole loan modification thing in exchange for a two grand a month raise.

Mrs. Geithner explained that she still made $4,100 a month, just like she had since last February when she sent in the paperwork IndyMac required when applying for a loan modification, although for the life of her at that moment, she couldn’t imagine why.

Their attorney asked where the bank could have gotten the $6,100 figure when they had received the paycheck stubs and W2 last February and they showed $4,100 a month.  IndyMac replied that they had received the $6,100 figure “orally”.  Under his breath, Mr. Geithner asked if they could resubmit the correct figures to the bank anally.

The nice woman at IndyMac, the bank that had “wanted to help the Geithners keep their home,” on so many occasions that no one could remember, responded that it didn’t matter at this point.  It was too late.  The Geithners would need to come up with $29,200 in the next five days to save their home.  Otherwise, it would be auctioned off on November 19, 2009… just seventeen days from now.

The irony of the story is that the new owner will likely pay about half as much as the balance on the Geithner’s loan, so in a way IndyMac will be granting the new buyer a principal reduction right off the bat, but don’t worry about the bank… they only paid about 20¢ on the dollar to buy the Geithner’s mortgage in the first place.

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Alright… that is Goddamn enough!  Did you enjoy that 100% TRUE STORY?  Did you?

What are we going to do about IndyMac/One West Bank?  I’ve now interviewed a dozen law firms and dozens of homeowners; all are currently being lied to and jerked around by IndyMac/One West Bank.  The way things look all will end up losing their homes to foreclosure, even though they all should qualify for loan modifications under the President’s Making Home Affordable program.

I am convinced there are hundreds of others in this situation with IndyMac/One West Bank… to say nothing of the myriad of other lenders and servicers who continue to break the rules, deceive our government, and destroy our economy after we the tax payers bailed them out to the tune of $11 billion in Indy Mac/One West’s case alone.

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So, what do we do about this?  Nothing, I suppose?  Because doing nothing seems to have become a tradition in this country ever since Barack Obama went on television to tell the country that he would do better than his predecessor.  Did he lie?  Or he is incompetent.  You are free to choose between the two, but those are the options… A or B.

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And speaking of Mr. Obama… where the hell is he on this issue.  The last time we heard from him on this subject was last February and here we are about to rob a liquor store to put a turkey on the country’s table.  How he sleeps at night I could not tell you.  I could not, were I in his shoes.

Obama told me and everyone else that watched his speech last February that he had a plan that would help save 7-9 million homes.  Yet this year, we’re on track to hit five million foreclosures.  He was going to create jobs, too.  Well, absolutely cracker jack work so far, Mr. President.

I did get an email from Joe Biden today… I’m sure millions got it as well.  He wanted me to help fight the war related to the president’s health care proposal.  I replied: NO!  Why would anyone in their right mind trust this administration to fix health care after proving themselves completely incompetent and uncaring about the housing crisis… a crisis much worse than anything this country has ever seen in health care?

I won’t and no one else should either.

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I’m announcing today that I will write and publish every story I receive about a homeowner being jerked around by IndyMac/One West Bank.  Every single one.  Write to me and I’ll put it out there.  And I’ll ask everyone to forward it along to friends online.  And maybe… just maybe… someone will be listening… someone will care… and someone will force this despicable failed bank’s hand… force them to do what the president’s plan requires them to do: modify a loan when it makes more sense to do so than it does to foreclose.

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I’d also like to call for a boycott on Indy Mac/One West Bank… if you bank there… please move.  There are plenty of other choices, why would you want to give your money to a bank that is lying, cheating and stealing from the American people and from our government.  Congress continues to meet and talk.  Vote with your wallet and bank somewhere else.  Please… do this for the people being so totally jerked around every day by Indy Mac/One West Bank.  Show them that this is still a country of laws and rules… still a country where the people have the power.

The stories are coming.  The war is on.

You can email me at mandelman@mac.com.

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Comments

  1. SoCalReb says

    The point of all this may be that One West never intended to modify their loan. Because in addition to the FDIC selling the Geithner family's loan for a song, they sweetened the deal further by covering either 80% or 95% of "Foreclosure Losses".

    What's included in these "Foreclosure losses"? Well, while the Geithners were running in circles in a futile attempt to save their home, the meter was running on: "Accrued Interest, Attorney's Fees, Foreclosure Costs, Property Protection Costs, Maintenance and Repairs, Tax and insurance advances, Appraisal fees, Broker Price Opinion Fees, Inspections, Other"

    Hope Mrs. Geithner has a recipe for goulash. George is coming for dinner.

  2. punstress says

    They probably don't qualify for a modification. Mrs G makes $4100 a month, and nowhere is it mentioned how much Mr G makes, but if we assume he is working and making at least as much as his wife -- let's round down to $8000 a month, though it is probably more -- they should have no problem paying the $2,200 mortgage, which is 27.5% of their gross.

    I guess they figured they'd use the FIL to claim some kind of hardship but if they're both still working, unless some major details were left out, they should have paid $2,200 all along.

  3. ppulatie says

    Punstress,

    Do you work for a lender or servicer? You make assumptions about things and do not read between the lines. Since the father in law was injured and required being waited on hand and foot, it is readily apparent that the husband stays at home and does not work.

    The payment on the Option ARM went up to $2200 in one year. This is likely in error as to the time frame, but there is something more devious on the part of IndyMac.

    The borrower was obviously given a stated income loan, whereby the income was inflated. If she had been required to show income documentation, then she would have been turned down for the loan, but that would be "bad" for Indymac and the broker, so they got her approved. This is even though both knew that once the loan began to adjust, the borrower would go into default.

