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Housing crisis through local lens.

Eleanor Youngman never thought it wotdd happen to her. Foreclosure was something you read about in the news.

"I think this is what angers me more than anything," she said, sitting midst scattered boxes and a naked mattress on the hardwood floor of her barren living room. I was not a deadbeat. I did not suddenly decide I didn't want to pay my_ mortgage. I did everything that they asked me to do"

Down the hall, Youngman's family--a 39-year-old daughter, a teenage granddaughter, and a developmentally delayed five-year-old grandson--could be heard banging about as they moved furniture and packed up boxes. Today the Youngmans would be leaving their Wenatchee home of the past nine years and moving to a rental in Port Townsend, the only place Youngman could find to rent on such short notice, and with her newly acquired bad credit.

For Youngman, the foreclosure was a surprise.

Purchased in 2001 for $108,000, the property was a fixer-upper. She took out equity loans when times were good to weatherize the house, re-do the wood floors, put in new countertops, and do a bit of landscaping. By the time she finished, her mortgage was around $203,000.

But after falling into financial trouble, she spent a year trying to save the house.

In 2009, she declared bankruptcy due to some family problems and immediately applied for a loan modification through the Home Affordable Modification Program, the 2009 Obama program created to help struggling homeowners afford their mortgages.

For about four months, Youngman paid approximately $1,300 in modified loans while her mortgage lender evaluated her application. It was denied but she was encouraged by the bank to apply again.

So she did and for an other four months the lender evaluated her situation. It was denied again because she did not make enough money. A nurse for the Chelan-Douglas Health District for the past 12 years, Youngman made about $42,000 a year. She was laid off on August 31, but at the time was still employed and was encouraged to apply yet again.

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This time she hired a lawyer and applied again, hoping that they would have better luck breaking through to someone who could help. The lender denied her application four months later, this time, because she made too much.

During this time, Youngman racked up more than $15,000 in forbearance payments and other administrative lees relating to her applications. The bank suggested Youngman do a short sale.

So in mid August, 12 months after the process began, Youngman contacted local Windermere Real Estate Agent Jamie Wallace, an expert on handling foreclosures for Fannie Mae, to help her with the short sale process. With Wallace's help, Youngman filed all the necessary paperwork, cleaned the house, pressure washed the exterior for painting, and prepared the house for market.

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About a week before her scheduled foreclosure on Oct. 9, Youngman said she called the bank to verify the sheriff's sale of her home had been postponed. She was assured it had been in light of the short sale.

On Oct. 10, on a hunch, Youngman checked the status of her home online and saw that it had been foreclosed. It was, she said, as if the right hand didn't know what the left hand was doing.

"You never talk to the same person twice," she said. "So there's no way of knowing what they are telling you is what in actual fact is happening. So you act on faith and my faith is ... I have none."

Wallace was just as shocked, but said she has seen it many times before and can conjure up any number of examples at the top of her head.

"There's many agents in the valley that have worked on behalf of the client to do a short sale and thought they were approved, really thought they were going to closing, everything was there and then 'Bam!' foreclosure happened and it was as if they were blindsided by it" Wallace said.

It's not the well known story of "robosigning" but it is a problem, Wallace said.

"When I talk to the representatives I've spoken to the apathy is huge," Wallace said. "When you say 'these people are exasperated,' they say 'I don't care, I have 400 of these assets I'm working on.'"

Wallace said she has known of lenders with one person handling as many as 900 foreclosure cases single handedly. It's a system, she said, that is grossly out of control.

The numbers support that claim.

Nationally, the foreclosure inventory rate for all loans at the end of the second quarter of 2010 was 4.57 percent, according to the Mortgage Bankers Association National Delinquency Survey Q2 2010. That's six basis points down from the first quarter of 2010, but 27 basis points higher than the second quarter of 2009. Basically, foreclosures are increasing.

"We're in an environment that's anything but normal" Washington Attorney General Rob McKenna said. "The volume of foreclosures and defaults is far larger than the system was set up to handle and it isn't handling it very well"

As the president-elect of a multistate group involving 49 state attorneys general, McKenna is at the forefront of the national foreclosure investigation that led to the temporary freezing of many of the nation's largest banks' foreclosure process last month. He too, was not surprised by the stories.

"That's why you're seeing the lenders foreclosure trustees cutting corners," he said, "and it's why so many borrowers who are trying to find a way to avoid foreclosure, who are trying to obtain a modified loan and so forth, are incredibly frustrated."

Locally, Cashmere Valley Bank Mortgage Center Manager Josh Stendera said that the foreclosure rate in Chelan County as a percentage of total home units is 0.13 percent. Nationally that number is 0.2 percent. As a percentage of total loans in foreclosure, Chelan County is almost 2 percent below the national rate at just over 2 percent. But he expects those numbers to rise.

"You'd be amazed at how many calls we get from other people in the community that don't have a mortgage with us, they're with one of the big banks, and they call us for help because they're having a hard time getting help there" he said.

Youngman can attest. In her living room, the sound of young crying erupted from down the hall and she smiled apologetically. It's going to be hard, she said, adding one last thought.

"I will never take out another loan through a (big) bank," she said. "I'll go through a credit union or a small bank. I will never work with ... they lost my business forever, not that they care."

BY LEE FEHRENBACHER

Ifehrenbacher@wbjtoday.com
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Author:Fehrenbacher, Lee
Publication:Wenatchee Business Journal
Article Type:Column
Geographic Code:1USA
Date:Nov 1, 2010
Words:1128
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