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A Home in Limbo

Attempt to modify a mortgage puts family on brink of eviction at Christmas

Patrick Sullivan - December 24th, 2012  

Rolling green hills, maple trees that turn red in the fall, and sparkling blue water lured the Reeds to Leelanau County.

It’s home for Kerri, who grew up here.

Now Jeffery, a Louisiana native, loves it, too.

It seemed like the perfect place for the couple and their two sons when they moved north in 2006. Jeffery had spent a decade in the Army. They were ready for a new life.

Their oldest son, however, who is now 19, is autistic, legally blind, and needs special care.

Considering those needs, the modest house and 10 acres they found outside of Cedar suits them perfectly.

It includes an in-law’s suite in the lower level where their son can have a semi-independent life. Probably best, though, is the land and its trails.

Their son will never be able to drive a car.

But he can drive a four-wheeler on those trails.


The Reed’s tranquil spot in Leelanau County could, however, be in jeopardy.

According to Realtytrac, the Reed’s property is just one of 137 bank-owned properties currently in Leelanau County, many of them remnants of the 2008 financial crisis.

And while in many cases homes go into foreclosure because they’ve been abandoned by the people who bought them, the Reeds say they’ve worked hard to stay in their home and thought they were negotiating a loan modification when their bank foreclosed. (The bank disputes this and says the Reeds ignored offers in 2010 for a loan modification after an initial contract fell through.)

The Reeds trace their troubles back to 2009 when they decided their interest rate was too high and wanted to refinance.

They both work hard and said they have always paid their bills -- she is a preschool teacher and he’s worked at Walmart and in manufacturing and is on his way to getting a teacher’s degree -- but they felt their monthly mortgage payment was about double what it should have been.

When they started making calls about a loan modification in November three years ago, they had no idea they had taken the first step toward seeing their home foreclosed.


Their lives had nearly reached the lowest point when the Reeds called a lawyer.

Attorney Jason Jenkinson, who specializes in helping people facing foreclosure, said by the time the Reeds called, in October, it was almost too late.

They had not understood the complicated, labyrinthine foreclosure process as it unfolded before them, he said.

The Reeds were referred to Jenkinson after they sought help at Third Level crisis center when they received a notice of an eviction hearing.

By the time Jenkinson was involved, the Reeds home was already in foreclosure and they faced eviction through the district court in Leelanau County.

Days after they received notice of the hearing, Jeffery Reed’s mother died. Reed said he realized he needed to miss the hearing in order to attend the funeral in Louisiana.


Jenkinson, who said JP Morgan Chase foreclosed on the Reed’s house and then sold the property to Fannie Mae for one dollar, said he recalls the frustration of trying to get that eviction hearing postponed.

“It was the choice of Fannie Mae,” Jenkinson said. “Fannie Mae could have said, ‘We’ll adjourn the hearing,’ and it would have been adjourned.”

They would not agree to an adjournment, however.

“I guess the whole point of this is, did Fannie Mae know that this guy had a loan modification agreement?” Jenkinson said.

A default judgement was entered against the Reeds but that judgement has since been set aside.


To the court, the case just looks like a tenant who stopped paying rent, Jenkinson said.

“There’s nothing in their file concerning the voluminous modification efforts, document requests and phone calls over three years,” he said.

(JP Morgan Chase, however, said they have no records of phone calls from the Reeds since their problem with a loan modification began in 2010.)

The eviction hearing was in district court because the bank had already taken legal control of the home and now it was a mere formality to get the Reeds removed.

There is really very little a person can do once things reach that point, Jenkinson said. People facing foreclosure need to call a lawyer once they realize they are at odds with their bank.

“If we get past the redemption period, it takes a lawsuit for a modification because you’re no longer working with the bank, you’re working with Fannie Mae or whomever allegedly purchased the property at the sheriff’s sale,” he said.

Jenkinson said he would file a lawsuit in the Reed’s case unless something can be worked out, which now appears possible. A Chase representative has said the company is willing to work with the Reeds.


Here is how the Reeds went from refinancing a loan to foreclosure:

The couple decided they needed to refinance in 2009 because their monthly payments of around $1,500 were too much, Jeffery Reed said.

They were paying an interest rate of 7.25, which more than double the rates offered today.

They had a lot invested in their home.

It had cost around $250,000 and they had put down around $100,000. They had also paid the bank around $1,500 each month for three years.

