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Who Owns Your Loan? It's Time To Find Out

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By SHANNON BEHNKEN

sbehnken@tampatrib.com

Published: November 18, 2008

TAMPA - Natalie Fuentes was about to lose her foreclosure battle when her lender said it would work out a loan modification so she could stay in her home of 13 years.

The lender, Washington Mutual, agreed to hold off on an eviction until the new loan was final, she said.

So she was stunned last month to find the locks had been changed. Her belongings, including her children's baby photos, clothes and toys, were gone. The lawn and windows were blanketed with realty signs advertising the Carrollwood home for sale.

"I called the bank, and they said they didn't know who had done this," Fuentes said. "I called the real estate company and was told my stuff was trash and had been thrown away. We're talking about stuff that can't be replaced."

It turns out the lender Fuentes had been dealing with no longer owned her loan. Without her knowledge, it had been sold to mortgage finance giant Freddie Mac. Washington Mutual remained the servicer of the loan. In a surprise to both Fuentes and the Washington Mutual officials she was working with, Freddie had moved forward with selling the home.

Fuentes' situation highlights just how difficult it can be for homeowners to work with their lenders, especially when a third party investor is involved. In this foreclosure crisis, lenders are saddled with bad loans and don't want more foreclosed homes on their books. They tell troubled homeowners to call at the first sign of trouble to see if something can be worked out.

Yet as Fuentes learned, it's much more difficult to do that when the loan has been sold. Selling loans to investors was so common during the housing boom that many homeowners don't know who owns their loan. That could come back to bite them if they, like Fuentes, need to negotiate a new loan later.

Title Was Being Transferred

In Fuentes' case, the home had gone through the foreclosure process in early October but the title had not yet transferred to Freddie Mac. Fuentes said she was told by Washington Mutual that they had one more month to work out the terms of the new loan and she could keep the house until then. But Freddie Mac officials say they weren't made aware of this deal and decided to move ahead with plans to rid the bad loan from their books.

"We believe this situation was handled as it should have been," said Brad German, spokesman for Freddie Mac. "The home was in the process of being titled to Freddie because we own the loan."

Washington Mutual, as the servicer of the loan, is the proper company to negotiate the loan modification, German said, but the new loan has to be approved by Freddie since it owns the loan.

Missy Latham, spokeswoman for Washington Mutual, now part of JPMorgan Chase, wouldn't comment on specifics, but said, "We continue to work with the borrower and owner of the loan to see what can be done."

What no one seems to be able to answer is how this could happen.

"This is totally outrageous," said Terry Smiljanich, a lawyer with the Tampa firm of James, Hoyer, Newcomer & Smiljanich. The firm is not representing Fuentes. "Freddie Mac had no authority to go onto this woman's property and throw out her stuff when they didn't yet have title. They jumped the gun."

With so many foreclosures, lenders are overwhelmed. If this happened to Fuentes, Smiljanich said, it could happen to other homeowners too.

When a Freddie Mac loan is foreclosed, the company's procedure is to hire a local real estate company to access the property, secure it and market it for resale. If the home is occupied, the company files for an eviction. If it is abandoned, German said, the agent moves forward with a sale.

With Fuentes' home, Freddie hired Herbert Fisher Realty, which sent an agent to the home and reported back that it "appeared vacant." Fisher said he got the go-ahead to then secure the home and dispose of the belongings left behind.

"It's out of my hands," he said. "This is between Freddie Mac and Washington Mutual. I did my job."

Keys Returned To Fuentes

Fuentes fell into foreclosure after a divorce, and had moved most of her belongings out in late September because she knew the home would be foreclosed on. But Washington Mutual didn't issue an eviction as it continued to work on the loan modification.

Fisher said the home appeared abandoned, but Fuentes said it did not. She stops by almost daily to check on the home and said she mowed the lawn and paid the utilities.

Before Fuentes realized Freddie had hired the real estate agent, she called authorities to report her home had been broken into. The Hillsborough County Sherriff's Office deputy interviewed the real estate agent and attorney for Washington Mutual and determined that Freddie had made the decision. The officer also determined the Hillsborough County Property Appraiser still had the home listed in Fuentes' name. Because of that, the keys were turned back over to Fuentes.

German, the Freddie Mac spokesman, said his company is still open to working something out with Fuentes. But, they say, they have to make sure she can afford a new loan.

"We don't want more foreclosed homes," he said. "We estimate we'll provide workouts for three out of five of our troubled loans."

Fuentes still has hope she will be one of them.

In the meantime, the home is still for sale, and Fuentes is renting two neighboring apartments - one for her two teenage daughters and one for her son and her. She's paying roughly $1,600 a month in rent and utilities for the two places. That's more, she says, than the new mortgage would be.

"I'm so depressed," Fuentes said. "I don't know who dropped the ball and who's to blame. Somebody needs to take responsibility for this."

Reporter Shannon Behnken can be reached at (813) 259-7804. Keyword: Foreclosure, to search an interactive database of foreclosures in the Bay area.

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