From re-fis to loan mods: The never-ending story

Althea Girard-Blakey, 59, and her husband Cornel Blakey, 61, relax in the back yard of their east Palo Alto, Calif. home that they were able to keep after a loan modification to her mortgage.

Tess Vigeland: For the past two years, California home owner Althea Blakey has been trying to get a loan modification on her mortgage. She bought her east Palo Alto home more than 30 years ago for less than $18,000. But after refinancing several times, she ended up owing more than $265,000.

Ann Carrns is the lead blogger for the Times' Bucks blog and reported this story. Welcome.

Ann Carrns: Thanks for having me.

Vigeland: Tell us first of all just a little bit about Althea.

Carrns: She's 59 years old. She has a small home in east Palo Alto that she bought more than 30 years ago. She was a young, single mother at the time and she was able to save up a little bit of a down payment and bought the house.

Vigeland: And I think we have a clip of her talking about the importance of this home in her life. So let's listen to that.

Althea Blakey: We have lots of birthday parties, we have lots of barbecues on the patio. Yeah, this house was always filled with love.

Vigeland: Oh that's great. So, when did she start pulling money out of that home?

Carrns: She said that over the years she did several refinancings, that the most recent one that led to her current loan modification was in 2007.

Blakey: I was off of work for a year, like seven years ago? And we wind up using credit cards.

Carrns: She had gotten into a little bit of trouble with credit card debt. Her husband's business wasn't doing well, and she refinanced. The end result was that she got a loan for $265,000 and the monthly payment eventually proved more than she could handle.

Vigeland: All right, well, let's hear what she had to say about all this refinancing.

Blakey: I wish I never had refinanced at all.

Carrns: It's amazing to think that your home, which started out at $17,000, at one point it looked like it was worth almost $500,000.

Blakey: People just wanted to get me in debt!

Vigeland: Well, there you go. So all of this led to some difficulty for them in paying this new mortgage amount. And at one point, they actually came close to losing their home. Let's hear how they described that.

Blakey's husband: We were actually very nervous.

Althea Yeah, because you're waiting months and months and don't know what's going to happen. I'm like, "Oh, they're going to kick us out of our house."

Vigeland: All right, let's start from the beginning. When did she start looking for help with this mortgage and describe that road for us.

Carrns: She began looking for help in 2009. And ultimately, nothing came of that. And so she decided to deal directly with Chase, which was her lender, and was offered a trial modification. But ultimately, that application was not made permanent, and it's unclear at this point what exactly happened. The bank has not weighed in yet with its side of things.

Vigeland: And of course, this is the story that we're hearing over and over again with loan mods, that it can absolutely take forever. But, the reason we talked to them was because they ultimately have found success.

Carrns: Correct. This is at the point when she really believed she was going to lose the house and was very stressed. And a friend of hers gave her this phone number for a nonprofit called CredAbility. Ultimately, her modification was permanent as of Oct. 1, and they lowered the payment dramatically -- I think to less than half of what it had been. And the interest rate was reduced to 2 percent, which she feels she can handle. She's employed, she's been employed for quite a while. Her situation, job-wise, seems steady.

Vigeland: And how are they feeling now about home ownership, writ large?

Carrns: They understand that they've made a trade-off, that their debt has been extended for a longer period of time than it would have been. But they feel very happy that they're able to stay in the house. She told me that she cherishes her little house.

Vigeland: Ann Carrns is a freelance writer and the lead blogger for the New York Times' Bucks blog. Thank you so much for telling us Althea's story.

Carrns: Thank you, Tess.

About the author

Tess Vigeland is the host of Marketplace Money, where she takes a deep dive into why we do what we do with our money.

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