Bank of America To Modify 630,000 Loans in 2009 To Avoid Foreclosures
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Bank of America is planning on proactively modifying 630,000 loans in the coming year.
Did you hear that?
A bank is going to be proactive in protecting it’s assets and providing relief at the same time. We all know the tremendous cost of foreclosure to banks. And who will do more to take care of a home than someone who has an ownership stake in it?
By being committed to keeping families in the homes instead of foreclosing Bank of America is cleaning up many of the ills that they have inherited with the Countrywide purchase.
This is welcome news and hopefully will be emulated across the banking industry.
To help homeowners avoid foreclosure, Bank of America and Countrywide modified approximately 230,000 home loans during 2008. This year the company embarked on a loan modification program projected to modify over US$100 billion in loans to help keep up to 630,000 borrowers in their homes. The centerpiece of the program is a proactive loan modification process to provide relief to eligible borrowers who are seriously delinquent or are likely to become seriously delinquent as a result of loan features, such as rate resets or payment recasts. In some instances, innovative new approaches will be employed to include automatic streamlined loan modifications across certain classes of borrowers. The program utilizes an affordability equation to qualify borrowers for loan modifications at a targeted first year mortgage debt to income ratio of 34 percent. via Press Release.
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Comment by CharlieNoSpam on 16 January 2009:
Ever since I heard Dr. Susan Wachter of Wharton talk about the problems our economy will face in 2010 when HEL loans need to be refinanced. I have been contemplating our current economic problems with foreclosures and falling home prices. The news reported recently of CitiBank’s acceptance of a proposal to allow bankruptcy judges the ability to modify payments; the problem is that this is just one lender, and it requires a case by case review by bankruptcy judges. Bank of America is doing better by proactively modifing loans, but what of all the others?
A proposal called the Mortgage Equity Protection Plan is for a program that is more streamlined (using the internet), not needing all the paperwork or expense of a conventional bankruptcy, not needing to have each case reviewed by a bankruptcy judge; it takes advantage of current low fixed rates and gives all the loan servicers (& lenders) the incentive to address current and future defaults. (I assume you are familiar with the problem that Loan Servicers face in renegotiating mortgages, on behalf of their investors of Mortgage backed securities).
Most importantly, the plan would almost instantaneously end the massive numbers of homes entering the foreclosure market for the next 5 years. From a populist point of view, it would sell well, as it would be directed to helping homeowners, instead of giving it to banks (hoping they will start lending again). Meanwhile the investors who are being paid from this program, can invest again in FNMA (government backed) mortgage securities. Investors have an incentive to put their money back into this market, because the plan would solve the problem of decreasing prices, and FNMA offers better returns than Treasury notes. Another reason that this will appeal to politicians and pundits, is that these investors will not be using the money to pay executive bonuses or buy other banks,
The Mortgage Equity Protection Program meets another goal of fiscal responsibility (i.e. getting the Treasury repaid).
This plan comes from my years of experience in the Real Estate industry and my work at Mortgage Reporting Service, a consumer service that published mortgage rates for all the lenders in the Philadelphia area in the 1980’s.
I am concerned that if we don’t stop the drop in home prices now, they are going to crater to absurd levels!
This information can be found at http://charlienospam.blogspot.com/
I would be interested in your feedback.
CharlieNoSpam-Economy [at] yahoo.com
Pingback by Realty Thoughts » Post Topic » Bank of America to Modify $100 Billion in loans in 2009 on 16 January 2009:
[...] high cost banks must shell out due to foreclosure they are now changing their tune. According to The Real Estate Bloggers Bank of America plans to proactively modify 630,000 loans totaling $100 billion. Now homeowners who [...]
Comment by Jennifer K Giraldi on 16 January 2009:
It’s about time! With the large expense of foreclosing, this looks like a win-win for both the banks and the mortgage holder. Hopefully this will get us on the right track for a full recovery.
Comment by Free Grant Kit on 16 January 2009:
I agree with that,home prices will sink as oil if nobody stop it.
