Family to lose home because of seven cents

Filed in archive mortgage news on August 10, 2009

Pres. Barack Obama wants mortgage companies to do everything in their power to prevent families from losing their homes to foreclosure. You can bet he's not thrilled with a story that ran earlier today in the USA Today.

The story highlights the plight of a Michigan family that is losing its home because it underpaid its home mortgage by seven cents.

The family, according to the story, does have a "spotty" history of paying its mortgage. But still, you'd think that with all the negative press facing mortgage lenders, and with the current presidential administration working so hard to promote loan modifications designed to keep families from losing their homes, that Bank of America, the mortgage servicer that currently holds the family's loan, would be willing to give the family a bit of leeway.

It's certainly an interesting case. The family underpaid its mortgage when a postal clerk made a seven-cent error. Bank of America, though, said that this isn't the first time the family has been delinquent. A spokesperson for Bank of America even told the USA Today that there is no story of a "7-cent foreclosure." Bank of America, in fact, has tried to work with the family on its mortgage problems, to no avail, the spokesperson said.

Like I said, it's an interesting story. It's a bit hard to feel sorry for a homeowner who's missed so many payments in the past, and then actually went the extra step of refusing help from a mortgage-servicing company. But it's hard, too, to feel sorry for Bank of America. The company's loan officers certainly helped give a boost to the mortgage crisis with all the bad loans the company passed out during the housing boom.

The story gets even more interesting when you consider that the family's home loan was originally taken out by Countrywide, which Bank of America eventually bought. Countrywide has become a symbol of the mortgage industry's incompetence, a deserved symbol. Countrywide is famous, basically, for being one of the biggest dispenser of bad mortgage loans during the housing boom.

So, who do you root for in a story like this? Beats me. But it shows pretty clearly just how screwy the mortgage industry became during those heady days of the residential housing boom.