The Nitty Gritty of it All

I’ve just been to Florence Thomas’ loan restructuring. I’ll spell out all the details in a minute, but let’s just sum it up like this: It’s not pretty.

Thomas, a single mother with three children from Upper Marlboro, Md., lost her long-time job in June as a case manager at a company that folded. She has two Countrywide loans - a stated income adjustable mortgage loan with a 5.75 percent interest rate and a 10.5 percent home equity loan Countrywide recommended when she called two years ago to say the first loan was too expensive. Neither loan ever was appropriate for her, but there’s little to be done about that now. Her mortgage payment totals $3,145, which she can’t afford, even after cutting everything she thought she could from her budget.

But as she sits at one of the little round tables in the crowded banquet room with NACA counselor Abimael Lorenzo, Thomas gets some bad news. To get a loan modification, she’s going to have to cut more. That’s the first step of this whole deal. Borrowers have to prove to lenders that they’re willing to take some hits, too, in order to get a better mortgage. "This is not a free ride," Lorenzo says.

First, goes $120 a month for cable. Thomas doesn’t protest. When he moves to cut $200 from the grocery budget, she points out that she’s already a frugal shopper, but he doesn’t budge. "Right now," he tells her, "we need to save your home."

"I hear you," Thomas replies. A few minutes later, I notice her holding her head in her hand.

The two go on to cut even more. The clothes budget goes from $250 to zero. Another $50 goes from groceries. Thomas remains stoic as Lorenzo gently reminds her the goal is to save her home. But then he cuts her $50 a month tithe for her church, and she gets upset.

"This is about faith," she protests. For the first time, she seems a little shaky. Lorenzo holds his ground for a moment, then jiggles some numbers, then puts the $50 tithe back in. He’s sending her new budget to a computer program; Countrywide then responds electronically with a counter-offer.

All the pain seems to be worth it. Countrywide sends back a formulation that shows her loan payment dropping to $2,392, and instead of the two loans she’ll have a single loan with a 3 percent interest rate, plus a $15,000 reduction in the amount of the loan.

But it’s not over yet. That’s just an electronic proposal. It goes to NACA’s resolution department, which does the back-and-forth process of fighting it out with Countrywide’s loss mitigation people to make the proposal a reality.

Usually borrowers wait an hour or two to find out if the proposal is approved, but NACA is so overwhelmed it’s taking much longer, and Lorenzo tells Thomas to call on Friday to get her answer. She’s almost too overwhelmed to talk. "It’s too emotional," she said. She did add that she thinks putting the tithe back in did the trick.

The other reason borrowers won’t know whether their loan proposals will be accepted is that NACA wants them to go up to Capitol Hill and lobby lawmakers to pressure lenders to do more loan modifications and to see NACA’s work in action. Thomas said she can’t go today but she will on Thursday or Friday, and she also said she doesn’t mind doing it. "When God opens a door for you, you need to make sure you open it for other people," she said.

I’ve spoken before with some housing experts who do have an issue with NACA requiring borrowers the group helps to participate in its rallies. But housing advocates also have told me that it’s not unusual for advocacy groups to require this of their members, and that the borrowers are getting a great deal on their loans.

If Thomas’ loan gets final approval, that certainly will be true.