Aurora Loan Services Saga, Part 3

by francine Hardaway on March 1, 2010

After I got all the comments on my last blog post, I got frightened that I would be thrown out of the loan modification program and then would be in foreclosure for not making the payments of the original loan while I was making those of the modification program. Several desperate people wrote me that had happened to them. So I did what I always do: I asked.And I got what I consider an honest answer. The servicers are caught between needing to get people immediate relief and needing to get the modifications underwritten. They are, after all, still loans. So people like Aurora chose to give immediate relief through temporary modification without verified income. That made people think they were “in” — until they submitted their documents and found they were “out.”

So it backfired on the servicers, because it appeared to be a betrayal. The news media doesn’t cover stuff like this, but people need to know:

..the program guidelines… have recently changed in a way that will limit what you describe from happening.

First, current program guidelines. The program currently permits servicers to start trial payment plans on the basis of verbal income information provided by the borrower. Many, if not most, servicers chose this option because it provided immediate payment relief, subject to verification of income and full underwriting. The other option requires borrowers to submit complete documentation for underwriting prior to starting a payment plan.

In the case of trials based on stated income, if the documentation subsequently submitted by the borrower is different, and the person is no longer eligible, they would in fact be reported as delinquent as required by the program.  Note that the income can be too high (specifically, the housing to income ratio is below 31% already), or too low (frequently the case in the case of someone who has lost their job in the interim). In addition, the program required certain other data to be refreshed if aged greater than 90 days, which could also result in not being approved.

So, the scenario you describe does in fact occur. Recently, the Administration changed  the rules to eliminate the stated income option, and all new borrowers will be fully underwritten prior to starting on a plan, so that if they make all payments and submit the final agreements, they are done.The deadline for conversion to the new plan is June 1.

The Treasury guidance that outlines the mandate to move to verified income is public information. I’ve linked to part of it here. Another useful document is the latest FAQ shown on the site.

I know this may not change the outcome for me, but at least I don’t feel that I’m being buffeted by unknown forces for their own advantage. This is a typical government program: well-meaning and poorly executed on all sides.

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{ 16 comments… read them below or add one }

Jocelyne C. May 29, 2010 at 7:08 am

Hi Francine. I have been following your posts about Aurora and I am interested in joining the people who have filed a class action suit against them. How can I join? Aurora has made my life hell for over 18 months and I can't take it anymore. They have put me on different plans and every plan I've showed them that I can pay for my home and they constantly try something to not approve my modification.I am desperate to save my home and they keeping on changing me from one plan to the next. Just like you have a pile of papers ready to send to them every 3 months or so because they can't seem to keep people's files together. They are threatening to forclose on my home July 6th and I need to do someyhing fast. I cannot let them get away with it. Please help!

Kim P. June 1, 2010 at 9:36 am

We just were 'enrolled' in Aurora's loan modification 4 months ago. After reading this, I am now worried we will lose our home. I had no idea this was possible, as it was 'sold' to me that this program would help us retain our home. So, if you are not approved, does that put you in foreclosure immediately? Also, we received a note on our door yesterday to call Aurora. I did and they said they had come by to take pictures of the property and to ensure the home was occupied. Is this a normal procedure?

hardaway June 4, 2010 at 1:19 pm

There is now a Yahoo Group and several people coordinating.

Francine Hardaway, PH.d

hardaway June 4, 2010 at 6:07 pm

After June1 1they can no longer take people into the program who won't qualify as I understand it. They never sent anyone to my house that I know of but the rules have changed. I still do t have my fi al paperwork back from aurora!

Francine Hardaway, Ph D

Rene Robert June 4, 2010 at 7:20 pm

I have never hated any one entity like I do Aurora, I now know the true feeling of hate…thought I did…but I do!

I've been going through the same thing for over a year. They just keep jerking me around –
I've been on a forbearance plan now since Jan. and part of the agreement for the forbearance is having to re-submit all the modification paper work again…which I did (for the 4th time I might add) only to get a phone call telling me I neglected to send them some info they requested in a letter I never received..

that was June 2 (yes..two days ago) – so –

I find out June 2 is “the cut off date” I can submit the info on the letter I never got, so I ask if she could fax me a copy of this letter, she said I would have to call back, put in a request, and that request would take a few days.
I asked her if she could read to me what they were looking for, I could find it, fax it in and we would be golden…well she started rambling on about copies of leases and copies of collected rents…

Copies of leases??
Collected rents??

I'm growing ever angrier by the minute – because this dear lady had not two minutes earlier asked me this question when she called me to qualify me as the homeowner: “Is this your primary residence?”

So I point out (not so subtly I might add) that this is my primary residence so I was at a loss to what leases and collected rents she was referring to –

Conversation went downhill from there –

I told her the only letter I received was on May 27 and I called in and was told by Aurora Rep that it was a stock monthly mailer and my paperwork was in their system and everything is as it should be.

Her response to that was “well the person you spoke to isn’t trained to read these files” and didn’t give you correct information”

I again, not so subtly, reminded the her that I was calling into a phone number, provided by her company, to the department provided on the letter that I was holding, for the sole purposes of a loan modification – this person's training is irrelevant to me.

Well…the call pretty much ended there.

I called back, got someone nicer this time who took the time to read the missing mystery letter line by line so I could write down and fax in what they were looking for – remember, this is still Jun2, my deadline date.

The info they wanted was updated pay stubs and a W2 – pretty far off from lease copies and collected rents…but wait…it gets better…

So I state since its only 2PM MST and its still 2Jun (my deadline date) if I fax this in, they would need to re-open the file – she said no, because it was already closed, I would have to submit a letter of “Appeal of denial” with the missing info.


