A foreclosure on hold as a couple holds on

Nick Illich, no stranger to bad news, might be on the verge of getting some good news regarding the hugely troubled mortgage on his Mayfair home.

Illich believed on Monday, after a phone call from his mortgage holder, California-based OneWest Bank, that he was about to be placed in foreclosure.

Now, bank spokeswoman Diane Henry said the foreclosure actually was on hold, pending a review required under the federal Home Affordable Modification Program (HAMP).

The voluntary federal program, which OneWest joined two weeks ago, requires that the foreclosure process be stayed, even if it was under way before the lender began participation.

That is the good news, but Illich's interpretation of the disputed phone calls with OneWest - that foreclosure proceedings would be starting against him yesterday on one of two loans he took with OneWest's predecessor, the now-defunct IndyMac Bancorp Inc. - took a great toll, he said.

"If I die tomorrow, I hope to go to heaven, because what I've gone through is hell," said Illich, who has spent months unsuccessfully negotiating with the lender to modify the terms of first and second mortgages on the house in Philadelphia's Mayfair section that he bought a decade ago for $73,000.

The total debt is about $128,000 for Illich, 58, and his wife, Kathleen, 52 - both of whom are disabled and get $1,700 a month in all from Social Security.

The Illich household is one of 1.5 million in the United States on which foreclosure notices were filed in the first half of 2009, according to RealtyTrac Inc., of Irvine, Calif.

Although more than half of such filings since the economic downturn began result from subprime lending in Sun Belt states, unemployment and illness remain the primary cause of mortgage delinquencies in areas such as Philadelphia, which has had few foreclosures by comparison, counseling agencies said.

Foreclosure filings began several months ago on the Illiches' first mortgage loan, with an interest rate of 12.7 percent. The second lien, for debt consolidation, was taken out in 2006. The Illiches also are behind on that loan, which has an 8.6 percent interest rate.

Henry said OneWest's telephone records show that when Illich was called Monday, he was informed that the mortgage would be reviewed for the HAMP program, and that stops would be put in place so the loans were not referred for foreclosure.

OneWest is "not in the business of making threatening calls," Henry said, but was simply requesting Social Security income documentation for Illich's wife.

Illich said two of the three calls Monday from OneWest did, indeed, focus on Social Security documentation.

"I told the person that I would try to get one quickly, but that you have to send a letter to Alabama and the process takes two weeks," Illich said yesterday as he left a cardiologist's appointment with his father, Wallace, 86, in Northeast Philadelphia.

But the message of the first call was clear, he said.

"I'm used to bill collectors calling, and I always answer the telephone," Illich said. "I know what a threat is."

Ian Phillips, legislative director for ACORN, which stepped in to help the Illiches several weeks ago, said the mortgage-modification package prepared for them and sent in a week ago had the Social Security award letter OneWest was requesting.

" 'We are going to foreclose tomorrow' doesn't sound much like 'We are going to review your case tomorrow,' " Phillips said.

Had OneWest tried to foreclose on the house, state and city laws would have stopped the process, Phillips said.

Pennsylvania foreclosure law and Philadelphia's mandatory mortgage-foreclosure diversion program both require that state and city receive copies from the lender when the obligatory Act 91 notice is sent to a borrower.

Borrowers may be eligible for state help in averting foreclosure and have an automatic stay for 33 days from receipt of the notice to contact an authorized credit-counseling agency for help.

The city requires lender and borrower to meet in court to see if a mortgage can be modified to avert foreclosure. The borrower must contact an accredited counseling agency to start the process.

Accredited is the key word, said Paul Chrystie, a spokesman for the Philadelphia Office of Housing and Community Development, which oversees the city's counseling agencies. There are "questionable firms that frequently charge for limited or no results," he said.

Because the Illiches had been approved, then rejected, for a modification of the first lien after receiving a notice of foreclosure earlier this year, ACORN's Phillips said, that notice is no longer valid for foreclosure purposes.

Nick Illich had a stroke a few years back and cannot work. Kathleen Illich has chronic obstructive pulmonary disease. They lost their only son, 20-year-old Nicholas, five years ago in a job-related accident.

Their daughter, Brooke, has diabetes and was recently hospitalized after a ministroke.

"My son's problems are even worse than what he told you," said Wallace Illich, who, despite arthritis and heart issues, still lives on his own in the Northeast. "He never fails to call me every day, and he visits me as often as he can."

Phillips said the Illiches easily qualify under the rules for help with their situation.

"There are plenty of people even worse off," he said.