The Hidden Traps in Loan Modification - 8 News NOW

Desert Underwater

The Hidden Traps in Loan Modification

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Dirk Ravenholt Dirk Ravenholt

LAS VEGAS -- Approximately 12,000 Nevadans have sought home mortgage mediation to lower their monthly payments and save their homes. Only 4,000 have been successful.

Nevada lawmakers are proud of the state's mediation program which is among the first in the nation to require banks to meet face-to-face with homeowners in default. However, there are so many obstacles for homeowners, only one-third of homeowners who seek mediation actually end up getting a better deal from the banks.

Pat Hendsch is trying to save her own home from foreclosure. She's a real estate agent who never thought it would come to this.

"These are boxes that I can pack if I have to move. I'm not going to wait to the last minute. I have too much stuff. I can't be bag lady with boxes," Hendsch said. 

She has been through mediation twice, hoping to cut her $1,000 monthly mortgage in half. Both times, the bank did not come with certified proof they actually own her home. It's left Hendsch in a legal limbo, not certain what to do other than write hardship letters and cut back on expenses, including food.

"My refrigerator, it's the lowest I've ever seen it," she said. "I'm not trying to be a burden on anyone, the state, the city, the county, my children, you, anyone. I've worked all my life and I'm starting over at 68."

A Nevada Supreme Court mediation clerk fills a large table with piles of incomplete bank documentation. The numbers say it all. Of the 12,500 homeowners that have gone through mediation, lending banks have only provided proper documentation for 5,500. Another 3,600 homeowners are still in the homes. The rest of the homeowners have lost their mediation cases and left their homes.

"The banks would love for you not to produce this document. Because if you don't produce even one of the documents that's required, the bank will say 'we came here in good faith, they didn't produce the documents, we're going to foreclose in the next 30 days.' And there's nothing you can do. You get one shot at mediation. If you're not right with all your paperwork, you lose that shot and you will lose your home," said Dirk Ravenholt, Hendsch's mortgage mediation attorney.

"I just need help from the bank. They've been helped out by the government. Can't they help people like myself and the other people out there a little bit too?" Hendsch said.

She holds her Irish heritage close to her heart. An old Irish proverb says it best: "The longest road out is the shortest road home."

The I-Team reached out to some of southern Nevada's largest lending banks and asked them what they plan to do to improve the state mediation program.

Bank of America responded with the following statement: "We are committed to continually improving our processes to assist distressed homeowners through the Making Home Affordable program and our proprietary modification programs."

Hendsch's third mediation took place last week. The bank agreed to lower her monthly payment as long as she declared bankruptcy.


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