Foreclosure procedures cause confusion for homeowners

Like many baby boomers who are upside-down on their home mortgages, Bruce Clemmer is thinking he might have to postpone retirement -- indefinitely.

The Henderson homeowner said he came home to a 120-day foreclosure notice on his door the week after a story about his frustrating loan modification experience with Merrill Lynch was published in the March 13 Las Vegas Review-Journal.

Clemmer said he had telephone discussions with a Bank of America representative in California who requested a copy of the notice and loan account number. Bank of America, which acquired Merrill Lynch's assets during the investment bank's financial meltdown, had no record of the loan, he said.

"I gave them my Social Security number and they still couldn't find it," Clemmer said in a follow-up interview.

A Merrill Lynch spokeswoman also told the Las Vegas Review-Journal that she couldn't find the loan.

Often, said John Gallagher of Deutsche Bank in New York, the servicers of loans are initiating foreclosures, not the trustees.

Confusion is created by the servicer filing for foreclosure in the name of the trust, so the trust company's name appears in the foreclosure filings. That gives the impression that the trustee is the entity foreclosing, when it's actually the servicer handling those decisions, Gallagher noted in an email response to the Las Vegas Review-Journal

He sees articles referring to "Deutsche Bank's lawyers" when the lawyers on these cases are solely engaged, directed and paid by the servicer rather than the trustee, Gallagher said.

"Beyond the reputational issue, we are keen for people to know who the players are and what they do or do not do in order to help them navigate their situation better," he said.

Gallagher said he read an article in The Boston Globe about a community group that helped a homeowner write a letter to Deutsche Bank asking for a loan modification.

"They were reaching out to an entity that legally cannot step in and assist and that helps no one," he said. "So our intent is in part to avoid misunderstandings that can further hinder a homeowner's efforts."

Clemmer of Henderson said he tried the Home Affordable Mortgage Program with Merrill Lynch and it didn't work. The bank started sending his $2,700 monthly payments back in October.

He'd like the bank to bring his interest rate and principal down to an affordable level so he can stay in the home and gain equity in five to seven years.

"If they don't do something like that, they're going to end up eating the whole thing," Clemmer said. "It's not like I went out on speculation buying six or seven houses to make a killing. I'm trying to live in this one and make it decent so I can retire sometime in the next 100 years. They're doing what they can to thwart anything positive I do."

Legal experts are questioning the status of all mortgages transferred by the Mortgage Electronic Registration System or MERS.

"MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage-recording process," U.S. Bankruptcy Court Judge Robert Grossman wrote in a February decision.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.