By Alison Burdo
February 14, 2012
Homeowners’ aggravation continues despite the $25 billion foreclosure settlement the federal government reached last week with five mortgage servicers to compensate for loan servicing and foreclosure abuses. Borrowers, like Vivian Ojikutu, await more information as no one seems to know the first step to obtaining financial relief.
Six years ago as home prices escalated, Ojikutu paid $255,000 for her first home, a North Lawndale duplex. The purchase was a plan for her financial future. She rents out the second floor three-bedroom apartment to supplement her income and hopes to leave the property to her two adult sons when she passes.
Ojikutu put 20 percent down in 2006 and has made every $1,500 monthly mortgage payment on time. But she still owes $183,000 on her North Lawndale duplex. Yet her home was appraised for only $84,000 last year, putting the 97-year-old home underwater and the 69-year-old retiree’s plan in jeopardy.
She is one of the 383,000 homeowners underwater in the Chicago region, according to Tom Feltner, vice president of the Woodstock Institute, a nonprofit that researches lending, wealth creation and financial systems. In Illinois there are 481,000 homeowners who owe more on their mortgage than their home is worth, Feltner said. But to be eligible for the new relief plan, a mortgage must bear an interest rate of 5.25 percent or more, and the mortgage servicer must be Citigroup, Bank of America, Wells Fargo, Chase or Ally Bank, formerly GMAC.
“No matter how many things I try to stack in my favor, people who don’t want to give you the advantage can find a way to stop it,” Ojikutu said. She retired from a law firm in April 2008, shortly before the housing market crash.
“Sooner or later, the money I’m using is going to run out,” she said. “If I get a refinance, I will be able to make this work much longer than three years.”
With Citigroup Inc. as her mortgage servicer and a current interest rate of 6.36 percent, Ojikutu should be eligible for refinancing as part of the foreclosure settlement. But at this point, she can’t move forward. Citigroup will contact her if she is eligible, according to information released by the Illinois Attorney General’s office.
“I am not satisfied with the idea of waiting until the bank sends me a letter or calls me,” Ojikutu said. “But I’ll give it a chance to work.” She’s giving Citigroup 30 days to contact her, she said. At that point, she will call the bank.
In the six years since Ojikutu purchased the home, she replaced the front steps, rewired the electric service and added a firewall to the roof. She also refinished the hardwood floors and replaced the kitchen floors in both apartments. Despite the fact that she had invested approximately $100,000 to improve the property, she was denied a chance to refinance in 2011 through the Home Affordable Refinance Program, or HARP.
“Once I was turned down, they stopped taking my calls,” she said. “They’re betting against me.”
Her frustration lies in the fact that she received no feedback on the rejection. If her mortgage does not get refinanced within three years, she predicts her home will go into foreclosure.
Ojikutu remains optimistic. “There is always help coming through the pipeline,” she said. “There is a way to work it out. I just have to discover it.”
Born in 1942, Ojikutu grew up as part of a generation that saw property as an investment, something of value to leave behind for her children, she said. “I have not given up on the idea to have something to leave behind for my sons.”
The foreclosure settlement will assist three distinct groups: borrowers who are behind in their mortgage payments and at imminent risk of default, former homeowners who lost their homes to foreclosure between 2008 and 2011, and borrowers who are current on their mortgages but have an outstanding loan balance greater than the current appraised value of their home.
Illinois will receive $1 billion of the settlement, a triumph for Attorney General Lisa Madigan. But the distribution among the three groups has yet to be determined, according to her deputy press secretary Maura Possley.
Ojikutu remains hopeful despite the lack of information and her current stage in life. At nearly 70 years old, it may be more sensible to walk away from her home, as many other distressed homeowners have done, but that is not in her character, she said. “If I live, I will manage to get this done.”
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