    I hear these stories EVERYDAY from attorneys. I mean every day. Attorneys and loan mod companies are getting NOWHERE with Indymac.

    The only time that mods get done are when attorneys file the lawsuits. Then, when Indymac assigns a law firm to handle the lawsuit, the attorney can call the firm, and suddenly, loan modification talks open up for real.

    These borrowers were set up to fail from the very start, like most were done from 04-07. It was the banks and investment firms, once again "looting" the country, like they do every ten years or so.

  4. djlj0531 says

    Mandelman - I am the partner in a firm that does loan modifications and litigates in foreclosure defense and quiet title actions. By far, One West is the worst company to deal with. They are argumentative and adversarial at every term. If we say the paper we sent over is white, they'd say it's black. We currently have 2 active litigation actions against them for going ahead and foreclosing on a property after they told our offices that the trustee sale had been postponed and in active negotiation for a loan modification. We simply have to create a groundswell of pressure on them including contacting good real estate attorneys to assist, contacting your state attorney generals and contacting the FDIC and complaining. Thanks for continuing to keep the heat on them!

  5. punstress says

    Quote:
    Since the father in law was injured and required being waited on hand and foot, it is readily apparent that the husband stays at home and does not work.


    I wouldn't say it's readily apparent that the able-bodied, money-earning man of the house quit his job to take care of his wife's father just when he's got an increasing mortgage payment. Do you know this for a fact? One really can't assume such things!

    One might assume the wife quit her job to take care of her own father, especially since wives usually make less than their husbands and women are the typical ones to sidetrack their own careers to nurture their families. But she didn't.

    I don't think either of them quit their jobs. And if they were the least bit smart, they would keep both incomes, keep paying their mortgage, and hire some domestic help if they couldn't rearrange their schedules around the father.

    Funny how when people want to stay in a house they can't afford, they pull out every sob story and base everything on emotions. Then once they decide to walk, it's just a business decision. Bottom line: They could afford the mortgage, they just didn't want to pay.

    P.S. Did you really say I make assumptions AND I don't read between the lines? If you don't see the irony in that, I have nothing more to say.

  6. bavail says

    punstress - the story illustrates the incompetance and total disregard the lenders have for their clients and for our government. If these people did not qualify for a modification, they should have been told once.. from the get-go. Not strung along for months with letters of encouragement. Their individual situation doesnt matter because you can bet there are thousands of ligitimate mod candidates who are getting the same treatment and losing their homes. This is a mess, and who's to blame can make for a lengthy heated debate. In the meantime, regardless if unworthy homeowners are trying to take advantage..,. the banks are blatantly bucking the system and screwing many Americans in the name of greed. If they do not take responsibility for what they created, soon, 2010 is going to be the ultimate implosion year. believe me, my hopes are not too high.

  7. mortgage3 says

    "They refinanced a few years back with a loan from IndyMac, who apparently felt that the Option ARM mortgage design was the young family’s ideal option."

    We all know that the Option ARM shouldn't have been made available to the masses, but the borrower is the one that signs the loan documents.

    Did they do any cashout refi's? If so, how many? The number of people that didn't use their home as an ATM is few and far between.

    Is it now against the law to rent a property? If you can't afford a real payment, you shouldn't be a home owner.

  8. bavail says

    Financial Literacy has not been a forte of the average American. Sure, ignorance is not an excuse but I can't tell you how many times I've heard people being sold option arms because they couldnt qualify for anything else. They trusted the person or entity selling it to them.... that was their biggest mistake. Mortgage Originators do not have any incentive to do what's right for the customer. With that, these products should never have been made available to the idiots who sold them to the idiots. :wink:

  9. marksgreen says

    Well done Martin, and I'd love to help you however I can. I do have a few questions:

    1) Why are the letters of commitment by Indy Mac not legally binding?

    2) Why does it make financial sense for Indy Mac to foreclose when they have a borrower willing and able to work out a loan mod?

    3) What can everyday people like me to help you?

    Thanks for everything you do man.

    Mark Green
    678-596-3045

  10. frankensense says

    Here is why they don't modify. The agreement the FDIC made with Onewest was that Onewest will take over Indy's loan portfolio but ANY losses incurred will be 100% guaranteed by the FDIC. So, do they want to get a few bucks on each loan each month or do they want to foreclose and get 100% of the face value of the note on a depreciating asset? The agreement is posted on the fed reserve website for all to cherish. I've been trying to get this publicized for months.

  11. xleland says

    You are spot on IndyMac/OneWest Bank gets 100% on foreclosure and a big minus for almost any loan Mod. Thanks to TARP IndyMac/OneWest Bank gets the taxpayers to pay them the difference between what they get in Foreclosue - "costs" (their costs are outrageous) All they have to do is fill out a few forms and voila' the dough rolls in from TARP. Pretty slick deal wouldn't you say!!

  12. hollig03 says

    HELP what are you talking about ??? I am being royaly screwed by Indymac regarding my mod . I applied in march 09 then denied . i stopped making pymnt Nov 09 due to denial stating must be delinquent to get mod . I was then approved Dec 1st I recieved a letter and email congratualting me ,after never recieving packet I called and they said it was "A SYSTEM ERROR": im not getting it sorry would i like to make a payment ..how do they do this ??? please give me any info that you have I am not the type to let them get away with this ...HELP

  13. frankensense says

    Holli, are you upside down?

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