Monday, February 20, 2012

Why Bank of America MIGHT Modify Your Mortgage

I am happy to report there is an update on my saga with BoA in securing a permanent mortgage modification. I have an insider's point of view, because I've been at this as part of the first wave of mortgages that had been securitized, but went south when the bottom fell out of the financial markets. My three-year battle with BoA started in January, 2009, but in the interest of fairness and full disclosure I will always give credit where credit is due.

Over a month ago I was invited to attend an "outreach" event sponsored by BoA here in Salt Lake. I have had such varied and sporadic communications from BoA over the last three years, and can confirm they have given me such scant evidence they had their act together, I almost didn't go. I was again being asked to gather all my supporting documentation (bank statements, tax returns, W-2, etc.), and I thought wearily to myself this would be the fourth submission. I have kept in touch with one person from BoA with whom I met last September. My meeting with her, while pleasant and helpful on a personal level, produced no tangible results. When I asked for her opinion about whether this would be yet another exercise in futility, she strongly recommended that I attend, so I did.

I was amazed, and I'll admit it. For the first time in my experience with BoA, they had a team of fifty people populating various stations in the Grand Ballroom at the Grand America Hotel, and they had organized themselves very well. I secured the first appointment of the day, thinking I could get in and get out quickly. I chit-chatted with two security officers, both of whom are personally trying to get their mortgages modified, who had been hired for the event in case there were some disgruntled borrowers. I saw more anger from them than I did from anyone else, and that was an ironic start to my day. There was no evidence of anger or frustration from anyone else. I got to interact with many borrowers that day, and while each had a sad tale of woe to share, I met no one who had been at it for three years like I have.

We all had one thing in common - no one had filed a lawsuit against BoA, and they were all trying to work things out in good faith with their mortgage servicer.

Computers were synced to underwriters in real time, and as documents were reviewed and cross-checked against long check lists, they were then scanned and handed back to me in sequence. We were each assigned a number (no names were used), and the process was orderly and sequential. With each step as documents were checked, double-checked and scanned, there was a well-defined method, and very little madness. It was impressive, given what I've experienced with BoA in the past.

As the list of additional documentation and letters of explanation continued to mount, I was escorted and checked out of the event, then re-admitted and escorted three separate times during the day. I came to know many of these people on a first-name basis. It was an exhaustive day (I started at 7:30 a.m., and didn't leave until 8:30 that night), and the assembling of supporting documents and letters of explanation for the underwriters continued into the next day.

The good news was that I received a call back on my cell phone on Saturday morning to tell me they had all the documentation assembled and subject to verification (an estimated 7-10 business days), they would be getting back to me with an offer for a permanent mortgage modification because it appears I meet the requirements for something called HAMP ("Home Affordable Modification Program"), or some variation thereof. The discussions about its moral underpinnings continue: Should the federal government (read the Obama Administration) forgive and reduce principal balances in order to rewrite new mortgages? Fannie Mae, despite the billions already received to keep it afloat, is digging in its heels, according to Edward DeMarco, the acting head of Federal Housing Finance Agency. They won't do it voluntarily without more cash infusions from the taxpayers, which the administration seems more than willing to do.

The "negotiators" referenced in my past communications with BoA are a thing of the past. When I asked what their role was the explanation was they were negotiating for terms on my behalf with Fannie Mae, the entity that owns virtually every mortgage under the sun, and now Fannie Mae has created various "buckets" into which mortgage modifications will fit. You either meet those criteria for relief or you don't, and there is no longer a "negotiation." It appears I do meet the new criteria.

Yes, it is an election year, and yes the government is dictating terms to Fannie Mae, and yes, there is no other game in town since the collapse. It has taken this long because of the government's intervention into the mortgage markets to work through the maze to develop programs for certain circumstances that meet their criteria.

Here was my takeaway on what you have to do to qualify for a mortgage modification under the current rules: 1) The home must still be your primary residence; 2) you must express the desire to remain in your home; 3) you must have a job and be able to document your income; 4) you must have a current tax return that can be verified; 5) you must have encountered a hardship that can be documented and adequately explained; and 6) there is a demonstrable high probability you will be able to sustain the new mortgage if granted.

