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!

Tags: loan modification

Sacramento Real Estate Loan Modifications

Sharon Wallace

Today I was out looking at property for a client when I happened on a very nice lady who had a nice story to tell.  It seems her mortgage had gotten a little out of control and she had written to her lender asking for a modification of her loan terms.

Within a couple days or weeks, she had a new packet at her doorstep with all the terms she needed and a little more.  Another homeowner who is able to stay in her home due to a loan modification.

By her own admission, Sharon was very fortunate and blessed.  It was nice to meet her and hear her story.

This Is Happening All Over the Region

I’m hearing more and more stories about people who have been getting loan modifications to help them stay in their homes.  With the new law signed today, many more people will be able to get help to stay in their homes.  It’s about time.

A word of caution: There are many “companies” out there right now claiming to know about loan modifications touting that they can help you for an advanced fee.  My advice is to never pay anyone for a service before you’re absolutely confident in their ability to help you.  There are many scammers out there right now preying on vulnerable people who are seeking aid in staying in their homes and avoiding the foreclosure process.

While there are many stories out there like Sharon’s, there are equally many horror stories out there as well.  Get a referral from someone you know and do your homework.

Tags: loan modification, sacramento real estate