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BofA Loan Modification Delays

Posted by 15789465 on

I'm helping someone right now who's been on  "hold" for over a year regarding a loan modification. They completed all requirements for the trial mod. They've made every payment exactly on time for almost 18 months.  Still  no permanent modification!  In fact, each new loan statement shows their delinquent balance getting larger, because the payments are less than the original payments. They've received multiple foreclosure notices! These poor people are completely stressed out, and it's no wonder. Their BofA contact told them final loan modification was delayed because FHA sued Bank of America and no loans could convert to permanent modification until the lawsuit was over.

WHAT A BUNCH OF _______________! (Fill in the word you want. As Colonel Potter on M*A*S*H used to say, "What a bunch of horse hockey.")  There is no lawsuit by FHA against Bank of America. There is a lawsuit by FHFA (Federal Housing Finance Authority) against Bank of America and 17 others, but it is related the sale of bad loans to Fannie Mae and Freddie Mac.  It has nothing to do with loan modifications. If you would like to read the lawsuit, it is HERE.

I spent almost an entire day trying to get a straight answer. It isn't easy, and I used to cross examine people in court for a living! I still don't have an answer. This is what I've been told:
  • The problem is widespread, and there is an entire department at BofA dedicated to problems with "delayed conversions" (That's the official name of this problem)
  • No one knows how long it will take
  • Until it is resolved, no information at all is being reported to the credit bureaus about the borrowers. In other words, even though they've made every payment on time, the credit bureau doesn't know that, so their credit score has not had an opportunity to get better
  • The problems are not the fault of the borrowers, nor are there any deficiencies in the borrrowers' paperwork
  • Miraculously (right at Christmas!) a manager I was talking to (okay, maybe I was grilling him) said he received an update on his computer last night! The update notice said the "audit" of the loan modification process was now complete, and BofA would begin manually processing all loan modifications in the pipeline and awaiting conversion to permanent modifications.  The notice did not say how long that would take.
  • The telephone number of the BofA legal department is a closely guarded secret and even I cannot find it, and I'm really good at that sort of thing
  • At least two managers in the chain of command on this issue have no assigned telephone numbers and cannot be reached. Another manager has a phone number but she never answers her phone and her voice mail box is full.
  • My blood pressure has gone up 50 points since starting my phone calls, and if I have a stroke and die, my husband is going to sue BofA for my death!
HAMP regulations cover the "delayed conversion" situation. They say that when a lender learns about a delayed conversion problem, it must finalize the conversion as soon as possible, but no later than 60 days after learning about the problem. My reading of the regulations seems to indicate that if borrowers quit making their payments during the delayed conversion period, then when the loan modification becomes final, the lender must tack the principal portion of those payments on the end of the loan, and is not entitled to any interest during the delayed conversion period. DO NOT STOP MAKING YOUR PAYMENTS BASED ON THIS. IT'S JUST MY OPINION, AND I MIGHT BE WRONG!  TALK TO AN ATTORNEY BEFORE STOPPING YOUR PAYMENTS. Here is a link to a brochure that explains some of the loan conversion issues. Skip ahead to page 84, "Delayed Conversion."  LINK This is preposterous!  The borrowers I was trying to help are totally stressed out. They can't even start rebuilding their credit while they are waiting! Write and tell me your experiences or insights.  I'll update this issue as I get more information, of if the borrowers hire a lawyer and file a class action lawsuit. If that happens, I'll give you the name of the lawyer.

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  • Howdy! I work for a major company and I am the person you would probably be calling in and talking to… A couple of things of note… Getting through the HAMP program is like creating a car from scratch. I’m simply amazed at the amount of paperwork and time it takes to get people on it…
    I’m going to make the assumption that this bwr has a conventional loan… if this is the case I could imagine a timeframe like this. In my dept we do FHA loans and we, for several reasons, don’t have a lot of people getting on the HAMP program and we are looking at a 3 month delay to get people a decision. Most the modifications we put bwrs on are 10x less complicated than HAMP, in my opinion.

    Morgan Smith on
  • Thanks for the follow up!
    Do you know how they got their files to converted status? Is there anything we can do from here to help things along???

    Any help is very much appreciated.
    Thanks again for hosting this blog.

    Frustrated w BofA on
  • Hi. Delayed conversion is caused because they messed up how they evaluated people for loan mods, and got in trouble with the federal government. The feds forced them to audit and recalculate all the loan mod requests. Its taken a REALLY long time, because they have to be done manually, not all at once on a computer. According to what I’ve been told, the bank is not allowed to charge any interest the whole time you are in delayed mod. So, when you do come out, every penny of your payments has to be credited to principal. From that standpoint, and delayed mod is a good thing.

    Some people have been told their original loan mod was wrong, and now they must agree to higher interest rate and higher payments. Those people have been telling the bank, “I had a loan mod agreement. It was supposed to convert automatically. I don’t need a new one just because you messed up. I won’t pay a higher payment, or higher interest rate. You’re just going to have to eat it.”

    Denise L. Evans on
  • Hi Diana,

    Still nothing. I tell people to check with their lawyers, but I think the bank is not entitled to collect any interest during the whole time you are in delayed modification. In other words, every penny of your payments must be credited to principal. If I’m right, then you should be happy this is taking so long. Just another way of looking at it. Good luck, and let me know what happens.

    Denise L. Evans on
  • Hi, I was wondering if anything has happened with your problem? I’m in the same boat and I haven’t been able to get any information? Please let me know what’s your status on your HAMP loan.



    Diana on

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