Rather, things went awry when they refinanced their $211,000 mortgage in October 2009 to lower their interest rate from 7.8 percent to 5 percent.
Now, no one knows who owns the loan, said Jason Krumbein, the couples attorney.
The new loan servicer, a government-approved lender that took over the refinanced loan from the originator, says it owns the loan, Krumbein said.
But CitiMortgage, the original lender, claims it never received the payoff from Lend America, once one of the largest originators of mortgages backed by the Federal Housing Administration but now banned by the FHA from doing business.
In my 15 years of practice, I have never dealt with anything this weird, Krumbein said.
Representatives contacted at CitiMortgage said they could not comment. Lend America is no longer in business. Lend America was licensed with Virginia Bureau of Financial Institutions in October 2005 and surrendered its mortgage lender broker license here in December 2009.
The loan-modification process is rife with abuse and problems, often leading to foreclosures, mortgage experts say. But refinances that go bad are unusual, they say.
Still, as strange as this case is, the Hunts are not alone. Borrowers from across the country, including a person from Powhatan County, claim Lend America failed to pay off their existing mortgages after they received new loans, according to a complaint web site.
This has cost us dearly not only in the headaches and stress in dealing with this, but it has hurt our company, said Terry Hunt, owner of a construction firm. As small-business owners, we personally guarantee payroll and equipment. But this has destroyed our credit and we cant make those guarantees.
Jay Speer, an attorney with the Virginia Poverty Law Center, said that since hearing a few weeks ago about the Hunts situation, he has been alerted to a few more cases in Virginia involving Lend America not paying off previous loans.
Its a big can of worms, Speer said.
Krumbein dug up a copy of the check that was supposedly sent to CitiMortgage by Lend America to pay off the Hunts mortgage. He found the UPS tracking number that was reportedly used to pick up and deliver the check.
He has filed lawsuits on behalf of the Hunts to stop the foreclosures.
Meantime, the Hunts kept making their mortgage payments. They had tried to refinance their loan with CitiMortgage, but the lender kept giving them the runaround, asking for the same paperwork, Terry Hunt said.
They were enticed by a Lend America advertisement on television and closed on their loan with that lender in October 2009. But they received delinquent notices from CitiMortgage in December.
They alerted CitiMortgage that they had refinanced, but made two mortgage payments nonetheless one to the new lender, another to the original lender thinking the matter would be resolved and their account would be credited with the extra payments.
Perhaps a number on their account was transposed or the refinance hadnt been recorded properly. Neither proved true. Nor, as it turned out, was the UPS parcel ever paid for, so the package containing the check apparently was never picked up or delivered.
And Lend America, the couple would later learn, abruptly ceased operations within weeks after it closed on their refinance.
The U.S. Attorney for the Eastern District of New York had filed a complaint in federal court, accusing the company of fraudulent lending practices that compromised the integrity of the FHA mortgage insurance program and contributed to increases in loan defaults and foreclosures.
The case is pending.
Lend America accounts were taken over by Loancare Servicing, a Ginnie Mae-approved mortgage servicer. Terry Hunt said he contacted Loancare to discuss the situation and said he was told to make the payments or Loancare would foreclose.
We have never seen a situation exactly like this, but we see errors in the servicing of loans, misapplied payments and foreclosures not based on proper documentation, said Connie Chamberlin, president and CEO of Housing Opportunities Made Equal of Virginia Inc., a housing advocacy group.
Homeowners in Virginia have little recourse to ensure that they dont get caught in a similar situation, Chamberlin said.
A substitute trustee is appointed to take care of a foreclosure, but in many cases, the trustee doesnt exercise the level of due diligence there ought to be when dealing with something as important as taking someones house.
Virginia requires no third-party review, nor does information need to be checked for accuracy, she said.
Originally published by CAROL HAZARD; Times-Dispatch Staff Writer.
by Kate Waylen