Loan Modification Forum - LoanSafe.org - View Single Post - Bank of America loan mod -SUCCESS!!

LHarveyMadman · 10-16-2008, 11:02 AM

Hello everyone,

I'm new here, so please bear with me if my questions sound naive. Lots of information follows, but I'll try to keep it concise.

We bought our house about 3 years ago in a particularly high-priced area of California. We got into a 5/1 interest-only ARM at 6.25%, and like many people were assured that when it came time to adjust the rate, we could simply refinance. Balance on this loan is $680,800. This loan is with Bank of America. Purchase price was $851,000 (eeek!).

Since we were only able to scrape up about 8% for a down payment, we also got a fixed-rate 30-due-in-15 home equity loan for $100,000 at 8%. I recently refinanced this into a HELOC with an interest rate of prime + 1.24%, so the current interest rate is 5.74%. I have been trying to aggressively pay down this HELOC, and the balance is currently $95,000.

As things stand now, we are able to make our payments without difficulty.

Home values in our neighborhood have not suffered as much as other areas nearby, and based on recent sales and listings I am reasonably confident that the current value of the house is at least equal to our purchase price. However, I believe that this will not be the case for much longer.

I'm concerned that when it comes time for the first adjustment, we could be looking at a significant rate hike and increase in monthly payment, especially since the principal will be amortized over 25 years. I'm worried that if our home value drops and doesn't recover by then, we won't be able to refinance into a fixed-rate loan.

So my situation in a nutshell: an interest-only ARM plus a HELOC in second position. The ARM will not adjust for a couple years but when it does, it will most likely lead to a massive increase in monthly payments. If our house value drops, we won't be able to refinance. We're not in distress now, but could be in a couple years when the ARM resets and principal starts getting paid.

This is what I'd like to do: I would like to contact Bank of America and propose a conversion of my ARM to a 30-year fixed rate loan. Ideally, I'd like to see an interest rate cut as well, because at 6.25% our monthly payments would go up by about $550, and that would be difficult to manage, at least for the next year. I don't need a principal reduction.

In this scenario, I would actually be offering to pay Bank of America more each month, but hopefully less interest with each payment.

Is this a reasonable thing to ask for? I don't think I can claim "hardship" at this time, but I sincerely believe that we will be in that situation in a few years.

Has anyone tried a similar thing with success with Bank of America, or any other lender for that matter?

Does the fact that I am offering to pay more and not less carry any weight? That is, would such a proposal be more attractive to B of A, since they won't actually be losing any money (other than interest payments)?

Who should I contact with this proposal? Should I call the 800 number for loan modification, or would a letter or email (like 05swimmer's) be more likely to get results?

If a letter/email would be the way to go, who should I send it to?

Thanks to everyone who has read this message to this point. I look forward to hearing your advice.

10-16-2008, 11:02 AM	#1 (permalink)
LHarveyMadman Senior Member Join Date: Oct 2008 Location: California Posts: 554 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Bank of America loan mod -SUCCESS!! Hello everyone, I'm new here, so please bear with me if my questions sound naive. Lots of information follows, but I'll try to keep it concise. We bought our house about 3 years ago in a particularly high-priced area of California. We got into a 5/1 interest-only ARM at 6.25%, and like many people were assured that when it came time to adjust the rate, we could simply refinance. Balance on this loan is $680,800. This loan is with Bank of America. Purchase price was $851,000 (eeek!). Since we were only able to scrape up about 8% for a down payment, we also got a fixed-rate 30-due-in-15 home equity loan for $100,000 at 8%. I recently refinanced this into a HELOC with an interest rate of prime + 1.24%, so the current interest rate is 5.74%. I have been trying to aggressively pay down this HELOC, and the balance is currently $95,000. As things stand now, we are able to make our payments without difficulty. Home values in our neighborhood have not suffered as much as other areas nearby, and based on recent sales and listings I am reasonably confident that the current value of the house is at least equal to our purchase price. However, I believe that this will not be the case for much longer. I'm concerned that when it comes time for the first adjustment, we could be looking at a significant rate hike and increase in monthly payment, especially since the principal will be amortized over 25 years. I'm worried that if our home value drops and doesn't recover by then, we won't be able to refinance into a fixed-rate loan. So my situation in a nutshell: an interest-only ARM plus a HELOC in second position. The ARM will not adjust for a couple years but when it does, it will most likely lead to a massive increase in monthly payments. If our house value drops, we won't be able to refinance. We're not in distress now, but could be in a couple years when the ARM resets and principal starts getting paid. This is what I'd like to do: I would like to contact Bank of America and propose a conversion of my ARM to a 30-year fixed rate loan. Ideally, I'd like to see an interest rate cut as well, because at 6.25% our monthly payments would go up by about $550, and that would be difficult to manage, at least for the next year. I don't need a principal reduction. In this scenario, I would actually be offering to pay Bank of America more each month, but hopefully less interest with each payment. Is this a reasonable thing to ask for? I don't think I can claim "hardship" at this time, but I sincerely believe that we will be in that situation in a few years. Has anyone tried a similar thing with success with Bank of America, or any other lender for that matter? Does the fact that I am offering to pay more and not less carry any weight? That is, would such a proposal be more attractive to B of A, since they won't actually be losing any money (other than interest payments)? Who should I contact with this proposal? Should I call the 800 number for loan modification, or would a letter or email (like 05swimmer's) be more likely to get results? If a letter/email would be the way to go, who should I send it to? Thanks to everyone who has read this message to this point. I look forward to hearing your advice.