Donna Peterson told a small crowd that Bank of America encouraged her to default on her mortgage and then tried to foreclose on her home.
About a dozen people attended a March 10 presentation by a Helena woman who said she has been fighting foreclosure since mortgage lender Bank of America advised her to default on her loan in order to qualify for a much lower rate.
The talk, hosted at the library by Occupy Helena, came a day before a federal judge in Washington D.C. released the wording of a $25-billion government settlement with five major lenders, including Bank of America, in part for misleading borrowers seeking loan-modification deals.
Speaker Donna Peterson offered what she called “my corner of the larger issue.”
She said she purchased her original loan from the Countrywide Financial — the predatory subprime lender, which was bought by Bank of America in 2008 — and was current on mortgage payments until beginning treatment for cervical cancer in early 2009, at which point she called Bank of America to request a forbearance.
Peterson claims a bank representative told her they could drop her interest rate from 8.5 percent to 2 percent, but first she had to stop making payments and default on her loan.
“I had no reason not to believe what they told me,” Peterson said.
In June 2009, she stopped making payments. Now she regrets doing so because she feels the bank unnecessarily delayed resolution and then used her forestalled payments as an excuse to begin foreclosure proceedings.
She said bank officials sent her stacks of paperwork after she requested assistance, but she doesn’t believe they approached their own process in good faith.
“It took me eight to a dozen hours to do the paperwork,” Peterson said. “But every single time I sent in my application … someone would say, ‘We never received a particular document.’”
She estimated that she had completed the required paperwork eight to 10 times.
At one point she asked the small crowd if anyone else had faced similar situations and two men raised their hands. Steve Story, 44, said Bank of America also foreclosed on his home and that he had submitted the paperwork “probably 20 times.”
“I am convinced that Bank of America doesn’t want those (modifications) to succeed,” Story added. “People who haven’t been through it have a hard time believing that.”
Another attendee, Seth Breding, said his situation was a little different in that his problem originated with an investment property. However, he said the bank also encouraged him to miss a payment in order to qualify for a loan modification. He said he skipped a payment, but when they urged him to do it a second time, he balked.
Peterson said that, at one point in summer 2011, the bank offered her a modification deal that included a 3.5-percent interest rate, but they wanted to charge her back-interest at the original rate of 8.5 percent.
“I believe they made a promise to me (about the 2-percent rate) and I believe it’s unethical not to honor their promise,” she said.
She rejected the deal.
“That’s when they got in my face,” she said. “And it infuriated me. It was their error. I just dug in my heels and said, ‘Hell no.’”
She has since found a local attorney, Jon Motl, who was willing to work on contingency.
“(Judge Seeley) issued a temporary restraining order prohibiting Bank of America from doing anything with the house,” Motl said, explaining that the bank is officially barred from moving to foreclose on Peterson’s home until the case is resolved in court.
Motl, who specializes in consumer complaints, said his firm has filed 10 such cases against Bank of America on behalf of Montanans across the state and three more with other lenders.
“I think in 20 years of practice these are the most consumer complaints I’ve seen against a business entity, and the most serious,” he said.
Peterson’s advice to others was “document every single thing … their name, phone number, what did they say. Keep copies of everything they send, receipts.”
She said she has had to spend time away from work because she is dealing with this problem, so she suggested keeping track of those hours, too.
“It will not be easy,” she said, “but don’t give up.”