Lilla Roberts is a 73-year-old retired physical therapist, a pleasant, engaging woman who moved to this country from Jamaica 46 years ago. In 1988, she bought a small house in Jamaica, Queens, putting down $25,000, and taking out a mortgage for around $120,000. For many years, she religiously made her mortgage payments.
Like most homes in this part of Queens, this one is a little on the ramshackle side: a small, two-story home, part brick, part faded gray siding, with a red awning out front and a large backyard. But she raised her children and several of her grandchildren in this home. Her life’s memories are in this home. It means a lot to her.
“My whole life is here,” she said on Tuesday, when I visited her. “Every penny I ever had I put into this house.”
Ms. Roberts pointed down. “I finished the basement,” she said. She pointed up. “I had to put in new windows and repair all the rotting wood,” she said, referring to an upstairs apartment she rents out.
She pointed toward the back of the house, to the yard beyond her cramped kitchen and her two crowded bedrooms. “I love my garden,” she said. She paused, and then sighed. Between her pension, Social Security and rental income, she said, “I have enough income to pay my mortgage. I would love to enjoy the rest of my life here.”
Sitting across from Ms. Roberts was Elizabeth Lynch, a 30-something lawyer who works for MFY Legal Services. Ms. Lynch is a foreclosure specialist who has spent the last few months trying desperately to keep Ms. Roberts from losing her home. In 2007, a year after a refinancing, Ms. Roberts suffered a temporary setback that caused her to stop paying her mortgage for less than a year. Given her situation — steady income, a history of reliability — you would think that she would be a perfect candidate for a mortgage modification.
Instead, her servicer, Bank of America, foreclosed on the property in late August and handed it off to Fannie Mae, which owned the mortgage. Ms. Roberts first learned this when she saw Fannie Mae’s eviction notice taped to her front door.
As part of her effort to save Ms. Roberts’ house, Ms. Lynch filed a lawsuit to undo the foreclosure, on the grounds that fraud had been committed at various points along the way. Although such suits rarely succeed, a judge agreed to hear the case in early January.
Another part of her effort, though, was to try to create some media interest, which is how I got involved. “With all of the foreclosure cases I have seen,” Ms. Lynch wrote in an e-mail, “this is the one that gets at me the most.”
Truth to tell, Ms. Roberts’s story got to me too. Even putting aside the possibility of fraud, nobody should have to endure what she’s been through. Since March 2008 — that’s right, two and a half years — she has spent nearly $30,000 trying to hold onto her home. She has had to deal with a nasty foreclosure mill law firm, with servicing employees who gave her the runaround and with a foreclosure process that took place behind her back. And she has had to deal with the anxiety of not knowing whether she would be able to keep her home.
Yes, there are people who took out mortgages knowing they could never pay the money back. Ms. Roberts is not one of them. Rather, she is one of the many Americans, mostly poor and lower-middle class, who have been devastated by a system that is as rapacious, uncaring — and sloppy — in tossing people out of their homes as it once was in foisting predatory mortgages on them.
Two days after I spoke with Ms. Roberts, Bank of America and Fannie Mae acknowledged that foreclosing on her home had been a mistake, and they vowed to give her back the house. “We are going to work with her on a loan modification,” a Bank of America spokesman promised.
Yet, while Ms. Roberts’s story has a happy ending, it is hard to get too excited — not when so many others are in the same awful place, losing homes as much because of the system’s callousness as because of their own precarious finances.
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Ms. Roberts’s troubles began with the rotting wood and upstairs windows. In 2006, her longtime tenant, who paid her $600 a month, moved out; she needed to fix the apartment before she could get a new tenant. The only way she could afford it was by refinancing her home.
The company that gave her the new mortgage was a now-bankrupt outfit, Mortgage Lenders Network, which a former employee described to me as “one of the bad actors” during the subprime bubble. It is hard to know now what kind of mortgage Ms. Roberts got; although it had a fixed interest rate below 6 percent, Ms. Roberts recalls having very little cash left over after the repairs were made — even though, at more than $300,000, the new mortgage was more than double the size of her original mortgage. Her new monthly payment was around $1,700 a month, a $500 increase. But with a new renter paying $900 a month, she felt it was well within her means.
