Received package from Bank of America

[selfemployed]

I was approved for a loan modification last winter with Countrywide. Basically all they did was tack on the late payments to the end of the loan and brought me current. This went into effect with my May 1st payment which I have been paying since. Today out of the blue came a Fedex truck with an offer for another loan modification. The letter states that I will be receiving information about the HAMP program from them. Then it went on to say that "As an alternative to the HAMP, we are now pleased to offer you a modification under a seperate program. We have already approved you for this new loan modification program that will immediately change your outstanding principle balance and reduce the total amount due. Your participation in this loan modification program will not require that you provide us with any financial documentation." The offer was to reduce the principle balance from $424,000.00 down to $408,000.00 and they will reamortize the loan over a 480 month period with a 5.5% fixed rate for the life of the loan. I have a pay-option arm mortgage right now and the rate is already lower than this but it is not fixed and I would really like to have a fixed rate loan and with a principle reduction of $16000.00 I am thinking about accepting it. Has anyone else received a principle reduction? I called them to verify this information and to make sure that it was an actual principle reduction and not somehow added onto the end and they told me that it is an actual principle reduction. I am just baffled because I did not apply for another modification and am surprised that they would just offer me a principle reduction. The only thing I can think of, is they don't want me to continue on with the Pay-option. Has anyone else received this?

[ama125]

That's a new one to me! I wish FedEx would pay me a visit! Just waiting for them to show up as promised. If the new offer works for you (especially a principal reduction), then by all means take it so long as you can afford the payments. Perhaps they are trying to prevent the next predicted wave of foreclosure/default...the pay option arms. Maybe this is just your lucky day! Hope it all works out!

[MyHAMP]

I agree with ama125.

If the monthly payment is affordable - go for it!

[selfemployed]

Thank you, I was very skeptical when I received it because I have not heard of many people receiving principle reductions. My current interest rate is only 3.5% right now because it goes by the 12 month treasury and it is interest only, so the payment will be more than we are paying but it will also be fixed and starting to pay down principle which would be nice. I am just curious what the offer is going to be from HAMP. The woman I spoke with on the phone told me to wait to receive that offer and compare the two before I just accept this one so I am thinking that the HAMP offer is probably going to be better than this one. I am selfemployed and it is hard to verify income and I know that the HAMP modifications require income verification and this one does not. Part of me is just tempted to decline this and see if I can get a lower fixed rate for the remainder of the loan even if they don't still give me the principle reduction. I have seen some people receiving 2% fixed for the rest of their loan term. I have BONY as my investor. Any thoughts on what I should do?

[MyHAMP]

Originally Posted by selfemployed

Thank you, I was very skeptical when I received it because I have not heard of many people receiving principle reductions. My current interest rate is only 3.5% right now because it goes by the 12 month treasury and it is interest only, so the payment will be more than we are paying but it will also be fixed and starting to pay down principle which would be nice. I am just curious what the offer is going to be from HAMP. The woman I spoke with on the phone told me to wait to receive that offer and compare the two before I just accept this one so I am thinking that the HAMP offer is probably going to be better than this one. I am selfemployed and it is hard to verify income and I know that the HAMP modifications require income verification and this one does not. Part of me is just tempted to decline this and see if I can get a lower fixed rate for the remainder of the loan even if they don't still give me the principle reduction. I have seen some people receiving 2% fixed for the rest of their loan term. I have BONY as my investor. Any thoughts on what I should do?

My mother is self-employed as well and providing proof of income was VERY easy. P&L statements and the 4506-T and tax-returns. That's it.

The 2% APR over the rest of the loan won't be HAMP. HAMP often starts at 2% for the initial 5 years and increases annually by 1% until it reaches about 5% for the rest of the loan. So that's slightly lower than the current offer. However, I've yet to see principal forgiveness under HAMP - only forbearance.

Here's the deal: Under HAMP, your initial payment will be 31% of the borrower's income. So if you are self-employed, they take your income after expenses and 31% of that will be your HAMP payment for the initial 5 years if you are the only one on the loan. Now you can compare HAMP to the current offer.

[Sunbeam]

Wow, what a gift! Out of the blue. You must be doing something right. If you can afford the payment, I would snap it up. Great news!

[davephx]

There are obvious pros and cons of quite good internal offer (in hand) and Hamp (in the bush).. or whatever that saying is...

Wonder if they will keep open the internal while you consider HAMP...but that may take six months!

The 2% for 5 yrs and than increasing up to 1%/year up to the max which I believe is around 5% based on the formula isn't that bad. But the principal reduction but higher rate on the internal mod is also good.

Your lucky to have the choices! And Sunbeam got a great deal even though she didn't qualify for HAMP. So there is some good news starting to beam from the sun....

[ama125]

@selfemployed - I came across an article last night that may explain the unexpected package (except that you are in NH and this pertains to CA). Nonetheless, this could reflect on, dare I say, the banks being proactive to actually prevent more defaults (I can't believe I am saying that)! California AG Calls on Lenders to Outline Option ARM Modification Plans Also, since you have BONY, there is always a good chance of getting 2% fixed for the remainder of the loan term if you go through NACA (lots of peeps have achieved this). Oh, to have so many options! Of course, it would be nice to have them all at once so you could evaluate each one and choose which is best. Still though, it's great to have the options!