We won't believe it until the ink is dry on the modification papers we now anticipate receiving, but I can at least report BoA is making a start and they are to be commended. They frankly admitted to me they know their brand has been severely damaged. Their top management is conducting weekly webinars to keep the employees on the front lines informed about their future direction. One of the mortgage counselors at the event estimated at the rate they are moving it will take five years to untangle this Gordian knot, and that's based upon what they know they have in the backlog today, barring another wave of foreclosures in the future.

I have to salute BoA, however, for making a start. The Fannie Mae programs are so new the employees of BoA are still in training on them. However, the people who came representing BoA to the three-day event where they served about 200 people in a personal and professional way, were knowledgeable and forthcoming with answers to all my questions. They gave me every indication they were sincerely interested in my outcome. When I asked what metric they were using to measure the success of the event, they indicated if they could modify 50% of the mortgages they worked on, or 100, they would consider it a success worth doing. You can do the math for yourselves. They take this three-day road show into every city in America every weekend between now and infinity, and at the rate of 100 per city, it will take FOREVER to complete.

This has been a long three-year odyssey for us. I'm hoping that soon I will be able to report a happy ending. My advice to others is to stay in constant contact with BoA. Write letters, place phone calls, take the initiative, don't wait for them to act - you act first. Talk with whomever you can, even if it's a person with no authority who is reading from a script. I was delighted to find they had my complete file on record, and when we reviewed it together all my attempts at resolution had been logged and I was given credit and lauded by the team for continuing to do the right thing to get it resolved.

BoA is not the monolithic behemoth I once feared it was. I met real people this time around. They have suffered right along with the public. One lady who had worked for BoA for 33 years has lost lifelong friendships with people who got behind in their mortgages and she was powerless to help them. This will go down as a long, sad chapter in American history, but like most things in life if you persist and you remain constant in your desire to make a resolution, things eventually have a way of working out in a positive way.

Oh, and P.S., they even explained why I was eventually turned down the first time without explanation. In the file there was a notation that the loan calculation for the modification was an "NPV" - negative present value. Why no one ever told me that was not explained, but the person with whom I met that day showed me the file. This time, however, all the calculations were done in advance before the file was submitted to underwriting. I have a feeling this time they are going to get it right.

At least one can hope. . . stay tuned and I'll let you know what happens as soon as I do. I would like to become the poster child for a successful loan modification. I'm hoping BoA would like to cross the finish line and snap my picture for that poster.


  1. Okay, so my momentary euphoria was not well-founded. Just as I'm beginning to feel like BoA is getting their act together and the retention department is speaking to the foreclosure department and they are all communicating with the modification department, today I am sent a certified letter from the foreclosure department with a notice of default enclosed (first time in this whole process THAT's happened) and a demand for a reinstatement amount that doesn't include any of the modified and full payments I've made along the way for three years. It really can't be true because the truth is stranger than fiction, but there you have it.

  2. Unbelievable! Here's hoping it's their last mistake before their right hand finally figures out what their left is doing. Man alive...

  3. Here I was getting caught up in the moment right with you. What a mess...

  4. So later in the week I actually connected with my "one point of contact" person who resides in Phoenix. That means I've had communication with BoA in yet another state, including Texas, North Carolina, California, Colorado and Utah. My case has been assigned to an employee who is working 240 cases. It took two days for us to connect, but I am now assured he has my complete file, he is going to quarterback the modification to the finish line, and he has had a good success ratio with the cases he's worked. I continue to be amazed at how long it has taken, but I remain optimist. Do I really have any other choice?

  5. So now it's August, and guess what has happened since February. . . a request at the end of June for the latest tax returns and pay stubs to be sent by return FEDEX envelope to a Colorado location of BoA. Then a form letter stating the submitted documents were "incomplete," with no further detail from a Simi Valley, CA, BoA location, then the sixth form letter from RDS in Texas, in three years offering (again) deed in lieu of foreclosure and a check for $3000 to help in relocation expenses, and no response from my "single point of contact" with BoA, Mr. Gilbert Della Cruz, after nearly daily phone calls from me asking what more they need. Nothing but silence coming back from BoA. So once again I throw the facts out into cyberspace for help - maybe Gilbert's boss is reading my blog. Uh huh.

