The Star-Ledger

Wells Fargo Meets With Hundreds In Foreclosure

The Star-Ledger — Sunday, January 16, 2011

By Sarah Portlock / The Star-Ledger

Mark Smith, who was once homeless, and his wife Joi wanted desperately to open a homeless shelter to help others. When the economy started to sour in 2005 and his construction work and her real estate agent projects dried up, they saw an opportunity to take their savings and finally embark on their dream.

Mark, 44, would renovate a house they had as an investment property in East Orange. Joi, 49, would line up the necessary permits, licenses and variances to turn the property into Joi's Angels. Once it was operating as a shelter, the Smiths could collect funding through grants and government agencies.

But the Union residents never imagined, five years later, they would be facing a foreclosure notice on their own family's home of 12 years. That was after emptying their bank accounts, retirement savings, 401(k) plans and money from a life insurance policy to pay for the monthly mortgage payments on their personal home.

"We knew we if couldn't get this (shelter) off the ground, we wouldn't be able to maintain our home because we didn't have any other business," Joi Smith said. "So, we had to gamble."

They hadn't counted on construction costs skyrocketing so high, the process taking so long, or the market turning as bad as it did. Without collecting an income, they fell behind on mortgage payments.

Things started looking up on Dec. 8, when the Smiths received their final approval for the shelter.

"As soon as we took care of that, we said, 'OK, we need to take care of our home,'" Joi said.

Early Thursday morning, she heard about a home preservation workshop for Wells Fargo and threw together their mortgage paperwork together as quickly as she could. The prospect of meeting with a counselor in person was enticing -- Joi had tried four times to get a loan modification over the phone, but each time her bank said she didn't file the paperwork properly.

The two-day event was the first of 20 the bank has scheduled nationwide this year as an outreach effort to work with clients who are two or more payments behind on their mortgages. An estimated 30,000 customers from New Jersey and New York who have mortgages with Wells Fargo Home Mortgage, Wells Fargo Financial, Wells Fargo Home Equity and Wachovia, which the bank purchased in 2008, were invited to the event in Secaucus.

Homeowners by the hundreds came wheeling document boxes, lugging stuffed accordion folders and hauling overflowing backpacks. The contents were much the same: tax returns, bank statements, paystubs, other financial documents. Of the bank's 650 clients who registered for one-on-one, one-hour meetings with counselors, about 550 showed up despite the snowy weather, organizers said.

Nearly 65,000 New Jersey homeowners were in foreclosure last year, up 2.5 percent from 2009, according to the most recent data from RealtyTrac, a national database of foreclosure filings.

"The goal is really to understand their situation and to provide some sort of alternative (to) foreclosure option," said Joe Ohayon, senior vice president with Wells Fargo Home Mortgage who leads the events.

The bank started the workshops in 2009, and Ohayon said this week's event was scheduled before Wells Fargo was one of six banks named in a December state court order to prove its foreclosure processes weren't unnecessarily putting customers into foreclosure.

Between 20 and 40 percent of customers receive a decision on-site, and 50 percent do within a week, Ohayon said. Two-thirds of those homeowners will then work out an alternative to foreclosure, the "vast majority" of which is a loan modification, he said. Other options could include repayment plans or short sales. The remaining third did not return the necessary paperwork. Others may end up going to foreclosure or sell their property, Ohayon said.

"While we try to avoid foreclosure, for some of our customers it's the last resort we have," Ohayon said.

The aim instead, Ohayon said, is to help customers become financially stable, whatever it takes.

"There really is no silver bullet," he said. "We need a comprehensive approach, and the more tools we have in our tool belt, the better to help our customers in unprecedented times."

Wells Fargo invited community groups to offer credit counseling and talk with its customers about local outreach efforts. Newark-based New Jersey Citizen Action Executive Director Phyllis Salowe-Kaye said Wells Fargo and other mortgage lenders are obligated to host events like these, judging today's mortgage industry.

"The large banks that have been named as having been the bad guys, I think they all have an affirmative obligation to do as much as they possibly can to try and mitigate the foreclosures," she said. "Every single thing that anybody is doing clearly is needed."

But, she added, "everybody should be doing more."

The event gave Joi and Mark Smith a feeling of hope, and that they have a second chance.

"We felt like we were losing everything while we were helping others," Mark said.

Their new mortgage counselor helped the couple understand what additional paperwork they would need to get back on track, be it a loan modification or perhaps a principal reduction.

"I do feel like we can pretty much start all over again," he said. "We're hoping everything is going to start turning around for us."

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