Sometime in 2007, however, the tenant stopped paying his rent. Thanks to New York’s tough rental laws, she couldn’t easily evict him. Without that $900 a month, she couldn’t make ends meet and still pay her mortgage. Thus it was that in March 2008, she requested a mortgage modification from her servicer, the Wilshire Credit Corporation, a division of Merrill Lynch that specialized in delinquent mortgages.
What happened over the course of the next few years can only be described as Kafka-esque. Wilshire Credit asked her for a hardship letter; she sent one. Nothing happened. Three separate times, Wilshire set up short-term payment agreements — two of which included $7,000 upfront payments — claiming that it would make a decision on a long-term modification once the agreement expired. She paid every penny — to no avail.
Sometimes, when she was between short-term agreements, Wilshire would refuse to take her check. Sometimes, it cashed them. Sometimes she was told her request for a modification had been denied. Other times she was told it was being considered. At one point, the foreclosure mill law firm of Steven J. Baum, which represented Wilshire, tried to get her to waive her legal rights as part of the third short-term agreement. (The firm would not discuss the details of the case on the record.) All the while, behind Ms. Roberts’s back, Wilshire was inching toward foreclosure.
In March 2010, Bank of America, which got Wilshire when it bought Merrill Lynch in 2008, sold the servicing company to I.B.M. As part of the deal, though, it kept Wilshire’s servicing clients.
Was life any better with the mighty Bank of America now servicing her mortgage? Not a chance. Bank of America took her money in May and June. But in July and again in August, a bank employee told her not to send a payment because the bank was close to offering her a new repayment plan. Instead, in late August, the bank foreclosed and turned the property over to Fannie Mae.
After taking on Ms. Roberts’s case, Ms. Lynch uncovered the unseemly back story — a story that is playing out in poor neighborhoods all over the country. She found clear evidence of robosigning. She also discovered that the transfer of the mortgage from Mortgage Lenders Network to Wilshire appeared to have been backdated by two years — making it appear that it took place before M.L.N.’s bankruptcy. Assets cannot be sold by a bankrupt company without the assent of a trustee, thus suggesting that the transfer of Ms. Roberts’s mortgage might have been improper. And she found evidence that Ms. Roberts had never been served with the foreclosure papers — something Ms. Roberts swore to in an affidavit. These are the grounds for her lawsuit.
But as I discovered when I began asking around, the story is even worse than that. Why did Fannie Mae begin eviction proceedings? Because Bank of America claimed, wrongly, that Ms. Roberts was a deadbeat who hadn’t made a mortgage payment since March 2008. When Fannie Mae asked the bank to double-check, Bank of America simply repeated this false information. In other words, Ms. Roberts was being thrown out of her house because of Bank of America’s carelessness.
Stunned at what I was hearing, I sent James Mahoney, a bank spokesman, a copy of Ms. Roberts’s legal complaint, which documented all the payments she’d made over the year. Less than 24 hours later, he called to tell me that the bank had requested a “rescission” of the foreclosure sale to Fannie Mae — and that “this decision is receiving favorable consideration from Fannie.”
To Mr. Mahoney, this reversal showed that Bank of America was trying to do right by homeowners. “We have made 700,000 mortgage modifications this year,” he said. He described the bank’s willingness to give Ms. Roberts a loan modification as a “microcosm of Bank of America’s role” in the foreclosure crisis. I agree that it’s a microcosm, though not necessarily in the same way that Mr. Mahoney does.
To my surprise, when I called Ms. Lynch with the good news late Thursday, she did not jump for joy. Although she was pleased for her client, she was furious at what she saw as Bank of America’s presumption.
“It’s offensive that BofA thinks a foreclosure action, an eviction notice of an elderly woman sitting in her house fearing that she will spend the remainder of her days in a shelter, is some sort of party invitation that can be ‘rescinded,’ ” she wrote in an e-mail. “Their disrespect for the law is appalling. But it is a pattern of behavior that led to this crisis and that is continuing to keep this country in this crisis.”
Let’s face it: Ms. Roberts got a break. Because she had a dogged lawyer, who had the wit to get a New York Times columnist interested in her case, a terrible mistake was uncovered. As a result, an unjustified foreclosure may well be reversed.
But it has to make you wonder how many other people have lost their homes because of similar mistakes. I can’t bear to venture a guess. It’s too sickening to contemplate