HERNDON, Va. -- Michael David Kerns doesn't fit the expectedprofile of an American in a mortgage jam, but as the housing crisisin America filters down to middle class homeowners, that profilewill undoubtedly change. Kerns is a scientist at the NationalInstitute on Aging at the National Institutes of Health inBethesda, Maryland. He has a PhD and three graduate degrees and thestudent loans to prove it. So when Kerns applied for a mortgage tobuy a townhome at NIH FCU he said he told the mortgagerepresentative he couldn't afford more than $1,500 per month.

The "Caveat Emptor" experience he related goes to the heart ofunderstanding how even a highly-educated professional can be laidlow by the complex nature of a mortgage transaction, and thedifficulty of redoing terms once a buyer feels overwhelmed by thecosts. "I trusted the credit union to give me good advice," hesaid. "I thought they'd act in my best interest, that's why I wentto them."

Kerns received a hybrid mortgage with a 3-year ARM with a costof $1,298 per month and made a downpayment of 5% by drawing downhis Thrift Savings Plan and moved into his $255,000 home with histwo rescued Springer Spaniels in July 2006. He was surprised tolearn a month later that he also had a home equity loan and wasrequired to make two separate payments that came to $1,735. He saidhe originally asked about an FHA loan for first time homebuyerswith subsidized private mortgage insurance but was counseled thatthe NIH mortgage was "better" for him.

For several months Kerns said he made both payments by usingsome cash leftover from his initial draw down, but it was gonefast. Then, he was involved in a car accident that totaled his car.Because he needed to drive in order to get to work, he got a smallcar loan from NIH and drew down the remainder of his savings planto cover the costs, approximately $5,000.

It got worse when Kerns found he's bought a "lemon." Virginia's"lemon" law places all burden on the consumer to litigate, so heended up selling the car at a loss of $3,500 and has to pay two carloans now after financing the second one at NIH.

Now, Kerns said his back was close to the wall. He started doingwhat many other in-debt Americans do: he began to get cash fromrevolving credit cards in order to pay his monthly bills. ByJanuary of 2006, his credit debt was over $6,000. He worried, hefretted. He developed a gastric ulcer. He unloaded to a friend oneafternoon, feeling a tad sorry for his situation and she advisedgoing to the credit union for help.

Kerns contacted Cynthia Thompson at NIH in April 2007 to askabout the possibility of restructuring his mortgage. He said thatshe would take up his predicament with others at the CU and sworehim to secrecy. Four weeks went by, he said, without a word. Kernsnext stop was at Help for Homeowners and a counselor there sent himto Consumer Credit Counseling Services. CCCS took his financialinformation, pulled a credit report and got back to him with ananalysis and suggestions. Go to the credit union, they advised, andask for a Short Sale of the house. Kerns housing costs were toohigh to be sustained, they said. A second choice was to execute aDeed-in-Lieu.

He called Thompson again and his call was returned by CurtEssig. After a discussion, Kerns was asked to write a "hardship"letter and he did so the following day. Three more weeks passedbefore Kerns said he got through once again to Essig, who told him,"There is nothing that NIH FCU can do for you, Dr. Kerns." Now,Kerns said he picked up more than a hint of dismissiveness fromEssig. "He seemed to suggest I was not being truthful."

Kerns said his lifestyle and expenses are modest and haven'tchanged from before he developed these problems. He dropped his TSAcontribution to zero and increased his tax exemptions, which willcause him to owe more tax come April. He said he repeatedlyrequested a meeting with someone at NIH to try to work somethingout. He even wrote a letter to NIH FCU CEO Lindsay Alexander, whichhe says was never answered. He wrote a complaint to the NCUA aswell.

On August 29 Kerns got a package from an attorney representingNIH FCU with an offer that reduced his payment by $100, and awaiver of his right to declare bankruptcy and seek a jury trial andpayment of all legal expenses. He had a deadline to accept it bySept. 7 (less than a week later).

"What happened to the community focus?" he asks now. "Where'sthe commitment to serve members, especially when they come to thecredit union asking for help when they realize they need thathelp?"

Mark Forsyth, VP of lending at NIH FCU told Credit Union Times,"I'm disappointed to hear he feels the way he does. We think of Dr.Kerns as a valued member, he's an eminent scientist. At NIH FCU, wehave a range of mortgage products from which to choose, all ofwhich are standard. We don't do the secondary underwriting that'sgotten so many others into trouble. And we keep all our loans inportfolio."

Forsyth said that since Kerns contacted the CU that all effortshave been made to reach an accommodation "and we take great painsto educate members on all the decisions they make on theirfinancial well-being. I have his best interests in mind. It'sobvious that he feels we're not trying hard enough. But we dealwith folks who run into financial problems and we always try toreach an amicable settlement and a solution that's best for bothparties--the member and the credit union." Citing privacyconstraints, Forsyth declined to discuss financial specifics butfinally said, "I'm still hopeful we'll find a solution."

Kerns has subsequently received another counter offer from theCU's attorney and the solution hasn't been reached yet. "I don'tthink they've dealt with me in good faith at all," he said.

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