Comment by Robert Unusual Loans on 17 January 2009:
So they say. Now we shall seee what kind of criteria they use. Also it is past that point, good luck with the 34% DTI ration. Right now many are not worried about their home but rather keeping a job just ask California state workers
Pingback by One Positive Sign from Troubled Bank of America on 18 January 2009:
[...] Real Estate Bloggers had a post on their site that says that Bank of America and its subsidiary Countrywide will work to modify 630,000 loans. Why? It cost lenders up to $70,000 to foreclose on a home, and as more foreclosed properties come on the market it will take longer to sell their properties. [...]
Comment by A BOA Client on 22 January 2009:
I really hope there is some truth to this. I am a BOA client and I have been trying to get them to us stay in our home. They would rather take a 1,000,000 loss than help us stay in our home because they of certain guidelines they must follow.
Comment by Sarah on 24 January 2009:
What type of guidelines are you speaking of? I have applied for a BOA loan modification for my HELOC and since there is a waiting period of approximately 4 weeks I would like to know the facts so I can plan for my future.
Comment by Mary on 27 January 2009:
It is absolutely imperative that Bank of America or any lender, base the loan modification on current financials of the borrower. There was a time period recently when the banks would send loan mod papers to a borrower who was late, but they were using the information from the original application, not current financial info. This is one of the reasons for the low success rate for modifications.
It seems that banks have finally woken up to the fact that they must be pro -active and involved in order to successfully modify and keep a customer happy and in their home. Someimes in order to do that they are re-underwriting and dismissing a second or heloc completely.
Comment by John on 5 February 2009:
I am sure a lot of people who are here are poking around because they are in trouble or they see it off in the future. If you are in foreclosure, you MUST defend this even by yourself if you can’t afford an attorney. I am in south Florida so it may be a little more extreme here than where you are.
Don’t think the banks are taking the brunt of this. Lookup GRENWICH v. Countrywide and MBIA Insurance v. Countrywide. Most of the loans were sold (in not all according to Countrywide annual statements) and now, they are passing the loss along to the investors. These investors have a right to be upset. They were sold “high quality” loans. I have looked at several loan applications and settlement documents that were made during the boom and I don’t even see where/how these got approved.
The better defense against this (if you’re back is against the wall) is press them for the originals of the note (which the holder in due course needs). Send your lender a Qualified Written Request (there are several examples on the net). Under RESPA, they HAVE to respond. Find out what they don’t want you to know. See the study by Prof Katie Porter, Assoc Prof Of Law, Univ of Iowa. 40% of the notes are missing and in most jurisdictions, it is REQUIRED to enforce a note. But if you don’t object, you loose.
Everyone has been affected by this. Even if you have a secure job and can pay your bills, try to sell your house in the next 5 years for a small profit and it’s not going to happen. If you refied and took cash out during this time, you are now held hostage to your home or at least huge financial pain in the future. In my areas, prices are down over 50% which equates to 2000-2001 price levels. Agreed, we didn’t need this big of a run up but this mess will take at least 5 years (maybe more) for some sort of stability to come back. Homes, jobs etc will not bounce back anytime soon.
The securitization of mortgages made it easier for more buyers to come into the market. Simple economics of supply and demand…house prices go up. The problem, the banks needed more loans to sell to investors (forget about buyer qualification). Do you want to know why lenders don’t want to disclose exactly what they did and why they don’t want disclosure of where they spend TARP money? It’s a real simple answer. Most of these loans should not have been approved by any standard in place at the time. The lenders knew it at the time they sold the notes on these loans as “AAA.” So even if 60% of the notes are even around for a lender to use to foreclose with, of these 60%, a large percentage of them (if you force the issue) would have been fraudulent notes (remember, they were rated high grade investments). Under Federal and state UCC laws (as I understand), a negotiable instrument (i.e. a note) that is transferred, and the transferee knowingly obtains it through fraud (remember, when you GIVE the note to the lender at closing, they are the transferee) the instrument becomes “non-negotiable”! So, when the lender sold it to the investor, your note just got paid. And yes, the lender knew the note was not as represented when they sold it to the investor. The investor would certainly have a cause of action against the lender (i.e., the cases above).
