Bank of America – Loans & Lies, but no Real Modifications

In July the federal government pressured banks to modify 500,000 mortgages by November 1st.  Bank of America is lying to do its part.

MORTGAGE, EXPERT, MICHIGAN, BIRMINGHAM, BLOOMFIELD, DETROIT, ROCHESTER, ROYAL OAK, TROY

Take a close look at the document image below:

This is a copy of an actual letter sent to one of my clients who requested a loan modification. 

Note that in several places it alludes to the fact that this IS NOT an approval for a loan modification.  In fact it says, "If for some reason you are not eligible for the Home Affordable Modification Program once you've started the trial period, we will contact you and review other options."

How many tens of thousands of struggling homeowners got letters like this and now think their home is safe from foreclosure? 

My client did - until I pointed out the above sentence. 

I've run their numbers and I know they qualify for a loan modification.  With BOA's track record of incompetency though, I'm very worried they won't really be approved. 

So, I've recommended they send everything that BOA asks for via certified mail or Fed-Ex and keep copies of all cancelled checks to BOA.  It won't guarantee they'll be approved for a loan modification or that their home will be protected, but it may help them in a lawsuit against BOA if they get screwed.

I find the wording in the letter, "review other options" particularly frustrating.  Why?  Because it's more deception.  There are only two other options - short sale (where BOA has a terrible record) or foreclosure. 

BOA is giving homeowners nothing but false hope with this letter.

I'm sure they're including all the loans they've sent these letters out to in the loan modification numbers they're reporting to the federal government. 

I expect to hear from the "Great Obama" any moment now about how his program has saved so many homes from foreclosure.  Just don't look behind the curtain or you'll catch him hiding all these letters.

By the way, BOA (and all the major banks) keep crying that despite their best efforts, they can't keep up with the flood of loan modification requests. 

Bull-puckey.

Here's a quote from BOA's third quarter report (click the hyperlink to read it yourself):

• Bank of America funded $95.7 billion in first mortgages, helping nearly 450,000 people either purchase a home or refinance their existing mortgage. This funding included $23.3 billion in mortgages made to 154,000 low- and moderate-income borrowers. Approximately 39 percent of first mortgages were for purchases.

• To help homeowners avoid foreclosure, Bank of America has provided rate relief or agreed to modifications with approximately 215,000 customers during the first nine months of 2009. In addition, approximately 98,000 Bank of America customers are already in a trial period modification under the government's Making Home Affordable program at September 30.

See any contradictions here?

How could they have the staff to "help" nearly 450,000 people purchase or refinance in the third quarter, but only modify 215,000 loans in 9 months? 

Let's see, that works out to 150,000 new loans per month, but only 27,777 loan mods per month.

BTW - anyone pointing to that 98,000 number already in a trial mod as good news, better reread this post from the top as well as realize that the number only represents 11% of BOA customers eligible for a loan mod. 

Let's remove another excuse banks use. 

They like to claim they're ramping up staff as quickly as they can, but still can't keep up with the flood of loan mod requests. 

Hmmm.  The process of evaluating a loan mod request isn't that much different than evaluating a request for a purchase or refinance mortgage.  You gather the same documents, run the same calculations and it's either a yes or no.  Loan mods are actually a lot easier to evaluate as credit is not a factor.

Need more staff?  Over one million people have been laid off from the mortgage industry.  What's more, they all know the business so they'd need very little training.

Can't afford to hire them?  Baloney.  The federal government is paying $1,000/year per loan mod for up to 3 years - a total of $3,000. 

The bottom line is the same senior banking executives that made the bad decisions that got our country into this housing crisis, have decided that they don't want to do loan mods.  They'd rather pursue foreclosures and use TARP bailout funds to cover any losses. 

Where is the heart, courage & intelligence of the "Great Obama" on this matter? 

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In addition to real estate lending, consulting and investing, Drew Sygit writes & speaks about the mortgage & real estate industries.  He holds mortgage industry designations CMPS, CMC, CRMS, CMLO, CALO, has an MBA and is an approved industry instructor.  He's presented, spoken and/or written for HUD, Financial Planning Association, Financial Planners Association of Michigan, Michigan Association of CPA's, Institute of Continuing Legal Education, Oakland Real Estate Investors Association, North Oakland County Board of Realtors and numerous industry publications.  For speaking engagements and questions he can be reached at dsygit@TheLendingEdge.com.  He also publishes his own blog:  http://drewsmortgagenews.blogspot.com.