@davephx - LOVE the HAMP in the bush comment! One of my new favorites is from Dr. Seuss... "and that BOFA on the sofa, him I could do without!". I forget which book that's from, but I wish I could get rid of BofA!

[Steve-O]

I just received a package today and they are taking over $300.00 p/month off my monthly loan and I have 2 questions

1. Can I hold out or negotieate for more savings?
2. They are asking for all of the same info I already gave to get to this point. Do I need to re-send it all to them again?

[ama125]

Originally Posted by Steve-O

I just received a package today and they are taking over $300.00 p/month off my monthly loan and I have 2 questions

1. Can I hold out or negotieate for more savings?
2. They are asking for all of the same info I already gave to get to this point. Do I need to re-send it all to them again?

You can always try to re-negotiate but there is no guarantee. If you've been at this for a while, your info may be outdated and that could be why they are requesting the same thing again, just so it is current data.

[chriskeeler]

We got the same letter with the same terms (rate/time) on our jumbo loan. (See: Pay-Option ARM jumbo thread) We are forwarding to our attorney and let him handle the negotiations. We have some ammo in that we also got a forensic mortgage audit and the results show several state and federal laws were violated in the loan.

-CK

[2020rob]

BofA is pushing this type of loan a lot recently. Most of the time itis a step rate loan and often it is interest-only. I know a few people trying for HAMP who have been offered these "in-house" deal instead. Honestly...why would anyone in their right mind say no to HAMP and yes to a step rate. First of all, HAMP (For now) is always a fully loaded payment (Interest and Principal). In order for the lender to qualify you for HAMP they often have to lower the interest rate down to 2% so to make sure the payment meets the 31% threshold. This mean you are paying off A LOT of principal during the first four years. In my case ($550,000 loan), paying a 2% interest rate means that I will actually pay down my principal by $30K to $40K during the first five years.

Most of the step rate loans being offered are also interest-only. Hmmm...I wonder why that is. BECAUSE THE BANK MAKES MORE MONEY! Also, they start you out at a higher interest rate because they can. Since you are not paying principal, they can raise the rate and still stay within the 31% guideline. Somehow, in the eyes of many, they come off looking like good guys. They are actually screwing everyone they stick with this type of loan.

Say no! Demand a HAMP or an in-house loan paying both principal AND interest with a payment (including principal, interest, property tax and HOA) at or under 31%.

[huz715]

yes! BOA want to make more money to offer in house interest only loan.
I got offer for 3% for 5yrs, then back to original note.
I don't know what's the rate after 5 yrs, bacause current rate will expire in 2 yrs.my pricipal increased due to late payments add on.

I rejected the offer, now waiting for new offer.

[GoingNutty]

Originally Posted by selfemployed

I was approved for a loan modification last winter with Countrywide. Basically all they did was tack on the late payments to the end of the loan and brought me current. This went into effect with my May 1st payment which I have been paying since. Today out of the blue came a Fedex truck with an offer for another loan modification. The letter states that I will be receiving information about the HAMP program from them. Then it went on to say that "As an alternative to the HAMP, we are now pleased to offer you a modification under a seperate program. We have already approved you for this new loan modification program that will immediately change your outstanding principle balance and reduce the total amount due. Your participation in this loan modification program will not require that you provide us with any financial documentation." The offer was to reduce the principle balance from $424,000.00 down to $408,000.00 and they will reamortize the loan over a 480 month period with a 5.5% fixed rate for the life of the loan. I have a pay-option arm mortgage right now and the rate is already lower than this but it is not fixed and I would really like to have a fixed rate loan and with a principle reduction of $16000.00 I am thinking about accepting it. Has anyone else received a principle reduction? I called them to verify this information and to make sure that it was an actual principle reduction and not somehow added onto the end and they told me that it is an actual principle reduction. I am just baffled because I did not apply for another modification and am surprised that they would just offer me a principle reduction. The only thing I can think of, is they don't want me to continue on with the Pay-option. Has anyone else received this?

HI SELF EMPLOYED, I too received the same exact letter from these people on October 30th. I was also approved for a loan mod back in May 2009(if you can call it that) they basically did the same thing and stuck all my back payments into my balance and left me in an option arm still!
I was really excited when this letter came and so the next day I called them to set up a payment. The guy i talked to was very nice and took my payment info and said that by Dec 8th I would be receiving documents. So yes, I jumped on it, I figured it was getting me out of the ARM and even gave me a principle reduction
.Anyways ,fastforward, today I called them because my scheduled payment never went thru and I had to respond by the 19th or it would expire. So I called to check and I got someone in India(is it true they are really overseas?) OMG, after 45 minutes , they did not know what was going on and tried to tell me it was a trial payment , then kept putting me on hold and finally he told me I had to cancell my old loan mod so I can get approved for this one~!! I read the whole letter to him and it said that I didn't need any other docs, I was already "approved" not pre-approved like he said.
Did you or anyone else get this letter and what did you do? Please help me! I'm getting so stresed out. One day happy , next sad. today was really sad!!!I thought there was actually some hope and now this guy in India got me really worried.
AND Also , on my old mod, I have been making payments for over 7 months nows and it's not getting posted.Also showing late on my credit. It seems to be in a "partial balance" and in the meantime I have a negative $2300 escrow balance because they are not applying my payments still. I call them every month and they say lies to me , don't worry, it'll get updated.
Any one out there get this letter? And if you did schedule your 1st payment over the phone did you really get loan docs?