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New Face of Foreclosure – The Unemployed

Aaron Glantz

OAKLAND, Calif -- Giselle Jiles could be the new face of foreclosure.
The 52-year-old financial planner has owned her home in Oakland's
Laurel District for 12 years. She did not buy an expensive home that
was beyond her means and she did not sign up for a predatory adjustable
rate mortgage that was reset at an unsustainably expensive rate.

Jiles did not make any of the mistakes she sees in stories about
distressed homeowners on the nightly news. Her economic stress comes
from a more traditional source.

Jiles was laid off in March 2009. More than a year later, she's
exhausted her savings and dipped into her retirement. Now, she's
worried about losing her home.

"I worked for the company 20 years and 20 years ago I got a job, like
that," she says snapping her fingers. This time, despite sending out
hundreds of resumes, Jiles says she's only gotten "a few interviews, a
few call backs, but the companies started saying, ‘We just don't have
the money to hire you.'"

Jiles believes it could be a long time before she finds a new job. She
says many of her friends and family members have been unemployed even
longer. Nationally, the Labor Department reports 6.5 million Americans
have been unemployed for more than six months, the highest number since
the government began keeping records in 1948.

Housing counselors say they're increasingly seeing people like Giles,
who are worried about losing their home because of persistent

"It's as common or more common" than resetting adjustable rate
mortgages or "underwater" borrowers who owe more than their home is
worth, said Josie Ramirez, homeownership program manager at the Mission
Economic Development Association in San Francisco.

Until recently, federal anti-foreclosure efforts provided little help
to unemployed workers, but on March 26, the Obama administration
announced changes to its Making Home Affordable Program that would
allow some unemployed borrowers to have their mortgage payments
temporarily reduced for a minimum of three months, and up to six months
for some borrowers while they look for a new job.

The cost of that forbearance will be shared between lenders and the
taxpayers, with the government's participation funded through a $50
billion allocation for housing programs under the Troubled Asset Relief
Program, or TARP.

The problem, says Ramirez, is that there's nothing in any of President
Obama's anti-foreclosure programs that forces banks to work with
troubled borrowers to keep them in their homes.

"It's all based on incentives," Ramirez said, "and you can't just incentivize."

The Treasury Department estimates 6 million home loans nationally are
at least 60 days delinquent on payments, but through the end of March,
the government reported that only 230,801 Americans had modified their
loans through the Making Home Affordable program.


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"There's a picture of chaos and unaccountability and people just
getting shafted with no recourse," added Ramirez. "There's no way to
appeal a bank's decision."

Giselle Jiles has been trying to renegotiate her loan since November,
when - eight months after losing her job - she attended an all-day
clinic organized by the city of Oakland designed to help people stay in
their homes.

That day, Jiles said, she filled out all the paperwork that her lender,
JP Morgan Chase, required. She's called the bank's toll free number
every week since and faxed over required documents again and again.

Jiles still doesn't have an answer.

"It's just overwhelming," she said. "I totally get it when I see people on TV crying, because I'm pretty close."

Chase spokesperson Tom Kelly initially refused to go on the record to
discuss Jiles' case, but after repeated inquiries from New America
Media, he agreed to take down Jiles' full name, address, and loan

The next day, Kelly called back to say that Jiles had only sent in the
necessary documents the day NAM started reporting her story. Jiles'
loan modification request would be decided "in a few weeks," Kelly

The same day, Jiles was contacted by an underwriter, the first time a bank employee had been assigned to work with her.

"These institutions typically only work with people when you put
pressure on them," said Josie Ramirez of the Mission Economic
Development Agency. Sometimes she complains to Fannie Mae or Freddie
Mac, government-chartered corporations that hold loans serviced by
banks like Chase, Wells Fargo, and Bank of America. Other times, she
calls a politician. Other times, she goes to the media.

"The regulations are so weak even the Obama administration is simply
trying to shame them," Ramirez said. "Sometimes that works, sometimes
it doesn't."

To date, JP Morgan Chase has been earmarked more than $4.9 billion in
taxpayer money to subsidize mortgage modification for struggling
homeowners. Earlier this month, the company reported profits of $3.3
billion for the first quarter of 2010.

Aaron Glantz is New America Media's stimulus editor. Reporting assistance from the investigative news non-profit ProPublica.

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