By Henri E. Cauvin
Washington Post Staff Writer
Saturday, September 18, 2010; B01
Chase -- the bank that foreclosed on the home of a Prince William County couple caring for their gravely ill child -- has reversed the foreclosure and offered to modify the family's mortgage, the bank said Friday.
But Mike and Kathy Wales are waiting until a lawyer can look at the fine print before responding to the bank's proposal.
The couple, whose 10-year-old son, Alex, was found last year to have a rare and terminal neurogenetic disorder called cerebral adrenoleukodystrophy, fell behind on their payments this year and had been trying for months to have Chase modify the mortgage on their three-bedroom townhouse in Bristow.
But Chase, which was administering the loan for mortgage finance giant Fannie Mae, mishandled the application for assistance under the federal mortgage relief program, a spokeswoman for Fannie Mae said Friday.
Early this month, just days before the house was to be sold in foreclosure, Chase told the Waleses that they had been approved for a modification under the federal Making Home Affordable Program. But the promised documents never arrived, and on Sept. 8, the house was sold back to Fannie Mae.
In fact, the family might not have qualified under the program's income limits. But under Fannie Mae protocols, Chase should have offered modification options before weighing more drastic options, such as a short sale and foreclosure.
After the family's plight was described in an article Friday in The Washington Post, Chase and Fannie Mae began investigating and concluded that the case had been botched.
"Fannie is frustrated when we learn of individual cases where servicers do not properly process modification applications, and families . . . pay the price," Fannie Mae spokeswoman Amy Bonitatibus said.
"In this instance, the situation was not handled properly," Bonitatibus said.
On Friday, Chase called the Waleses to tell them that the bank was reversing the foreclosure and to propose a modification that would reduce the monthly payment by extending the length of their mortgage to 40 years, with a lump sum of more than $100,000 due at the end of the loan period.
The family, though, is taking a cautious approach to the bank's proposal, Mike Wales said. The bank's willingness to reconsider is an encouraging sign and the outpouring of support from friends, elected officials and strangers has been remarkable, said Wales, 47.
Given the Waleses experiences of recent months, they want to carefully study the bank's offer before signing off on it, he said. So they plan to wait for the loan documents to arrive and then to have a lawyer look them over.
"We don't want to agree to something that's going to bite us when all this dies and all the support goes away," said Wales, who served 21 years in the Air Force and is now a civilian intelligence analyst for the service.
Alex can no longer see or walk. An experimental bone marrow transplant last year appears to have halted the disorder, known as ALD, but Alex's long-term prognosis is uncertain. His brother, Zach, who is 13, also has ALD, but it has not affected his brain.
Not every family facing foreclosure has such a dire story to tell, but many desperately need the sort of mortgage relief that the federal government, with only limited effectiveness, has been pushing for banks to provide, housing advocates say. And lawyers who work with people facing foreclosure say the frustration the Waleses encountered is not uncommon: Banks often ask again and again for documents that have been submitted, and applicants often receive different answers to the same question, depending on the person they are talking to that day.
Mike Wales said he hopes the story of his family's ordeal will open officials' eyes to needs going unmet. "We want this to help other people," he said.