So I do it.

Ok – so today Jun 4, I call in to see if the file got re-opened, they got my faxes!! YEA!!


So this rep tells me no, it’s not re-opened, I said how can that be, I got the fax in ON June2 with the info they requested in the letter –

Her response to me just made my blood boil –

She tells me that although they received it on 2Jun, because of their inner process to scan faxes into files, it was delayed – so I technically still missed the deadline.

She tells me my only option is to start all over again and submit ANOTHER loan modification package or “asset liquidation”

Asset liquidation….Isn’t that I nice word for foreclosure?

So, I restate my opening line –

“I have never hated any one entity like I do Aurora, I now know the true feeling of hate…thought I did…but I do!”

Jake Storm June 14, 2010 at 6:26 pm

Well it's oddly comforting to hear I'm not the only frog in this pot.

Aurora has been screwing with me for over 2 years now. I entered into a trial modification and went through the same gauntlet I'm learning from all of you is standard process for Aurora. It seems they “lose” paperwork as a way to then graciously grant an extension of your trial…which means, of course you then need to make an additional payment…only then to discover you don't qualify! Then they may come up with an alternative plan for you, but you'll always have to jump through hoops and by by certified check. I'm convinced the only reason for these “programs” is for them to string people along that there's some hope that the nightmare will come to an end, when in reality they know there's no way to modify the terms. Their goal is to simple eek out as many payments from borrowers as they possibly can before the loan inevitably goes bad They know there is no way that most of these loans will ever be modified…they are just to complex. The ONLY way out of them is to default.

My response to this whole thing as been to reverse the process and screw them as much as possible for as long as I can. My credit will take a hit, but in the grand scheme of things I just don't care anymore. I discovered chapter 13 as a strategy rather by accident. Since filing I've felt much more in control. You have to get past the social stigma of being in bankruptcy, but once you realize that no one comes to your door with a wooden barrel for you to wear, the stress level drops dramatically.

Once you are in chapter 13 there is little Aurora can do to touch you. Get a VERY good lawyer and you will turn the table on these guys in some very satisfying ways. Realize though, that what you are committing to is a slow glide towards leaving your property. You will have time to prepare and think things through rationally. If you aren't too far underwater you may even want to stay in Chapter 13 through the whole term (usually 5 years). If you are terminally underwater I honestly feel it is your best option in that it allows you to save cashflow towards eventually buying again someday in a more favorable market.

I used to think that a program would appear that would make this all “right” again, but when the cramdown authority was shot down I realized there's no hope to right things. The banks will bleed borrowers as long as they can knowing that its just a matter of time until people wake up and walk. I personally think it would be a hell of a protest to have everyone walk from their loans. It would fix the market by default because properties would naturally recede to a “real value” level, and the credit rating system would have to be scrapped as it would be meaningless. Lenders would have to lend again or go under from the weight of REO inventory. What a beautiful world it could be. :)

hardaway June 14, 2010 at 7:05 pm

That's so funny, because I have come to the same conclusion as you have,
except for the Chapter 13 part, so I am continuing to pay. I've been told I
have a moditication but I have not see any executed paperwork from Aurora.

Jnatal July 6, 2010 at 12:17 pm

The GAO report issued several recommendations to Treasury, including that it establish

* procedures to track HAMP complaints
* further efforts to inform borrowers to use the HOPE Hotline if they have been incorrectly denied HAMP
* consequences for mortgage servicers for noncompliance with HAMP

Jnatal July 6, 2010 at 7:17 pm

The GAO report issued several recommendations to Treasury, including that it establishrnrn * procedures to track HAMP complaintsrn * further efforts to inform borrowers to use the HOPE Hotline if they have been incorrectly denied HAMPrn * consequences for mortgage servicers for noncompliance with HAMPrnrn

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Jen_siem August 24, 2010 at 8:28 pm
JIMMY December 18, 2010 at 3:35 pm

Aurora told me 15 days ago they would send a pkg for my loan mod but I am still waiting. Did you ever get your promised papers and did you ever get your loan mod.

hardaway December 18, 2010 at 4:15 pm

I never received the papers, and just continued paying the modificationrnuntil last month, when I finally short sold my house. Just as an fyi, evenrnthough I was current when I sold, and the house was $240k under water, whichrnmade any other kind of sale impossible, it is already reported as an adversernincident on my credit and my other credit card lines have already been cut.

secured loan January 5, 2011 at 5:04 am

good one…. very nicely described everything.n

Tall1001 March 7, 2011 at 12:33 am

Well…we are underwater with our mortage.. the option arm loan will adjust in about 6 months from now.
short sale is an option. Something i just learned though is if you plan on going thru with a short sale or even a foreclosure, its to make sure you pay off all of your credit card debts before walking away.
because once we walk away from our propertys, our credit card rates will triple, and it will take 30 years to pay off these cards. it will be much easier to build credit on a card with a zero balance than one with excessive interest/penalites and the like.
Our loan will adjust, making it so that we will have to pay almost $6,000 per month to live in a 2 bedroom one bath house in the SF Bay area. sigh. i wouldnt do a chapter 13 though it is tempting.

hardaway March 7, 2011 at 12:58 am

I ended up doing a short sale because I had to live in Phoenix. I stayed
current until right before I sold. I bought a small condo in Phoenix for
cash. I got a car loan. Then I short sold. My credit got hit,from 729 to
650. To get a mortgage now, you need 750, 22% down, and 6 months of payments
in the bank. My credit lines were slashed.

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