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I ate drank slept and lived fighting with the bank

Stories of homeowners who feel mistreated by their banks are commonplace these days. Hundreds of thousands of people are underwater and behind on their mortgages. As they seek loan modifications or other solutions, they tell of hours on hold, never speaking to the same person twice, reams of lost paperwork and rejections for reasons they don't understand.

Some homeowners actually do get workable solutions, most commonly loan modifications to reduce their payments. Some outlier cases get even more unusual outcomes. Whether it's getting a foreclosure rescinded or reducing the amount owed on a second loan, the odysseys of people who successfully negotiated with their banks provide tips that may help others in similar situations.

Refinance goes awry

All that Brad and Joan Zetterlund wanted was to refinance the mortgage on the home they had owned for 16 years. Instead, they ended up having their Pleasanton four-bedroom Colonial sold in a foreclosure auction at the courthouse steps, even though they had plenty of equity and the means to make their monthly payments.

After months of fighting and pleading with their bank, the couple were able to have the foreclosure rescinded earlier this year.

A couple of years ago they owed $400,000 on a home then worth $700,000. They applied for a refinance of their adjustable mortgage to their lender, Countrywide. The application moved slowly, and then Countrywide was sold to Bank of America. BofA evidently turned their refi application into a loan modification request early last year. Not even sure what a loan mod was, they hired an attorney.

Brad Zetterlund said bank representatives told him and his attorney several times that the bank would not accept payments because they were in loan mod status, although a loan mod agreement never happened. Since they weren't making payments, they were sent notices that they were delinquent and facing foreclosure.

Home auctioned

The couple made hundreds of phone calls and faxes, trying to get a solution. On Aug. 16, their home was auctioned in a foreclosure sale to an investor for $505,000.

The bank wrote out a check to the Zetterlunds for $40,000 - what it said remained of their equity after subtracting for missed payments and late fees. They never cashed the check because they wanted to get their home back.

Brad Zetterlund, a stay-at-home dad, worked full time on trying to get the house back, spending hours a day on the phone. He sent countless faxes of financial paperwork, saving all fax receipts. He contacted about 18 elected officials, both local and national. Some forwarded his case to bank regulators. Through work connections, Joan Zetterlund got the CEO of a Fortune 500 company to contact the bank.

"We had to leverage every possibility, every person out there that may be able to help us," he said. "I ate, drank, slept and lived fighting with the bank."

In the fall, their case was assigned to a bank representative who appeared sympathetic and started pushing their case internally. The tide started to turn with an agreement to rescind the foreclosure. Since outside investors were involved, the bank had to negotiate with them.

Finally in January, the bank bought the loan back from the investors, restoring the Zetterlunds' original status as mortgage holders.

Brad Zetterlund is now counseling two families from his church who are struggling to keep their homes.

"This was David versus Goliath - and David won," he said. "But this almost destroyed us."

In a statement, Bank of America said: "Based on the particular facts and circumstances of this case, we believe that the rescission was an appropriate resolution. We understand the difficulties experienced by the Zetterlunds and we are happy that we were able to reach a resolution that addressed their concerns."

Foreclosure rescissions are rare, and rarer still when a third party purchased the home, according to Sean O'Toole, founder and CEO of ForeclosureRadar.com. "It does happen but not too often," he said. "Occasionally you get a connected homeowner or one who makes enough noise that the trustee decides to rescind the sale. Every once in a while there might be a serious error that the lender made.

A material mistake in the foreclosure notice (such as the wrong address) could be an issue."

Foreclosure auctions that happen on a legal holiday - such as California's Admission Day - can successfully be challenged by homeowners, he said.

Generally a rescission rolls back the clock to before the notice of trustee sale, he said. So if homeowners were behind on payments, they would have to get a loan mod or get current to forestall the bank going ahead and posting a new notice of trustee sale and proceeding with a foreclosure.

Short sale blocked

A San Ramon couple's home had fallen in value to about $450,000, down from the $735,000 they paid in 2005. They wanted to sell it in a short sale - for less than they owed on their mortgage - but their second loan of $70,000 was in the way. The second loan holder insisted they sign a promissory note for the full amount due or face possible litigation.

