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SALT LAKE CITY — Now that the state and the federal government have agreed in principle to a $25 billion settlement aimed at helping thousands of struggling homeowners, Utahns like Teresa McElprang are hoping to preserve their slice of the American dream.
A few years ago, the reality of the recession hit home for the South Jordan family, as McElprang's husband lost his job and the majority of the household income. Unable to find work for 18 months, the family was struggling to make the monthly mortgage payment, depleting their savings in the process and even asking relatives for financial assistance to get by.
To make matters worse, the value of their property fell and the house was worth less than their mortgage: they were under water.
She said the lender, Wells Fargo, informed her that because they were current on their mortgage and making their payments on time, they would not be eligible for a loan modification.
"Because we had done everything that we were supposed to do, they could not help us," the married mother of five explained. "We would just have to make the payments and figure out a way to do it."
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"I want to do everything I can to stay in my home," McElprang said. "We can now make our house payment, but we have no extra money to do anything else." She said the family is considering a short sale on the property, or perhaps foreclosure, but they owe approximately $100,000 more than the home is worth and neither option keeps them in their home.
"It is a nightmare!" she said.
She's hoping they will qualify for help from the $171,115,273 in benefits available to the state of Utah.
According to Wells Fargo, program options will include:
- For qualified borrowers with little or negative equity in their home, an expanded first-lien refinance program.
- For qualified borrowers with financial hardship, the program will offer expanded first and second mortgage modifications that broaden the use of principal reduction to help customers achieve affordability.
- The plan calls for an expanded short sale program, that would include waivers of deficiency balances.
- The refinance process in the settlement program will, in many cases, involve a simple rate and/or term adjustment to the existing loan for customers who are current on their payments.
- Loan modifications, changes to one or more terms of a mortgage including term extensions, rate adjustments and/or principal forbearance or forgiveness will be among the available options depending on the customer’s financial hardship.
Other participating lenders will offer similar programs. Banks are expected to implement the programs beginning next month.
"I am excited about it, but whether it's going to help me in my situation or not, I'm not sure," McElprang said. The family is working with a Realtor to determine if the short sale is the best alternative or whether they should look into other options offered through the settlement programs.
Either way, she said, "The ultimate goal is to stay in our home."
"I'm crossing my fingers that it's going to be something that might help us," McElprang said.
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Contributing: John Daley
Email:jlee@ksl.com
