House Taken Over

A onetime homeowner looks back on a two-year nightmare that ruined her life—and illustrates the madness of the financial world

The abandoned two-story house sat close to the road on an outside curve of Delaware Turnpike, packed in tight by untouched snowbanks and ice. The windows were broken and the nests and waste of wildlife lay scattered among children’s toys and shoes, clothing, cheap furniture and appliances, the things that you leave behind in a frantic move. A built-in bookshelf was stuffed with hardcovers, and a broken computer monitor lay face down next to a golf bag on the ruined carpet. An ashtray was still filled with cigarette butts, and a grimy liquor bottle sat on the kitchen sink.

This house was a war zone. It was ransacked. The copper piping had been ripped out of its guts, its doors broken off their hinges and never fully repaired, leaving the house open to the elements and the raccoons that nested inside. This house was a waste, but at one time, it was the house that JoAnne Ferrell raised three children in, and had imagined would one day be her home in retirement.

She had dreamed of teaching herself how to farm the three acres between the house and the hills behind it, and building a small, roadside business to sell her produce and crafts. It was a dream that she had struggled toward for 11 years, working two jobs and raising three kids alone, trying to save money. But nowadays, as she smokes cigarettes in the second floor apartment of her ex- husband’s Rensselaer house, those old plans and hopes are just painful, she said, to think about, because she knows that they are something she will never have. Not now. Not after the foreclosure that forced her out of her home, and the bankruptcy that ruined her credit.

Not after she got herself into a debt she couldn’t handle to a company, Wilshire Credit Corp., that she said specialized in profiting off people in distress.

A quick Google search of Wilshire will bring up pages of complaints about the Oregon-based mortgage-servicing company, and most follow a similar narrative: The company is rude, incompetent, bullying, unprofessional, greedy, vindictive. Based on these complaints, Wilshire seems to epitomize the era of subprime mortgages and predatory lending. There is at least one lawsuit pending against Wilshire, and Ferrell said that she is working with Legal Aid in Albany to mount her own. Had Wilshire just been willing to work with her, she said, none of this waste would have had to happen.

Ferrell’s is the kind of story that encapsulates the madness of the mortgage sector in the past eight years.

Ferrell’s story is a confusing blur of numbers and dates. She admitted that without a stack of documents in front of her, she has trouble keeping track of them all. But the dates and numbers are important to the story.

In Dec. 2005, Ferrell refinanced her home. She needed cash, bad. It was a different time, and the easy myth of equity-based loans was still pervasive, despite the warnings of legions of killjoy economists. Refinancing seemed like a quick, reliable way to secure cash, and Ferrell had the equity. So she refinanced her $72,000 mortgage to $87,000, increasing her monthly payments to $1,000 a month, which she could barely afford. She agreed to a crippling 11-percent interest rate, but wasn’t worried, she said, because she believed that in a year she would be able to refinance again, at a more agreeable rate.

That was the plan.

In September 2006, Ferrell was in the final stages of that second refinance. There was just one detail left to attend to: She needed to provide proof that she was current in her mortgage payments. This, she claimed, shouldn’t have been a problem, as she had been making payments on time for a decade. But what she didn’t know was that her original mortgage servicer no longer held her contract. In fact, it had been sold in August. So when she made her August mortgage payment, she paid to the wrong company. On Aug. 5, she claimed, she was informed by the new company, Wilshire Credit, that she was delinquent.

Her refinance was thrown into chaos.

“I had enough credit. My credit was good. My bills were paid. All I needed was a letter from Wilshire that said I was current,” Ferrell said. But according to Ferrell, dealing with this new company was proving to be a nightmare of waiting on hold, lost information, lost documents, rude customer service. After two months, the confusion over the August mortgage payment was finally settled, but by that time, her deal had fallen through. Even though, she said, she had paid Wilshire the September payment directly.

Ferrell was stuck with the devastating interest rate, and the monthly mortgage payment she was having trouble meeting. She decided to strike out again, to find another company refinance with, anything to get rid of Wilshire.

In December 2006, four months after being sold to Wilshire, Ferrell claimed that she was informed by the company that it was going to raise her monthly payments by $100. Wilshire claimed that Ferrell didn’t have enough money in her escrow account and that she hadn’t paid her insurance. It was simply not true, she told them. The insurance was paid, and her escrow account was fine, she said. Her insurance agent even called Wilshire to tell them so. But she wasn’t worried; by that time she had found another company to refinance her loan. She had even been pre-approved at a reasonable new fixed rate.