The couple, who asked not to be named because of fear of retribution from their lender, owed this lender another $25,000 on a credit card, for a total of $95,000. After negotiating, the bank agreed to settle both debts for $20,000, writing off almost four-fifths of the balance.

In negotiating, the couple tried to reach someone with authority to speak for both the mortgage and credit departments.

Finding right person

Finding such a person took a lot of persistence and numerous phone calls to different departments. They then told that person they were prepared to file bankruptcy, in which case the bank would have to write off the whole debt. The bank rep instead offered them a deal.

They hope to now proceed with a short sale and have a prospective buyer lined up.

"I feel self-satisfied if not exactly proud ... but we have been royally shafted and I've been carrying a lot of stress over the past 30 months trying to save our home," the man wrote in an e-mail.

Dan Mulligan, a partner in the San Francisco law firm of Jenkins Mulligan Gabriel, said he often advises clients on how to negotiate down their second home loan, suggesting they seek to buy it back at between 6 and 10 cents on the dollar - slightly more than the 3 to 5 percent of face value the banks could get in the secondary market.

"I tell them to set aside an hour a day for about 14 straight days to make calls to their lender and don't take no for an answer," he said.

"Most people I've told to try it have been successful. For example, one (homeowner) with the first three calls he made, the guys (at the bank) just laughed at him and said 'No way,' but the fourth guy said, 'Oh yeah, I'll fax you the form.' It's just who you get that day."

Tips for working with banks

-- Keep detailed records, including copies of every e-mail and fax you send. Send faxes to a third party as well for verification.

-- Buy a telephone recording device and inform bank reps at the beginning of every call that you will record it.

-- Be prepared to devote consistent time, at least an hour a day over a few weeks, to making phone calls and handling paperwork.

-- If at first you don't succeed, keep trying. Ask to speak to supervisors. Keep calling back. Call the offices of top bank executives.


E-mail Carolyn Said at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . © 2011 Hearst Communications Inc.

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We can help you stop foreclosure with a loan modification in the following states:

If you need help understanding your option of taking advantage of the home loan modification process, the help is available to you everywhere. The process is quite tricky and it is highly recommended that you do indeed seek legal advice before signing on the dotted line, in order receive the most efficient and cost-effective modification to your mortgage payment.

Where do I get Advice
There is advice all over the web on how to receive a loan modification; some of this advice is quite helpful, while some is quite dreadful. There is also the opportunity to hire a professional service that will help you go through the paperwork and work with the lender to help you get all the benefits that you deserve, due to a hardship. Loan modification is a process that must be understood completely and thoroughly. This article can actually offer you an insight on the process of loan modification and tips that will better help you as a homeowner save your home from the risk of a foreclosure.

Loan Modification Advice
First and foremost, it is important to determine if you are eligible for a loan modification. This requires writing a letter of hardship explaining to the lender what exactly the reason is for your late payments and the fact that you are unable to pay your mortgage. Doing a loan modification on your own requires more than just advice. Becoming educated about the process is more important. This is perhaps a good reason to hire a professional loan modification company to take part in the process. They will handle everything for you, while educating you in the progression. There is a fee charged for hiring these companies, but in turn your mortgage payment can be lowered quite a bit and professionals can even find things in your original loan papers that may prove that the lender may have broken the law during your original mortgage signing.

If you do choose to take the big leap of the loan modification process on your own, you must first contact the lender and they will lead you to the correct department, normally the loss mitigation department. You may not want to directly say that you are in the process foreclosure. We do not want the lender to think your situation is not worth their time before hearing you out. Always document anything relating to the loan modification process, every phone call and any other information you may receive during the process must be documented. Always discuss every option available with your lender, so that you may come up with the best alternative for you. It is true you will save money going directly through your lender and let’s face it, you are struggling already trying to make your payments, but professional assistance can help immensely.

No matter what direction you decide to take, loan modification will be what determines the amount of time you have in your home. If you are eligible you should act as soon as possible.



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