  6. Informative post. Thanks for sharing such a nice article. Liked the post. keep it up.

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  7. And now it is the end of January 2013. I have arrived at the "concierge level" in my relationship with BoA. When I dial the BoA customer service line now, the system immediately recognizes my cell phone and connects it with my loan number, then I am immediately put through to my good friend Gilbert Della Cruz. If he doesn't pick up the line an associate does and schedules a call with me so we can talk within 24 hours.

    On the heels of that disclosure in December I was asked to fax all my updated information (again) to an express fax number, which I did the same day. A week later I called again to confirm they had a complete package, and was told it was complete and had been forwarded to the underwriters.

    On January 2nd I received an invitation to attend another "event" like the one described above last year. I attended the event, spent six hours discussing my case with a "specialist", this time at the Red Lion Hotel here in SLC, and after waiting for another two hours was informed that I am now "80% complete" and the underwriters have everything they need from me to complete my modification. What remains is for Fannie Mae to do a "net present value" calculation which I am told will take 30 days to complete. Funny to an old finance guy like me, since all it that amounts to is plugging four variables into a financial calculator to spit out a result - really takes about a minute. But, hey, who can complain at this point? Certainly not me.

    At that point, I am told, the modification paper work will be on its way to me in an overnight envelope and another "three-month" trial period will commence.

    So, you may ask, "How do you eat an elephant?" All together now. . . "One bite at a time."

  8. As promised an approval letter for our permanent modification arrived via FedEx on Valentine's Day. We commence our three month trial payment period on March 1st.

  9. Those who commit mortgage fraud do it for the sole purpose of greed. They want to profit from the loss of others.

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  10. MAR,APR,MAY...then into a permanent loan...I'm betting that hasn't happened...and that BOA will continue to drag you through the process of re-requesting documentation...and sending out notices of acceleration/foreclosure....

    any update?

  11. Patience is a virtue ;-) 3 trial payments completed - permanent modification "in process" - stay tuned.

  12. So now, “the rest of the story.” This chapter in our lives has finally ended in a non-event. Via FedEx a letter arrived dated May 16th: “We regret to inform you that your loan is not eligible for a Home Affordable Modification for the reason stated below. . . You are not eligible for a Home Affordable Modification because your current monthly housing expense, which includes the monthly principal and interest payment on your mortgage loan plus property taxes, hazard insurance premiums and homeowner’s dues (if any) is less than or equal to 31% of your gross monthly income (your income before taxes and other deductions) which we verified as $x.”

    Translation: You make too much money to qualify for government assistance.

    On May 17th: Two (YES, TWO) identical FedEx packages arrived stating: “We are pleased to inform you that you have been approved for a loan modification. If you accept the modification, your mortgage will soon be permanently modified with a more affordable monthly payment.”

    Translation: The original loan was modified by adding the accumulated arrearage to the outstanding principal balance and creating a new forty-year loan bearing the same original interest rate (8.875%) in 2001. And now I have the “more affordable monthly payment” that is exactly $51.36 less than my three monthly trial payments and exactly $331.75 more than my old monthly payment before it went into arrears. And now you have the government definition of "more affordable."

    Moral of this story to my young friends: NEVER go into debt. If you must go into debt, make certain you NEVER fall behind in your payments. On the other hand, if you have little or no self-respect and you become a deadbeat with no way to pay it back, and you choose never to help yourself by improving your situation, then you can expect your benevolent federal government to step in and assist you.

    So we come at long last to the end of my odyssey to nowhere. And I will continue to help myself without government assistance, thank you very much.

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  14. In Aguust, 2014, I refinanced the BoA modified loan and finally put this Goliath in his grave. My credit by then was fully repaired with a high credit score, and my terms on the new mortgage were at the low end of the interest rate spectrum. If there is a lesson to be learned here it is this: Never, never, never, never give up. Persistence and patience paid off for us and there was a happy ending.