The lenders do not want anyone knowing this. The problems you hear everyday about trying to figure out what this stuff is worth so we (the tax payers) can buy this paper and get the economy rolling again. I’ve got news, if people understood what happened with securitization, they would know, the paper is only worth salvage prices at the recycle bin. If this wasn’t the case, the banks could put a value on it for the FED that all could agree on. I think they want to keep quite because lying to Uncle Sam would put these geniuses in jail.
Countrywide was the biggest lender and Bank of America will probably go same way as other have this past year for buying the country’s #1 lender. Someone else agrees, just look at BOA stock prices of the past months relative to the other banks.
If you think the banks really want to work things out, think again. They will but only if forced to do so. They want payment for the loan, TARP money, the Credit Default Swap (another form of insurance) Money, and your house. From the banks prospective, they are better to foreclose. The “securitization” process never enters the process. They get your house, sell it for cheap, and then either charge it off (passed through to the investors) and issue you a 1099 OR hold on the deficiency. The crime here is the investors who bought the loan get shorted also. The bank receives the TARP, CDS money, money from the sale of your property. Mind you, they sold the loan to the investor at face value in the first place! Do the math, the bank lends you $200,000 and received fees, They sell the investor the loan for face value (or better). The loan goes bad, they get (say) $100,000 at foreclosure that they pass along to the investor (a $100,000 loss to the investor, $0 lost by the bank). They get the CDS money (say 25% or $40,000 or the loan), the then get to either charge off the $100,000 loss on their taxes OR retain a deficiency judgment against you…say they get $10,000 (10 cents on the dollar but I think they will do better than that). The bank just made $50,000…sprinkle a little TARP money in the mix and who knows! You have a foreclosure, the investor looses out and what almost makes this laughable is the note, if borrowers took the bank to task, was probably NOT enforceable in the first place! And MOST homeowners are simply walking away!
I had the opportunity last week to look through one of these securitization agreements. I notice that it said (in essence) that if the bank negotiates with the borrower (ie, short sale, deed in lieu, renegotiated terms), the MUST buy the note back from the trust at face value. Obviously, there must be some other language buried in these multi 100 page agreements that banks like Countrywide are using to pass the loss on to investors…thus the above mentioned cases which were filed in late ‘08 after Countrywide “settled” with 15 states.
The next “wave” of problems I think are to come will be in a few years when foreclosed homeowners get a letter something like this…”You know that house we lent you $300,000 for and could only sell it for $125,000? Well, we would like to work out some sort of payment arrangement.” So, if your bank issues a 1099, be thankful. It’s probably over (because they can’t issue a 1099 and enforce a deficiency judgment). Thank goodness congress passed legislation that allows homeowners (of their primary residence) to pretty much wipe out the loss. Former owners of investment/second homes may face challenges that will need to be addressed with their accountants.
Yes, I have heard of several customers receiving “offers”. They all run about the same, 40 years, rates in the 3% range, and arrearages either cut down and/or added to the principal. It nets about $100 reduced payment. To quote one of them, “Why would I sign up for a $200,000 loan on a property that’s worth $120,000 for 40 years?, I’ll never get out from under this place!”
Informed comments are welcome here or at the address below.
Regards,
John Woodward
john at johnwoodward dot com
Disclaimer – This is my opinion. Do your own research. There is much more to this than can be written on a message board. This is not advice and you should consult with the proper experts in your area about your situation.
Comment by Eirik on 18 February 2009:
I have recently contactd BOA in reguards to finding out more info about a loan modification. They person I spoke with has no idea what im referring too. Does anyone have anymore info on who or what department I should contact?
Comment by Rita Franklin on 25 February 2009:
I would like to know how Countrywide can present themselves as the seller of a home and excute a contract. Then hold up the closing as they need to get a POA from the investor. The new buyers had no idea an investor was invovled. Can someone explain this apparently legal process to me?
