Bank of America Offers Principal Reductions

The Obama administration has not been happy with the lenders’ effort to help property owners in the housing crisis. For the more than 6.5 million property owners currently late on their mortgage only 170,000 loan modifications have been completed.

Under increasing government pressure, Bank Of America launched a new program to erase as much as 30% off the principal in underwater home loans. The program should be available sometime in May, and before you ask, yes it is only available to homeowners with principal residences.

The enhancements to the National Homeownership Retention Program (as they call it) are coming soon according to their web site.

Bank of America has not been my favorite bank, but I am cheered to see a major bank lead the way towards measures that must be taken. Both property owners and the banks are going to have to compromise and meet somewhere in the middle for us to get out of this mess.

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Bank of America Wrongful Foreclosure

Bank of America seems to be rather organizationally challenged. I’ve experienced this first hand with their property claims process.

I’ve seen cases where a troubled homeowner has received two completely different letters from them within the SAME WEEK. One threatening to foreclose, the other saying they were working on the “loan workout request”.

When I worked out a temporary forbearance with them due to the fire and rehab, they then apparently fedex’ed some loan modification (??) papers to the property address (I bet the tenants were confused) and then called and told me that they would be doing a loan modification with me to adjust my loan payment to … wait for it .. wait for it .. to exactly the same amount as my current loan payment!

So, some major internal problems. Now it appears they are busy foreclosing on the wrong houses. Below are three cases, the “parrot one” in particular has gotten a lot of press.

• Bank Of America forecloses on a house with no mortgage on it
• You tube video on wrongfully foreclosed homeowner, B of A takes her pet parrot
• Blog post on above “stole my parrot” story.
• Another home invasion “foreclosure” on a homeowner that had no banking relationship with B of A.

Note that in the Angela Iannelli case, B of A first blamed the contractor.

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Lender not helpful when disaster strikes

One of my rental properties had a major fire.   The insurance only paid so much and at first I was unsure whether the cost of repairs could be covered.   I called my lender and explained that I was having trouble finding bids that would come in under the insurance amount.

I asked what help they could give.  I wasn’t sure of what help, maybe they could help negotiate with the insurance company.  Maybe they would offer forbearance on the payments.  The answer.  Nothing, they weren’t willing to do anything.   I explained to them that this property was underwater, not by a lot, but that it would not be worth it to me to come up with substantial additional money to fix it up.  That a good financial decision might be to give it to them. I pointed out that that the mortgage payments were up to date and it was in their best interests to make that situation continue.  The response? “Perhaps you could find a negotiator that would help you with the insurance”.

Banks are in business to make money.  Everyone understands that.  But I’m finding so many examples of extreme shortsightedness on their part.  If this downturn continues and more people get fed up with the banks, they might just rue the day over how badly they treated their customers.

And that was just the beginning of the nightmare this bank put me through in rehabbing this property.  The lender?  Bank of America?

 

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