For many homeowners it is a race against time. An overwhelmed financial system is processing complicated loan modification paperwork, but often it is way too slow and the homes wind up on the auction block.
Regina Harper of San Leandro happily bakes cakes in her tiny kitchen and has settled in with her pet Shih Tzu. However, it wasn't long ago she thought she'd lost this place for good.
"I remember when I used to look at the four walls and think, 'How long have I got to be here?'" said Regina.
The past two years have been filled with ups and downs as she struggled to keep her home, starting when she fell behind on her house payments.
"Every day I would dread coming home from work. I used to sit in the car for an hour or two before I would come up thinking, 'Oh man, that note is going to be on the door,'" said Regina.
Sure enough, she arrived home one day to find a foreclosure notice slapped on her front door.
"My first thought was, 'Where am I going to sleep?' You know," said Regina.
However, there was hope. Saxon Mortgage let her try to save her house by modifying her mortgage. Regina entered the government's Making Home Affordable program and her house payments were cut in half for a trial period. It was a huge relief, until -- out of the blue -- she got a shocking phone call.
"To tell me that I was no longer the owner and that my place was sold and that Deutsche Bank was the owner and that I had to move," said Regina.
It turned out while she was busy modifying her loan, the foreclosure wheels had still been turning. Her home had been sold out from under her.
"It's quite a common occurrence unfortunately," said Consumer counselor Rick Harper.
Rick says this has happened to many distressed homeowners. While one part of their bank is modifying their loan, another part is on its own track rolling toward foreclosure.
"I'm dealing. I think I've got my modification, I'm ready to go and then I'm notified I've already lost my house to foreclosure," said Rick.
"I didn't know where I was going to go and what I was going to do. I thought I was going to be homeless out there on the street," said Regina.
However, there were still more ups and downs to come. First, Saxon admitted the foreclosure sale was a mistake due to inadvertence and oversight. It returned the home to Regina, but not before she was kicked out of the Making Home Affordable program. She now had a new mortgage company Ocwen Loan Servicing and her loan payments shot back up. That's when Regina contacted 7 On Your Side.
"It was the first bit of hope of somebody listening to me," said Regina.
7 On Your Side contacted both Saxon and Ocwen and the two mortgage companies agreed to work together for us. Weeks later, Regina got the good news that she got a new 25-year fixed mortgage.
Because of the mistakes, Ocwen put Regina back in the Making Home Affordable program after all. Her house payments were cut nearly in half, to $1,660 per month, and Ocwen agreed to forgive $126,000 of fees and principle over three years. That put Regina squarely back in her little kitchen.
"I have a roof over my head, me and my dog. I can say this is home. Thank you 7 On Your Side," said Regina.
There are new rules in the Making Home Affordable program to reduce this type of problem. The rules now say, once you make all your trial payments, your loan modification automatically becomes permanent and that should stop any foreclosure.
If you need help, there is a list of government-approved housing counselors at Hud.gov.