Thank you
Comment by Karen on 25 February 2009:
Sorry…but who is getting the loan mod..it says eligible borrowers? So does that mean that the bum who is a almost out of business mortgage broker down the street who bought a 1.2 million dollar home on a option arm gets help? Does that include the equity line he took out for 200k?..so what will his payments be after the loan mod…1500 a month? Great so after all that I have done being a doctor… This uneducated idiot gets a pass? Sad!
Comment by Frustrated on 2 June 2009:
Try getting a loan with BOA. 10 days after we were supposed to close they say we need to do repairs to the house. We don’t even own it yet and they want us to pay for repairs. The seller will not pay as we got the house as is. They say the repairs need to be done before closing. WE have never had so much of a run around as with BOA. If we were not emotionaly attached to the house and have almost $10,000 into it we would try to walk away. But then the seller could sue us for breach of contract. Now 15 days past closing and they havn’t lined anyone up to do the repairs and it is costing us $100.00 a day in fees to be over our closing. I wish we could find out who this underwriter is and talk directly to her. But they do not allow it. We have good jobs and assets. Why can’t they see this and just give us the loan so we can get into our dream home. We will never do business with BOA ever again. If they decide to give us the loan we will pay it off as soon as possible to avoid them getting any interest money. We have several properties that are paid for and we will sell a couple just to get out from under them.
Any way. I need to get this out. Thanks for reading. Say alittle prayer.
Comment by jdvon Logan on 23 June 2009:
I just recvd an approval from bank of America on a Loan Modification for one of my Properties. I had refinanced it with a Mortgage Company called Quality Homes. The Loan was sold to Country Wide less then a year later. Currently, the Title Company that secured the Loan to Quality homes is being sued in a Class action suite for millions of dollars for false charges made on the the closing statements. NOW! You might be wondering, what is my Point?
Thanks to you guys and your comments I have learnt a lot about the RIP-OFF TACTICS, That banks, servicers, mortgage predators and fraudulent brokers, and of Course the Government, Use to keep home owners and innocent idiots like me in the dark. ANYWAY, back to the BOA modification approval they sent me: First, IT IS BASICALLY A DEMAND TO ME TO PAY ALL THAT I OWE INCLUDING THE LATE FEES AND PAST PAYMENTS (Total = 212,000.00) The Properties in this area are selling for around 165,000.00 average) I originally refinanced it for 189,000.00,I was one of the many idiots at the time that didnt really want the Loan or even qualified for it, but I did it anyway. IT IS A INTEREST ONLY LOAN AT 7.75% AND ITS A SUBPRIME LOAN, BASED ON A JUMP IN INTEREST IN 2012 WHEN THE RATE WILL JUMP TO 11.5%. THEY CALL THIS A LOAN MODIFICATION HA HA HA…
ANYWAY, BOA’S LOAN MOD APPROVAL LETTER ARRIVED A COUPLE DAYS AGO AND OF COURSE I WILL DECLINE THEIR OFFER AND APPLY FOR ANOTHER PROGRAM.
BUT THIS TIME I WILL USE THE KNOWLEDGE I HAVE GATHERED FROM YOUR MANY COMMMENTS AND ALSO FROM MUCH RESEARCH I HAVE DONE ON THE SUBJECT.
ANYWAY WILL KEEP YOU POSTED HOW I DO! MEANWHILE ANY AND ALL COMMENTS WILL BE APPRECIATED.
JD
Comment by suzanne on 1 July 2009:
DO NOT GO WITH BOA FOR A LOAN OR RE-FI….I applied for a re-fi in March and I am still waiting for a loan processor. I bought my home in Feb of 08 and wanted to refi at 4.5….they told me today that it won’t close until Aug. When I applied BOA said 30-60 days…..it will be 6 months before I get my loan and more than $3,000 later I could have saved if they had told me it would take this long.
Comment by Jack Thomas on 15 July 2009:
Talk is cheap, actions are what speak louder than words. Bank of America has stonewalled and stymied all attempts for us to get them to honor a loan modification that we were approved for and now we are in the position where we need to file a lawsuit against Bank of America to get them to honor a contract they sent to us!!
