The San Diego Rostra, www.sdrostra.com, which covers politics in San Diego County, has been reporting on the financial troubles of Farrah Douglas, an Iranian immigrant who touts a business success story who was elected to the Carlsbad City Council and is running for the 76th Assembly District as a Republican. Douglas has objected to some of the posts on the blog through her attorney, but according to her attorney’s letter to SD Rostra, it is pretty clear that Douglas has had some financial challenges.
Among her financial challenges as outlined in her own attorney’s letter is the fact that just last year her home in Carlsbad went thru “loan modification,” a procedure that has been used to bail-out families that have fallen a victim to the financial meltdown of the real estate market. “Loan modification” is an agreement between lender and borrower to change the terms of the original loan contract on the purchase of the home, when it becomes “underwater,” and has lost equity. The Obama Administration has established a bail-out program known as the “Home Affordable Modification Program” that helps finances these changes in the original contract; private banks have developed their own programs as well to avoid more massive losses from eventual bankruptcy of the homeowner unless they get the modification.
According to one bank’s website, to qualify for “loan modification,” you have to prove you can’t afford your current mortgage by defaulting on the monthly payments (usually failing to make two consecutive monthly mortgage payments). You have to prove you can’t afford to pay the mortgage on the house anymore, that the equity in the house no longer exists, and the value of the house has gone way down. So the Douglas family in fact defaulted on their mortgage, in order to qualify for the loan modification.
The attorney for the Douglas family stated in a letter given to the SD Rostra that as the default on the mortgage was ongoing — and the loan modification was under consideration by the bank and documents were being exchanged, that the bank “misplaced” or “lost” documents that extended the period of time in which the loan modification was under consideration. Those delays, states the lawyer, are what caused the Douglas residence to go into foreclosure’s early stage last year and face a forced trusteeship sale. However, before their home was actually sold in foreclosure, the loan modification came through from the bank and the family was able to save their home.
California’s economic problems have touched many families up-and-down the state as real estate values have dropped and refinances with banks have become very hard to get. Maybe Douglas can bring, sadly, this not-so-unique perspective of her loan default, potential foreclosure, and eventual loan modification directly to the State Capitol.