Wednesday, May 16, 2012

DOJ Settlement Results in BOA “Denying” Mortgage Modifications? (huh?)


DOJ Settlement Results in BOA “Denying” Thousands of Mortgage Modifications? (huh?)

(UPDATE: see the bottom of this page for a link which explains BOA's direct response to this blog article)

 A few days ago, I was on the phone with a supervisor at Bank of America, discussing the unexpected mortgage loan modification denial letter we had received for one of our clients. The case at issue has a significant background, including some issues which had led to a higher level of attention from BOA. During this conversation, the supervisor made a few comments which particularly caught my attention: “Every borrower [with a modification request pending] who might qualify for the Department of Justice settlement program will be getting a modification denial letter.” (?!)  I believe my eloquent response was something similar to “HUH?” as I ran his words back through my head.

 When I asked for clarification, the supervisor stated “Yep, that’s how they [really meaning “we” – BOA] have decided to do it. I’ll be getting tons of these same calls. Anyone who has a HAMP request pending who may qualify for a DOJ settlement program will be getting a HAMP denial letter, because the Department of Justice program will take priority.”

 Let’s think about this just for a moment. BOA is going to send thousands of borrowers denial letters – not letters of explanation – not because they don’t qualify for the Home Affordable Modification Program (HAMP), but because they may qualify for a different program. What is the result going to be? Chaos, stress, confusion . . . and that’s just on the Bank of America side!

 Imagine if you’re a borrower who has been working on a mortgage loan modification with BOA for months, if not years. If your situation is typical, BOA has lost documents you’ve sent in, changed your account manager 3 times, failed to return at least some of your phone calls, and continued to move toward foreclosure even as you try to work with them toward a modification. You hear about the $25 billion dollar settlement between the Department of Justice and the five largest mortgage servicers (including Bank of America) and you think your loan may qualify for some additional relief – finally, some possible good news! Then imagine that you receive a letter from BOA that your application for a mortgage loan modification has been denied. Chaos, stress, confusion, anger result.

 I hope that was I was told was incorrect, or that it was at least incomplete. I hope that someone at BOA who matters has enough sense to ensure that letters of explanation are sent out, not letters of denial. Isn’t it very obvious that there is a right way and a wrong way to do this?

 The right way would simply entail a letter that is titled “Letter of Explanation About your Mortgage Loan Modification Application” and says something similar to “If you are receiving this, it means that you currently have a mortgage loan modification application pending with us, and that you may be eligible for a new program which is currently being put together. This new program will take priority, and thus if you qualify for it, your application for mortgage relief will be processed through that program instead of through the HAMP program. In the meantime, . . . .”

 Believe it or not, I want to give lenders and servicers the benefit of the doubt, as there are some very smart people in key places at these institutions and as this mortgage crisis is without any easy fix. I just wish they didn’t make it so hard on themselves and everyone else.

UPDATE: BOA Responds to my Blog on Supposed Modification Denials

 McGrath & Spielberger, PLLC provides assistance to borrowers in need of mortgage relief services, such as mortgage loan modification, foreclosure negotiation, refinancing, and deed-in-lieu or other negotiated settlement resolutions.