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Homeowners hope to modify a nightmare

Jerome Scott meets with a NACA representative about adjusting his mortgage.
Jerome Scott meets with a NACA representative about adjusting his mortgage.

The Obama administration last week said it would clamp down on mortgage lenders who aren't doing enough to lower payments for homeowners fending off foreclosure. Nationwide 1 in 7 home loans are estimated to be past due or in foreclosure. The Neighborhood Assistance Corporation of America has applied its own pressure on banks to re-structure tens of thousands home loans. The non-profit has been holding mass mortgage events across the country offering homeowners a chance to lower their interest rates and often reduce their monthly mortgage bills. Charlotte is the latest stop on NACA's Save the Dream Tour. The group estimates 50,000 people will have attended the five-day event by the time it wraps up tonight. WFAE's Lisa Miller followed two siblings who flew in from California with hopes of saving their homes. For Barbara Thurmond and her brother Jerome Scott this trip to Charlotte was three years in the making. In 2005 and 2006 they both refinanced their home loans and ended up in adjustable rate mortgages they can no longer afford. "The ultimate goal is we want to stay in our homes and I want a reasonable loan that's restructured and affordable for my family," says Thurmond. So they decided to invest in plane tickets and two nights at an EconoLodge to get a shot at slashing their mortgage rates. Several Californians made the trip and most, like Thurmond and Scott, lined up the night before waiting for the doors of the former Merchandise Mart to open. Thurmond is a flight attendant and her husband is a building contractor. They initially refinanced their home to get a $25,000 loan to start their own business. But the business went bust and instead of declaring their company bankrupt they swallowed the cost and took out another loan to cover living expenses. Scott and his wife are both therapists. A few years ago they refinanced the mortgage on their $162,000 home. They got two new mortgages that gave them $100,000 so they could build a swimming pool, landscape their backyard and put new flooring in. Both of their lenders promised they could easily slide back into fixed rate mortgages before the interest ballooned. "This was a business deal where, yes, I had a lot of responsibility in getting into, but there are some mitigating circumstances," says Scott. "This business deal that I got into was directed by the predatory lending practices." Now Jerome Scott and his sister are a couple months behind on their mortgages. Their interest rates are about to go up a couple points and the economy has taken a hit on their incomes. Thurmond commiserates with a few other people in line. "You weren't the only sucker," says Thurmond. "But it sounded so good: do it now, you can re-fi later before you get to the 10-yearsBaloney." Their ears perk up as they hear another friend in line give a testimonial that booms through the overhead speakers. At NACA's encouragement, she's at the podium to share her savings while the crowd applauds. "So Kelly I want you to tell me what is your interest rate now? "It's 3.25 percent" "And tell me how much are you saving now?" "$1,300." NACA estimates about 20 percent of people who attend the event leave the same day with a modified loan. Another 80 percent, the group says, have their loans resolved within 6 weeks. Soon Barbara Thurmond and her brother leave the group to speak with two of 350 NACA counselors spread out in rows across the enormous room. They've brought paycheck stubs, tax forms and loan documents that go into the system. Thurmond and her counselor start crafting a budget to come up with mortgage payments her family can afford on their current income and with their current expenses. "I'm submitting today for $1,391. That's your taxes and insurance included," the counselor tells Thurmond. "That payment can come down when you get in the back with an interest-rate reduction. So let's cross our fingers that it goes down." A few rows over, another NACA counselor who a couple years ago owned his own mortgage business is telling Jerome Scott what to expect when he goes on that day to talk to his mortgage servicer just beyond the partition. "So what we'll do is ask them for a lower interest fixed-rate mortgage which would naturally lower your payment," says the counselor. "So I wouldn't be able to say what that payment would be right now, depends on what they settle on in terms of payment." NACA has legally-binding agreements with many major lenders to modify loans. The non-profit says some banks have signed on voluntarily; others came around after a series of protests. An hour later, a teary-eyed Scott gets his moment on stage. "I tell you guys we got another great, great testimony up here." "My mortgage was due to reset to a higher interest rate. They fixed my mortgage rate from 6.99 to 3.5," Scott tells the crowd. "They took all the payments in arrears and set them aside that I do not have to pay. I can't tell you how much I thank you enough." Several hours later Barbara Thurmond gets a much more disheartening answer from Bank of America. She's told the bank can't modify her mortgage right away. They need the approval of the actual holder of the loan and she should check back with NACA in a week. Thurmond makes her way to sign out. "No solution?" "Um, no," replies Thurmond. "Did they give you a form?" "No, they didn't give me a form. Okay, now I'm tired." Thurmond is discouraged until NACA's CEO Bruce Marks approaches her. He gives her his personal email and cell phone number and tells her to contact him if she doesn't hear anything soon. "So if they don't get it done within a week we'll hold their feet to the fire," says Marks. Thurmond leaves feeling better. Although she didn't get the deal her brother did, she's hopeful her family will be able to keep their home.