Fannie Agrees To Rescind Foreclosure For Virginia Family After Recent "Post" Article; Says Chase Botched Loan Modification Application Process

In Prince William County, Virginia, The Washington Post reports:

• 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.

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• 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.

For the story, see Bank reverses foreclosure for Va. family with very ill child.