Home Owner Sues for Being Denied Loan Mod

August 18, 2011

Home owner Kim Orsi is taking her battle against two lenders to court, after being denied a loan modification — a possible sign of more such lawsuits to come. 

Orsi, a hair stylist, told the Detroit-Free Press that after getting a divorce last year she was no longer able to afford her mortgage, so she contacted lenders to apply for the Home Affordable Modification Program (HAMP), a government program that provides foreclosure-prevention initiatives. Orsi says her lender, Bank of America, told her to stop making mortgage payments before she could qualify for the program. She stopped making mortgage payments and also started a pet-sitting business on the side to pay off her debts and make more money.

She says Bank of America later approved her for finally qualifying for HAMP, but a letter she received in the mail shortly after said she was denied a loan modification because she made too much money.

Orsi has sued Bank of America and Fannie Mae; the former says the latter denied the loan modification. Her foreclosure has been delayed as her case remains in court, and she says the incorrect information she received to stop paying her mortgage has now hurt her credit.

"I don't want people to feel sorry for me," Orsi told the Detroit-Free Press. "I want them to be angry because the banks can deny you a modification, even if you qualify."

Earlier this year, a group of home owners across California were denied permanent loan modifications and were also fighting back against banks, suing lenders after they were denied for taking part in HAMP. Read more.  

Source: “Home Owner Sues: Income was Too Much--and Too Little,” Detroit-Free Press (Aug. 16, 2011)