If you were initially approved by Countrywide Home Loans for loan modification in the last 12 months, only to have them reject your modification please contact Jack Thomas (lead plaintiff) at 513-899-3478 for a potential class-action lawsuit against Bank of America
Comment by Judy on 8 August 2009:
I have already talked to Jack Thomas. My story is a near duplicate of his. Loan mod package/CONTRACT that is one of the California Attorney General stream-lined modifications, the letter with the modification CONTRACT states you need only submit verification of income, that the modification CONTRACT must be NOTARIZED, and that the package must be returned by 30 days from the date they typed up the letter/package.
You follow their instructions to the LETTER, you get verbal confirmation that the package is processed and that they verified it is complete. You keep calling them and they keep giving assurances. Then you find out they just did not finish the processing. No valid reason is presented. The modification CONTRACT package spelled out that if you agreed and followed the instructions, THEY WOULD MODIFY THE LOAN. There was no ‘out’ ANYWHERE in the offered CONTRACT that allowed CW/BofA to ‘rethink’ the offer. There is NO truth in lending letter sent telling you of your options – they don’t do that since there is no REASON that they can use to justify what they have failed to do!!!!!
Worker-bees have said they could get this ‘fixed’ but then the call is abruptly disconnected just when the worker tries to check with a supervisor and if you can ever get a message from the worker, you find that he was told by a supervisor “don’t get involved”. What is that stench? Bloated rotting pork or decaying tarp? (TARP should be the name for a subspecies of a fish called carp. What the banks are doing with TARP is definitely FISHY.)
They are trying to bluff their way thru this and make like the CONTRACT does not EXIST.
If you have one of these contracts, they CAN be enforced. BofA/CW just does not want you to know it.
Also, if you contact any of the ‘boiler-room loan-mod for cash’ peddlers, they will try to convince you that the better method is to start fresh with them. Well, sometimes the lender has put a roadblock in place by selling the note to a private investor during this skirmish. If that has happened, that boiler-room attempt to do a mod WILL NOT succeed.
You are better off to force the mod contract that you already have to be honored.
Jack is correct, the only way to get these honored is to file suit. My attorney’s letters are being ignored.
I’m definitely filing a complaint with my ‘Uncle’ Jerry Brown, the AG in my state of California who negotiated the settlement under which my mod CONTRACT was generated.
BofA/CW, you want the AG suing you AGAIN too? And I just bet other AGs would follow suit just like last time.
I happen to indirectly know of another of these CONTRACTS that is not being honored. Given my small network of friends, this is a problem that may have been perpetrated on a far larger group that is first realized.
Pingback by CW has outdone themselves this time... - Page 3 - Loan Modification Forum - LoanSafe.org on 8 August 2009:
[...] with info on an Ohio guy who has the same problem too. His post and mine are also at this link: “Bank of America To Modify 630,000 Loans in 2009 To Avoid Foreclosures : The Real Estate Bloggers” (my comment follows his comment). We both have attorneys working this. It may become a class [...]
Comment by Dan Haskins on 23 August 2009:
Hello,
My wife and I are Bank of America customers. We applied “by ourselves on the telephone”, and within 60 days received a loan modification on our home. We had a fixed rate at 5.375%, and B of A reduced our rate to 3.25% for 5 years, then back to 5.375% for the remaining 25 years.
Our original loan also had a fixed for 10 year clause, then it went adjustable. B of A changed our loan to a std. fixed rate mortgage for the entire life of the loan. For the next five years beginning this October, we will save $560 per month, which adds up to $33,600.
B of A has worked very well with us. Our loan analyst Monica, has been great. You do not need an attorney to get your loan modified. You can do it yourself, just be nice, and be patient, as they are very busy and overloaded with requests.
Thank You Bank of America for working with us to keep our home.
