Roughly one in every 250 homes in San Diego County is in foreclosure, according to RealtyTrac.com. That’s one-and-a-half times higher than the national foreclosure rate.
Jackie Foglio's house was one of those going through the foreclosure process in the last two years. She's been fighting it every step of the way.
Everyone told Foglio that 2007 was not the year to buy a house.
"That’s what I kept hearing, but when else am I going to get a house? I had a condo and my mom had passed away and my brothers both had houses and I kept thinking oh I want a house really bad, I want a yard," she said. "So, I just went for it.”
Things were fine until January 2009.
“When I was working we were making our payments and everything was fine," Foglio said. "Then I was laid off, a bunch of us senior secretaries got laid off. And that’s when they were already just starting the loan modifications and I went to the bank and checked with them what I should do.”
That conversation started what has now been Foglio’s nearly two-year long battle to keep her home. She missed her first mortgage payment in April 2009. Early that summer she started to apply for a loan modification.
The house was in Foglio’s name alone, but her husband, Joe, was still working in construction. She figured if their monthly payment was reduced by about $1,000, they could make ends meet.
Like many homeowners applying for modifications, Foglio had to submit and resubmit paperwork to her bank, Chase, because they misplaced her application materials. But, by November 2009 she was approved for a temporary modification.
"You know, I thought it was smooth sailing last Christmas, if we make our payments we’re fine,” she said.
And Foglio did make the payments for the three-month trial period. When she didn’t hear from the bank after the last payment in March of this year she called customer service and was told they didn’t know the status of her application. She says the agent suggested she make a good faith payment, so she did. But – it wasn’t enough to get her a permanent modification.
“I received the letter on April 26th that I was denied. And they said negative NPV, net present value," she said. "And the operator couldn’t explain to me what NPV was, but that I would be getting a package in the mail. “
Net present value is a test lenders run to see which option is more lucrative for the lender -- foreclosure or loan modification. When the result is negative, foreclosure makes more money for the bank.
Foglio challenged the home appraisal value Chase used in it’s calculations. But at the end of June she received a notice of default. While the bank reconsidered her application through the summer, the countdown to foreclosure continued.
Each lender calculates the present value a little differently and the exact equations they use are not public. So, challenging a bank’s calculations is pretty difficult according to Vino Pajanor, president of Housing Opportunities Collaborative.
“Usually when an NPV comes back and they say hey, you know what – it’s not going to work, usually you have to look at the circumstances of the borrow and see if there are other chances by which the borrower could reapply for loan modification,” he said. If there aren't additional circumstances, he said this is the time to consider other options that give ownership of the home to the bank without putting it in foreclosure. The homeowner still loses the house, but their credit doesn't take as big a hit.
Housing Opportunities Collaborative is an umbrella organization for HUD-approved housing counselors. They’ve seen about 8,000 homeowners like Foglio at their foreclosure clinics across the county.
Pajanor expects to see even more in the next two years. Lots of homes between 2005 and 2007 were bought with loans that allowed interest-only payments for the first five years. Those five years are coming to an end for many homeowners who have lost their jobs or whose incomes haven’t increased as expected.
Gary Kishner, a spokesman for Chase, said the bank considered Foglio’s application materials three separate times.
“We worked with Ms. Foglio over a period of several months and reviewed her application for a modification multiple times," he said. "Unfortunately, she does not qualify for a modification.”
Foglio’s home went to auction in October. She is still living in the house, waiting for an eviction notice. But she found an attorney and is planning to file a complaint in court. She hopes a judge might overturn the sale. If not, she thinks filing the complaint will still be worth the trouble.
“Maybe it won’t save me," Foglio said. "I’ll still get evicted. But maybe the next person and enough red flags and the judges will really listen.”
Foglio says she would consider buying a home again if she ultimately loses this one. But, only if she can pay for it with cash. She closed her checking account with Chase and opened one with a local credit union. She says she won’t deal with big banks anymore.
