NEWFIELD, N.Y. — It sounded like the break they needed.
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In 2007, Matteo Wyllyamz and his family moved from Colorado and into their new home in Newfield.
But one month after arriving here, Wyllyamz’s wife was laid off from her job at a local preschool. And Matteo Wyllyamz had already closed his computer electronics business in Colorado.
The Wyllyamz family faced monthly payments on the house of around $1,200. Matteo Wyllyamz taught computer classes at Tompkins Cortland Community College, tried resurrecting his closed business, and took a job as a barista at the Carriage House Cafe.
Money was tight, but the Wyllyamz family was able to make the payments. Then they got an offer — one that promised to ease a crushing financial burden at no cost.
“It was,” Wyllyamz says in an interview on Tuesday, a few weeks after his home was finally sold, “when everything went haywire.”
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In 2009, with the housing market in free-fall, the Obama Administration announced the “Home Affordable Modification Program.”
The idea was simple: As the subprime mortgage crisis squeezed families tighter across the country, the federal government wanted to give banks and borrowers an easy way to renegotiate mortgages to the long-term benefit of both.
The Wyllyamz family was told they would qualify. They met with bank officials, filled out the requisite paperwork, and submitted their application.
“We believed we’d get the modification on the mortgage, start making payments with a lower amount, and move forward and keep the house,” Wyllyamz says.
That would prove too optimistic. Wyllyamz still isn’t sure why, given what the bank told him, but he said his family would be repeatedly denied its Home Affordable Modification Program application over the course of two years.
“We got a full rectal exam on our finances every 90 days for a couple of years,” he says. “…We’re submitting them phone books thick of documents, and every time we did it they would find something else” and deny the application.
In the meantime, because he was waiting for a lower bill, Wyllyamz began missing monthly payments on his mortgage.
That wouldn’t have been so bad if there hadn’t been a hitch here, too: The bank told Wyllyamz that it would only accept payment on his outstanding obligation if it fully took care of what he owed.
Any attempt to pay only part of the debt would be rejected, Wyllyamz said.
“When you’re already living paycheck to paycheck, the idea you’ll be able to do that is very difficult,” he says.
A manageable monthly payment, in other words, quickly escalated out of control. The Wyllyamz family would soon owe over $100,000.
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The problems with the Obama Administration’s HAMP program are extensively chronicled in a paper published in the Cornell Real Estate Review by UCLA professor Marc Gans.
Gans detailed (among others) the following critical problems with HAMP:
— Unpredictable outcomes caused by unclear guidelines
“A glaring problem for HAMP is that the Treasury has failed to provide specific guidelines for servicers to follow,” Gans writes. “By lacking uniform standards, there is a high possibility for inequitable treatment of borrowers due to inconsistent outcomes.”
— Errors in assessment service
Gans writes that those responsible for determining whether someone’s income qualified for the program often failed. (This may be why Wyllyamz’s family was consistently denied.)
There was a 20% error rate in calculating borrower income, Gans says.
— Confusion and delays in implementation
“HAMP was also launched before being fully developed, which led to confusion and delays. Homeowners were put into trial modifications before servicers collected the required documentation,” Gans writes.
The problems of HAMP have been pointed out in several national publications as well.
“”The Hamp program, supposed to help homeowners save their houses, may have led them deeper into a bureaucratic swamp,” wrote The Guardian.
“The program, minted during the depths of the housing crisis in 2009, sought out to help an estimated eight million homeowners to negotiate more affordable payments to avoid foreclosure. Five years later, it’s apparent that Hamp did little to mitigate this flood of economic devastation and in fact may have prolonged it.”
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Wyllyamz remembers the pride he felt in his home, his excitement to make the place right for himself, his wife and his children.
“It’s in the forest; the neighbors are really good; it’s quiet and safe and our kids could play in the road,” he says of 6 Brown Road, which sits near the border of the towns of Newfield and Danby.
“We liked living there. It reminded me of the ‘Dick Van Dyck Show.’”
That’s one of the reasons, he said, they fought for many years to keep the property. But as the months stretched into years and then began to grow closer to a decade, the debt owed on the payments spiraled upwards toward $140,000.
“Emotionally, for our family, it was just awful,” he says. “You see that word ‘foreclosure’ coming in the mail, and it’s just devastating.”
In December 2015, Wyllyamz and his family were finally able to reach an agreement with the bank; their debt was negotiated down by about $60,000, and they were able to sell the home for around another $60,000.
The Wyllyamz family is now sharing living arrangements with another family in a farmhouse in Trumansburg.
They’ve been able to avoid foreclosure and bankruptcy. But even now, eight years after first purchasing the home, Wyllyamz potentially faces a new debt obligation.
“The $60,000 we were forgiven — the IRS wants to treat that as income: It’s possible we get taxed on the amount we were forgiven,” Wyllyamz says.
“I’m personally fond of the George Carlin quote: ‘It’s the American Dream because you have to be asleep to believe it.’”
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