Sacramento Real Estate Views

Bank of America – Loan Modification Shenanigans

B of A Sells Potentially Troubled Loans?

Lately, there has a been a lot of talk online through blogs, NPR and other media outlets about the morality of a homeowner walking on their mortgage holder when they find out that their home is hopelessly underwater and won’t be appreciating to what they owe for years.

My contention is the decision to walk on your mortgage is a personal, financial decision and that morality has nothing to do with and shouldn’t enter into the decision to walk or stay.  Morality, in my opinion, doesn’t apply to this situation although lenders and the government would like you to think that it does.

Here is a story from a close personal friend of mine regarding an example of how morality definitely doesn’t enter into financial decisions.

Paying On Time Got Me Sold!

I’ll call my friend Tom.  Tom calls me, in fact I’m on the phone with him as I write this, and tells me that he is financially strapped but that he’s made his mortgage payments on time and has never missed although his family is struggling.

Tom says that he contacted his lender, Bank of America, and submitted loan modification paperwork to see if there wasn’t something the lender could do to ease the financial strain that his family is under.  In the loan modification paperwork is all of their financial information to substantiate his family’s case.

45 days goes by and they receive a letter from Bank of America that their modification paperwork has been received and that they will be in touch with him.

More time goes by and there was no word from the lender as to the status of approval or disapproval.

Last week, he got a letter from Bank of America that their loan had been sold to another lender!  Bank of America, seeing that on paper they could demonstrate that Tom and his family were a good risk, sold the loan to another lender.

What Bank of America likely did was see that there was a potential for this loan to default as Tom and his family were asking for a loan modification and had their current financial situation in front of them.

Seeing that there was a potential that defaulting could occur, they sold the loan to another lender cause it looked good on paper.

While selling loans is commonplace in the secondary market, it usually happens early in the life of the loan.  The loan that Tom and his family had with B of A was seasoned.  They have had this loan for years.

There’s the morality of financial dealings.  This constitutes an immoral act by definition to some.  My take is that it’s a calculated, smart financial decision!

I wouldn’t be surprised if this is going on throughout the industry.  Lenders offing potentially bad loans to investors who are none the wiser.  Sweet!  I know who I won’t be banking with.

By the way, isn’t the image here just perfect!

As a side note, I told Tom that this could actually work in his favor as I know B of A has been brutal to deal with in this entire crisis yet post billions in profits.

Thanks for visiting!

Related posts:

1. The Foreclosure Crisis Is Ending
2. Home Loan Interest Rates Down
3. Short Sales Are Becoming Easier!

Tags: loan modification

This entry was posted on Friday, January 15th, 2010 at 3:15 pm and is filed under Market Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. John Wright said at April 22nd, 2010 at 9:30 pm

   IT HAS BEEN ABOUT NINE MONTHS! WHERE IS MY LOAN MODIFICATION BANK OF AMERICA?

   If it walks like a piggy, talks like a piggy, by golly it’s a PIGGY!

   BofA and it’s CEO Brian Moynihan reminds me of that song by John Lennon and George Harrison titled “Piggies” I invite you to listen to this song on youtube and see if it appropriately fits.

   http://www.youtube.com/watch?v=NTmeHM-Hojg&feature=related

   Have you seen the little piggies
   Crawling in the dirt
   And for all the little piggies
   Life is getting worse
   Always having dirt to play around in.

   Have you seen the bigger piggies
   In their starched white shirts
   You will find the bigger piggies
   Stirring up the dirt
   Always have clean shirts to play around in.

   In their ties with all their backing
   They don’t care what goes on around
   In their eyes there’s something lacking
   What they need’s a damn good whacking.

   Everywhere there’s lots of piggies
   Living piggy lives
   You can see them out for dinner
   With their piggy wives
   Clutching forks and knives to eat their bacon.

   John Wright vs. Bank of America Lawsuit at:
   http://news.yahoo.com/s/prweb/20100323/bs_prweb/prweb3766544_1

   When I filed my lawsuit against Bank of America, myself and United Law Group thought of the many others out there in the same situation. It was then that we decided to educate the public on what these piggy banks are doing, as well as unite us all together as one voice. Please help me turn this David vs. Goliath modification process, into a Goliath vs. Goliath.

   Please stand with me and United Law Group and send an email to Bank of America that states that we will no longer tolerate their potentially illegal, fraudulent, irregular and abusive business methods.

   Divided we might have fell America, but united we must stand!

   Please send your email directly to Bank of America and include the following:

   1. Your name
   2. Your complaint concerning your experience with Bank of America.
   3. Please end your email “I support John Wright vs. BofA Lawsuit!”
   4. Please send a copy of your email to johns-wright@hotmail.com
   5. Please send your email to both BofA link below and the CEO email

   CEO Brian Moynihan:
   brian.t.moynihan@bankofamerica.com

2. robsaxe said at April 24th, 2010 at 9:02 am

   Wow..normally I would delete this but it’s just so appropriate for this article. Thanks for the comment John!

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