Taking Action, Getting Results: Beach homeowners survive short sale nightmare

The Chesson Family made 18 years of memories in their Kempsville home spending time in their Florida room, cooking out, and enjoying their 8,000 gallon koi pond.

For Stuart Chesson, those memories now only exist in pictures attached to the home’s online short sale listing.

It’s currently empty, lifeless and slowly deteriorating.

“It’s all a result of it sitting here neglected while we tried to sell our home,” said Chesson.

The Chessons ended up there–like so many other Americans–after cashing out the inflated equity of their Virginia Beach home at the height of the real estate boom.

They used the money to start their backyard renovation and koi pond business, only for  the market to go bust a few months later.

“The house we were told was appraising at $385,000 was now only worth $220,000,” said Chesson.

So he and his wife decided to try a short sale to get rid of their burdensome monthly payments.

They were even approved by “Making Homes Affordable,” a government program designed to encourage banks to help underwater homeowners–but their experience quickly turned into a short sale nightmare.

“Pure incompetence, I don’t understand,” said Cheryl Hickok, who works for Rose and Womble Realty, and is the Chessons’ realtor.

She is fed up after a year of dealing with Select Portfolio Servicing, also known as SPS–the company in charge of the Chessons’ mortgage.

SPS couldn’t close the sale on four different offers before the buyers walked away in disgust.

“We’ve sold the house four times, come on,” said Hickok. “This one, the third one, was a cash offer.”

She says it all comes down to SPS’s computer systems, and paperwork going missing every time she sends them short sale documents.

“’We don’t see it,’ ‘it didn’t image,’ ‘our imaging system didn’t get it.’ It’s a consistent problem with them,” said Hickok.

This is not the first time SPS has been accused of unfair lending practices.

Three different complaints about the company have come into the offices of the Virginia Attorney General and the State Corporation Commission’s Bureau of Financial Institutions in the last three years.

SPS was even sued by the Federal Trade Commission back in 2003, when they went by the name “Fairbanks Capital” for illegal practices in servicing sub-prime loans.

The Chessons say they have consulted lawyers, as well as the “Making Homes Affordable” program, with no results.

The final straw was when SPS announced their home would be going up for a foreclosure auction on September 17th, this Tuesday.

“What do you do? So we contacted WTKR NewsChannel 3 to help us shine some light on it,” said Chesson.

NewsChannel 3 immediately took action by contacting HUD and the Treasury Department, who oversee the “Making Homes Affordable” program.

Both departments tell NewsChannel 3 they can get involved on a consumer’s behalf, and urge the servicer to do the right thing, but any enforcement or legal action can’t begin until after the short sale has been completed.

“What are you supposed to do, lose everything while they make up their mind what to do?” said Chesson. “It’s more disappointing that the system supposed to be helpful is actually broken.”

Even though the government program had no power, NewsChannel 3 still demanded answers from SPS.

After we started asking questions, suddenly, the situation changed for the Chessons.

“Within a matter of days of you getting involved, we get a call from SPS,” said Chesson.

He says the company ombudsman informed them that the foreclosure sale scheduled for Tuesday…would be cancelled.

“She wanted to explain how sorry they were, that they made many mistakes over and over again, and that the next time, she would hand-walk us through the process, to make sure our experience wasn’t the same,” said Chesson.

NewsChannel 3 will be watching, to make sure we continue to get results.

“It’s not over yet, but the results we have seen in the last week have been remarkable,” said Chesson. “Thank you WTKR for everything you’ve done for me and my family.”

The Treasury Department also gave us more information on the “Making Homes Affordable” program to help others who might be in the same situation. Our questions and their answers are below.

Who is accountable over servicers to see if they are working on HAFA short sales properly? Does the government have jurisdiction?

  • The Office of Financial Stability (OFS) Compliance does test servicers to ensure they follow HAFA guidelines and their specific HAFA policy.

What guidelines are these servicers supposed to follow for your program? Are there general operating rules?

  • The guidelines are all specified in Chapter 4 of the MHA handbook (available at www.hmpadmin.com) and some policies can vary by servicer.

If those guidelines aren’t followed, what are the enforcement actions Treasury can take?

  • If OFS Compliance notes that a servicer is not in compliance with Handbook guidelines, the servicer is required to remediate the issue and become compliant.  In certain situation we also require servicers to do a look back to identify any homeowners that may have been adversely impacted by servicer non-compliance and, to the extent possible, take corrective actions on those homeowners.  OFS Compliance follows up with servicers to ensure that they follow through on their corrective action plans.  Treasury can also implement financial remedies, in accordance with the terms of the Servicer Participation Agreement, which can include withholding servicer incentives until the servicer corrects certain instances of noncompliance with program guidelines.

Can customers file a complaint with Treasury about a servicer? How do they do that? What happens in that process?

  • A homeowner can contact the HOPE hotline for issues with HAMP servicers (888-995-HOPE).  Escalation specialists can work with the homeowner to communicate and resolve HAMP-related issues with servicers.  Treasury’s Homeownership Preservation Office monitors case escalations regularly and information is shared with OFS compliance to assist in directing compliance efforts.
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