Bank spares family from foreclosure Wyatts grateful for turnabout after community outpouring

September 26, 1996|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

The Northeast Baltimore family that had faced the loss of their home because an injury left their provider unable to work got the best news they could hope for yesterday: Their rowhouse will be spared because NationsBank abandoned plans to foreclose.

The decision came after an outpouring of community outrage and offers to help Walter and Mary Wyatt and their three children since an account of the family's plight ran Sunday in The Sun.

NationsBank said it will allow the Wyatts to stay in their home and make only partial payments on the loan for the next six months, to give Walter Wyatt time to mend and return to work.

Mark Ehrenreich, manager of risk management for NationsBank, said intervention by the Federal Housing Administration prompted the bank to put the foreclosure on hold.

"We're not in the business to take people's houses," said Ehrenreich. "We're in the process of trying to work with the borrowers and the housing counseling agency they have selected."

The Wyatts, overwhelmed by community support and dozens of offers of help toward the mortgage and clothing and toys for their children, ages 4, 3, and 6 months, were relieved at the news.

"That's really really great news," Walter Wyatt said a day after returning home from having back surgery at Sinai Hospital. "I don't have to worry about where I'm going or keeping a roof over their heads or where the kids are going to go."

In July, the bank notified the Wyatts that it would repossess the house because they had fallen behind on their mortgage after serious back injuries left Walter Wyatt temporarily disabled.

Just three months earlier, Congress had killed a program that allowed victims of job loss or illness to reduce or postpone payments on FHA-insured mortgages for up to three years.

In eliminating what was known as the Assignment Program in April -- at an estimated savings of $2.8 billion -- the government said commercial lenders could work with families more effectively than the FHA to prevent foreclosures.

But lenders have been unable or unwilling to do so. Since April, Ehrenreich said, NationsBank has had no choice but to foreclose on borrowers such as the Wyatts, who fell six months behind on loan payments of $532 a month,

Reports of the family's circumstances prompted the FHA, insurer of the Wyatt's loan, to step in this week and urge the bank to work out a modified loan payment.

"There are alternatives to foreclosure," said Joseph McCloskey, director of the Single Family Servicing Division of FHA. "But there's a lack of understanding of those alternatives." McCloskey's office suggested that NationsBank allow the Wyatts to reduce or defer payments for the next six months -- an option that has always been available to lenders.

But a more recent option known as "partial claim" offers help for those who can resume paying the mortgage but can't immediately pay back missed payment. In those cases, the FHA can pay the missed payments, then tack that debt to the mortgage as an interest-free loan.

"I think it's ideal for people in the Wyatts' situation," McCloskey said. "No lenders really want to go through foreclosure, but the uncertainty causes lenders to hedge their bets."

Currently, 130,656 Maryland homeowners have FHA loans. The government pays off lenders if an FHA mortgage goes into foreclosure. In Maryland, 3,890 FHA loans are in default.

Walter Wyatt, 32, is an employee of Victory Racing Plate Co. in Rosedale. He suffered back injuries more than a year ago while repairing equipment.

The injuries sidelined him, first for 2 1/2 months last year, then since May 12, after doctors discovered ruptured discs and nerve damage.

He was feeling better last night. And so was his wife. "You can't imagine how I feel," said Mary Wyatt. "I was so scared. I'm just grateful for everybody's help."

Pub Date: 9/26/96

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