Chase was unwilling to modify their mortgage at first, the Reeds said, so they turned to a mortgage refinance intermediary who told them if they wanted to re-negotiate a new mortgage, they had to prove hardship.

They were instructed to stop paying their mortgage.

Up until that point, the Reeds say they had not missed a payment.

It was a long, complicated, anxiety-inducing process, but in the end, it appeared they had prevailed. In September of 2010, they received a new contract.

They had a modification. Their new payments were around $650 per month.

“Everything felt final,” Kerri Reed said.

“OK. Now we finally have a comfortable payment. And then we’re making the payments.”


They started to make payments and expected to receive a payment book in the mail at any time, but that’s not what happened.

They made one payment, and then another, and then another. After that third payment, they received a check from Chase for the same amount, the couple said.

The bank would no longer accept payments, they said. As far as Chase was concerned, the contract was void and they no longer had an agreement.

“I call and I say, ‘Why? Why are you sending this back? We had an agreement,” Jeffery Reed said.

Reed said he eventually learned the bank decided something was wrong with the contract.

On one of the pages there is a table that describes payments through the life of the contract.

If you look closely, you can see there is an error -- in one of the cells in the table the year 2016 appears where 2017 should have been printed.

Because of that typo, Jeffery Reed says, he was told he no longer had a modification agreement.

The bank says their records indicate the Reeds were sent a new contract and followup letters warning them they needed to sign the new contract. They said the Reeds were sent two certified packages via FedEx regarding the new contract in late 2010. They said their records show the Reeds never attempted to contact the bank about the problem.

Jenkinson said people in the Reed’s circumstance wind up buried in letters and messages from the bank and from lawyers representing the bank. Significant letters can get lost in confusion. He said it is not uncommon for people to be defeated by how baffling the process is.

“What level of sophistication do the Reeds have to have in order to participate with the mortgage lender?” Jenkinson said.


Jenkinson said he’s seen a lot of foreclosure cases, but this one surprised him because there was an actual remodification contract.

In many cases, banks will use documents that look like contracts but are not legally binding, he said.

“This is the first time I’ve seen one -- an actual modification agreement from Chase,” Jenkinson said. “I’ve never seen one of these for real.”

Jenkinson said he believes he is seeing a tactic from banks over and over again where bank employees and their lawyers will make homeowners believe they are negotiating for a modification while a foreclosure process quietly begins.

As legal notices are posted in newspapers and letters filled with legalese are sent to the homeowners, the banks’ representatives tell the homeowners not to worry, he said, referring to cases in general.

In many cases, people should worry, Jenkinson said.

“They have no intention of following through,” he said.

The process takes a year or more and the homeowners don’t understand what’s going on. A foreclosure is followed by a six-month redemption period, followed by an eviction. By the time the homeowner realizes something is wrong, it might be too late.

“I don’t think people realize the rights they lose after the sheriff’s sale, then the redemption period, and finally the eviction hearing,” he said. “Homeowners lose substantial rights at the conclusion of each step.”


It appears there is a stalemate between the Reeds and Chase, but there are hopeful signs.

Chase recently sent a specialist from New York to the Reeds’ door in Leelanau County. They have tried to reach them in other ways but the Reeds have not responded.

The Reeds said they tried and failed too many times to deal directly with Chase, so they have decided they should only deal with the bank through their attorney. Jenkinson said he also has been contacted by Chase in the past couple of weeks and has attempted to return calls, but so far the parties have not made a connection.

A spokeswoman for Chase, Amy Bonitatibus, made this statement about the case: “We reached out to the customer and his attorney a number of times but have not been able to connect with the customer to discuss ways he can stay in his home.”

The Reeds say they have just wanted to have this worked out all along and they don’t understand how something like a typo in a contract could cause so much trouble.

“I feel a little more hopeful,” Kerri Reed said.

But even if it works out and they get a valid mortgage modification, it’s been two years of worrying the family believes they didn’t deserve.

Those months when the process was in motion and their house was being foreclosed seem surreal now. They were losing their home and they didn’t understand what was going on.

“We didn’t know anything about it. We never got anything in the mail. We never got things posted on our door,” Kerri said. “We’re good people. We pay our bills.”


After this story was reported, written and edited, Jenkinson contacted the Express to say that he had received a modification offer from Chase. It looks like the Reeds do not have to worry about losing their home in the new year.

“It looks like we are going to get started on a modification after the holidays,” Jenkinson said.

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