“I thought that I was going to get these people out of my life,” she said of Wilshire, “and that the nightmare was going to be over.”

But by that time, the world had changed. The housing bubble was in full burst. Foreclosure numbers were gaining steam, and the media were beginning its shriek about subprime mortgages. It seemed that the financial and regulatory worlds were beginning to brace themselves for the fallout, and mortgage companies were beginning to enforce strict guidelines for refinance deals. Ferrell’s house, after a detailed appraisal, was denied.

With her second attempt at a refinance gone, she had no option but to go back to her negotiations with Wilshire. She told them that she couldn’t afford the $100 increase, and that there was no reason for the increase in the first place, that they were wrong about her taxes and her insurance. She offered to pay them the original payment amount, she said, but they wouldn’t accept the money.

“They wouldn’t take anything but that amount” Ferrell said. “And one hundred dollars might not be a lot to some people, but for me it was too much.”

Frantic, with no options left, Ferrell put her house and her land up sale in January 2007 and, frustrated in her inability to deal with Wilshire, she stopped making her mortgage payments.

In March 2007, after two months of fighting with Wilshire representatives, the company began foreclosure on her property.

“You have no idea the white trash that this company is,” Ferrell said. “They are bill collectors, basically. They treat you like dirt. They call me up, when I missed that first month, and I answered my cell phone at a Lowe’s, and I got this guy on the other end of the line, screaming at the top of his lungs, ‘Why the eff didn’t you pay your eff’ing mortgage.’ Calling me bitch. How do you work out an agreement with someone like that?”

Ferrell stayed in her house throughout the summer, during the foreclosure process. Every month, her debt to Wilshire increased by $1,100, plus fines and fees.

By August 2007, she had found a cash buyer for the house. According to her real-estate agent, who asked not to be mentioned by name in this article, everything was set. The buyer was offering $105,000, well above the original $87,000, but barely above the $103,000 Wilshire claimed that she now owed them. The company refused to sign off on the deal. Wilshire claimed, she said, that Ferrell was trying to short sell.

It again became a confusion of paperwork and phone calls and delays.

“The few times that they actually spoke to me,” Ferrell said, “it was like, ‘Can’t you get more money? Can’t you get more?’”

Her lawyer, Michael Mansion, has years of experience handling real-estate and bankruptcy cases, and he can’t hide his disgust when talking about Wilshire. “That company should be taken out back and shot.”

“They jerked her around, repeatedly asking her for the same kinds of documents. Pay stubs, balances in checking accounts, with the promise that they were going to work out this sell. We sent them this same material over and over again,” Mansion said. “I don’t think that they were acting in good faith at all.”

Wilshire would claim, said Mansion, that they had never received documents, even though Mansion had proof in the form of receipts of fax-transmissions received. “And all the while the interest was accumulating, making it harder and harder for her to sell the property.”

In September, Ferrell signed a contract to sell her house. “That whole week my realtor was calling them,” she said, “telling them that they had a signed contract with a cash buyer that was well above what they were asking.” In that same week, Wilshire finalized the foreclosure.

She continued to fight to sell her house, but by Dec. 18, she and her 10-year-old boy, Jesse, were told they would have to be out. There was going to be a sheriff’s sale. At that, Mansion suggested that Ferrell declare bankruptcy, just to get a stay, and to stay in the house through the winter. And she did, eventually moving out in March 2008.

Since her bankruptcy, Wilshire has sold Ferrell’s mortgage, and she has no idea what she owes anymore. She has heard so many numbers: In September 2007, it was $103,000. In October, it $109,000. In bankruptcy court she heard numbers that ranged from $113,000 to $170,000.

When contacted, Wil shire directed Metroland to speak to New York City-based public-relations agent Bill Halldin, who expressed disbelief at Ferrell’s story. He laughed at the idea that Wilshire wouldn’t agree to a profitable sale: “I’m puzzled.”

“As a policy, we don’t comment on specific individual cases due to privacy laws,” Halldin said, but added that Wilshire makes every effort to work with anyone who is completely willing to meet all their obligations, including fees and costs. Then, he pointed out that Ferrell is in bankruptcy court. “Once people are in bankruptcy, things get complicated.”

—Chet Hardin

chardin@metroland.net

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