Marie, who asked that we not use her last name, is one of those distressed homeowners with Wachovia. She lives with Parkinson's Disease. Her troubles started when she refinanced her home in Fremont and got into a pick and pay loan.
"Not only is are loan nowhere near being paid off, it's more than doubled," said Marie, from Fremont.
Pick and pay loans are structured in a way that allows the loan balance to increase, if the homeowner makes the minimum monthly payment. Wachovia is based in Charlotte, North Carolina where the banking reporter for the Charlotte Observer has been watching the company closely.
"We were hearing from employees here and other places around the country who were complaining that they were being forced to sell these pick and pay loans and they didn't like the loans because they had concerns about whether they were good for borrowers," said Rick Rothacker, from the Charlotte Observer.
Wachovia announced this summer it would stop offering pick and pay loans, but that wasn't soon enough for thousands of homeowners like Marie, who are already in those loans.
Citigroup did not return our calls on Monday seeking comment about what it will do with the existing loans and Wachovia said it was too early to tell.
Regardless, Kevin Stein of the San Francisco based California Reinvestment Coalition said anyone in negotiations to make their payments more affordable should continue.
"If folks have entered into agreements, or work out agreements with Wachovia, they should be fine. If people are negotiating agreements with Wachovia they should continue to do so," said Stein.
Loan modifications are something both the governor and President Bush have requested of all mortgage lenders. Wachovia told 7 On Your Side it would offer a loan modification to Marie. Housing advocates, however, say the agreement did nothing to reduce her monthly payments or long term debt. It just restructured the loan.
Still, Marie was facing foreclosure and felt she had no choice but to accept the offer.
"We had a deadline to sign these papers or the foreclosure would proceed where it left off," said Marie from Fremont.
The threat of foreclosure is lifted and the agreement buys her more time. Housing and Economic Rights Advocates in Oakland is hoping to qualify Marie for a 1.5 percent 30 year fixed rescue loan.
Free Foreclosure Workshop for San Mateo County Homeowners:
October 16, 2008
EPA CAN DO
Workshop location: Fair Oaks Community Center
2400 Middlefield Road
Redwood City, CA
(650) 473-9838
Drop-ins are welcome, but RSVP's are appreciated.