Dan & Carol Haskins
Calimesa, California
Comment by Gwen on 2 September 2009:
What a crock. We’ve been trying to get a modification since january when it was still Countrywide. We are now living on 35% of the income we had when we bought the house, after both of us losing our jobs. Only hubby is working now. We have been completely stonewalled. Calls are not returned. Faxes are not responded to. Snail mail is ignored. We’ve been through all of the steps, sending them all of the documentation required under the Obama plan. We’ve contacted our elected officials. BofA has even called us telling us first that they were going to reduce our payments for a 3-month period of time, and if we made those payments a modification would be granted. But we were never told what those new payments were to be, and nothing ever came in writing. We were told to check the website to see the current state of our modification request, but that had not been updated for 4 months. All it said was we had applied. Then we got a call telling us to just “resume making payments”, which we cannot do since only one of us is working and our income is so much lower. Now we get a 5-day notice that we are unreachable and therefore our request is denied. We have documented call logs that show we only missed one call from BofA, and have returned that call over 15 times. All that happens is a voice mail, which goes unreturned. And yet WE are unreachable??
Is there a class action suit somewhere???
Comment by Robert on 30 September 2009:
bofA is sooo sllooowww..
Comment by B of A Homeowner on 6 October 2009:
We sent our information to the President of B of A in the Charlotte, NC office… barbara.j.desoer@bankofamerica.com We got a response within 48 hours and our mortgage amount can be reduced by $1200 per month including piti for 5 years because our income exceeds 31% of the PITI!! Send out emails to the following email addresses… some are working and some are not. good luck.
‘nancy.m.condos@bankofamerica.com’; ‘michelle.shepherd@bankofamerica.com’; ‘bradford.r.dinsmore@bankofamerica.com’; ’steele.alphin@bankofamerica.com’; ‘colleen.haggerty@bankofamerica.com’; ‘britney.w.sheehan@bankofamerica.com’; ‘nicole.nastacie@bankofamerica.com’; ‘joe.price@bankofamerica.com’; ‘keith.banks@bankofamerica.com’; ‘michael.jones@bankofamerica.com’; ‘brian.t.moynihan@bankofamerica.com’; ‘amy.brinkley@bankofamerica.com’; ‘ken.d.lewis@bankofamerica.com’
Comment by Uel Brown on 15 October 2009:
Anyone with FHA from Taylor Bean turn over to BofA in the middle of loan mod? BofA say they got no paper work on loan mod, but I do, BofA said have to start all over, but that I would not quafie because of income but yet Taylor Bean said I would, BofA said they did not get all the paper work I faxed them only the bank statement and the payments I made under the taylor bean agreement,whith were not credited, but the the letters from taylor saying they were makeing a mod to my loan they didnot get. What the hey no wonder the banks are maken a killing. HELP
Comment by Trying to help BoA customer on 6 November 2009:
My cousin in Maryland going thru same thing as Jack Thomas. Have loan Mod Agreement from Countywide dated April 2009, mod pymts started in May 2009 & they have been paying. They just found out 1st week of November that BoA won’t honor and “denied” approval and want them to pay huge amount, which I suppose is calculated based on previous payments and charges they have added,etc. My cousin is beside herself and barely able to function due to the stress and worry. I am going to try and call MD AG, MDHOPE and Md commissoner of financial regulation to see if I can help. This is crazy! if anyone has had any luck, please post contacts!
Comment by CC on 15 November 2009:
B of A has been horrible to me and my family. First, they took over Countrywide, took away my only source of business (I am a home loan consultant) and cut my pay in half. My income is now 1/10 of what it used to be when I fully qualified for my home loan (no reduced documentation).
I applied for a loan mod in May 2009, can’t get an answer from anyone at B of A and they scheduled a sale date of 12/26/09…THANK YOU B OF A for making it the day after Christmas and not communicating with me. When I call them, they state they don’t even know about the sale date being scheduled? I am in school to become a nurse, working as a loan officer and only need the mod temporarily until I am a nurse in 12 months…no, they can’t seem to get to me but they can help people who are receiving unemployment? Gosh…I can’t stand B of A!