Bank of America Loan Modification

[aurers]

Hello everybody! I am new to this process and have been advised by my real estate agent to try to get a loan modification before my rate adjusts next year.

Background:
I purchased a condo in the San Francisco Peninsula with my parents in October 2005 for $585,000.

$468,000 is a 5/1 ARM at 5.25% adjusting in 11/2010.
$58,500 is a 2nd mortgage at 6.75%. This loan matures in 11/2015.

In the time after I purchased the condo, I got married and had two children (22 months and 5 months). My husband and I are barely surviving having to pay for childcare, car payments, and living expenses. Childcare in the bay area is $800/month per child. My husband and I are surviving with only one car. The birth of my two boys required me to quit my 2nd job so I can be at home in the evenings. The company my husband works for is "restructuring" and my husband is unsure how this will affect his job. Definitely there will be no salaries or bonuses coming our way. My husband started picking up freelance work, but again, the income is not steady.

At the time I bought the condo I taught full-time and had a part-time job. My goal was to sell the condo and buy a single-family home when I had my children. Unfortunately, the real estate market is so bad. In my condo building of 13 units, there are 5 units on sale (one is a short-sale). A unit has been on the market for over a year. The property value of our condo as dropped to $463,000 (a loss of $122,000 based on our current property tax bill).

Question:
Where do I start? I called Bank of America back on 10/16/08 and the woman I talked to said there is nothing they can do for me since I have not missed any payments. The phone # I called was 1-800-876-5996. I don't want to wait until we can no longer pay our mortgage to get a loan modification.

Also, I wanted to know if having my parents on the deed will affect me in this process. While my father still has his steady income, my mother got laid off last month and is currently trying to file for unemployment. Both of them are on the deed.

I am trying to create a game plan on how to approach this loan mod. What information do I disclose to Bank of America -- me and my husband's or my parent's and I?

Any advice would be greatly appreciated.

Thank you!

[Moe Bedard]

Hi aurers,


Welcome to the forum and thank you for joining............


The modifications given are up to the investor on your loan........so you would need to contact BofA Home Retention and ask what the modification options are from your investor. You will also need to find out how they would want you to put together your financials.........they would normally take the income of the persons on the loan and the persons that are not on the loan but live in the household since they would contribute to the expenses as well.

Begin by putting together a hardship letter...........click on the link for examples...........
Examples of a Hardship Letter

Then Call
Bank of America
Loss Mitigation
1-800-936-6362

to get started and find out the options.

[HopingtoFind]

Hi aurers,

One thing to keep in mind is because your loan is currently interest only and your rate is very good, modification might not lower your payment by much if at all. And the reason for that is that most of the modifications I have seen offer fixed rate (interest + principal). Even with lower interest rate your payment might be higher because of the principal.

[LHarveyMadman]

aurers, are your parents on both the deed AND the mortgage?

Anyone can be on the deed to a house - your parents, your uncles, your children, your neighbors. Being on the deed to a house mean that you are responsible for contributing to the payments.

Being on the mortgage, however, means that someone has assumed shared responsibility for paying the debt. So, if your parents are cosigners of the mortgage, even if they have not been contributing to the monthly payments their income will most likely be considered. If you used their income to qualify for the original loan, then B of A will use their income to determine whether you qualify for a modification.

One comment about the appraisal: I don't know if you live in Santa Clara County like I do, but the assessor's office here did cut the appraised values of thousands of homes for property tax purposes. However, the county's appraised value does not necessarily reflect the true market value of your condo. They didn't go house-by-house to come up with a figure. They took individual neighborhoods, identified the sales that occurred over the past few years, and applied a discount across the board regardless of what the homes might actually sell for. For example, they've cut my assessment by $80,000, but virtually identical homes around me are selling for $100,000 more. Your true home value will be based on what they other condos are selling for, which may be higher (or sadly, lower) than the county's assessed value.

With regard to B of A, they agreed to modify my loan when I was current. It wasn't easy - when I first called on October 17, they told me the same thing they told you. I called a few more times, getting the same answer, before sending an email to selected executives. But like *** said, the decision to modify is investor-dependent. I never found out the name of my investor, so I can't be only help in that regard.

[aurers]

Hello LHarveyMadman,

My parents and I are on the deed of the condo and their income was used to help me qualify for the loan, but on all the loan documents I have, I am the sole borrower.

With that said, the monthly income and assets listed on my loan document are listed at:

Monthly income: $9,873
Assets: $85K in a money market account
$38K in a 401(k)
Liabilities: Students loans and credit cards at $18K.
Net Worth: $105K

Also listed on my original loan docs is that I am single with no children.

Now, my husband and I have a monthly income of $5,921.12. Our total assets (savings & stock) is $7415 plus my pension. We also have two children. Liabilities are $45K and our Net Worth is -$37K.

As for property value, on Zillow.com it is $430,500. I have a 2 BR/2BA condo. Two units of similar size are on sale above me. One is listed at $549,000. The other one is a short sale listed at $458,000.

I am working on my hardship letter now. Do I include all this information in it?

Please advise.

[HopingtoFind]

I would follow the sample that *** provided for you....

[LHarveyMadman]

Strange that your parents' income would be used to qualify but they're not on the loan docs. Sounds like a stated income loan, but the interest rate seems really good for a stated income loan. Anyways, that neither here nor there, the bottom line is that B of A can't factor your parents' income into their calculations.

From everything I've read on these forums, the market value of the home isn't that big a factor in determining whether you qualify for a modification; the decision is based on your ability to afford the loan payments. So, I wouldn't expand on the property value issue other than to note that you can't qualify for a conventional refinance of your loan (and thus your only recourse is a modification).

Your current income and how it changed since the purchase are details that should be included. When B of A took my info over the phone, they asked for total household expenses (groceries, baby supplies, etc.), property tax, car payments, student loan payments, credit card payments, preschool costs, utilities, insurance costs. I don't think you have to detail all this information in the initial hardship letter (probably not; I didn't), but you might want to state an overall income/outgo balance.

Be forewarned - having too much of a deficit is also grounds be denial of a modification. If B of A thinks that you're at risk of default regardless of what they do, they might deny you because you don't meet the income requirements.

FYI, they cut my interest rate from 6.25% to 3.25% for the next 5 years. After that, it goes back up to 6.25% for the life of the loan.

[aurers]

I call the Bank of America Loss Mitigation department as *** had suggested and was connected to a very helpful man by the name. He took down all my finances and advised me to call on Wednesday to see if an analyst was assigned to my file.

However, he told me that the loan modification may not work to my benefit since my current loan is 5.25% interest only and the current 30-year rate with B of A is 5.5%.

My rate does not adjust until next year. Should I wait until the end of 2009 to apply for a loan modification? Please advise.

[Moe Bedard]

When you speak to the rep on Wed..........just ask if there may be an option similar to what LHarvey received which would drop the rate for a 5 yr. period and then bring it to a low fixed rate there after. It doesn't hurt to ask............and then make the decision from there.



Keep us posted............

[aurers]

Since I've last been on my husband received a pay decrease. His company is downsizing. Better than getting laid off, I guess.

Just wanted to let everybody know that I sent my hardship letter with all the additional paperwork to B of A via fax and interoffice mail. I'll keep you posted on what happens.

[aurers]

I started this process on January 12, 2009. Today it is March 18, 2009 and I have been declined by Bank of America for any type of assistance including a forbearance and loan modification.

After being put on hold for 30 minutes by Rita (who went to talk to a manager about my question regarding making payments during forbearance), she came back on the line telling me that the investor has declined to offer me assistance.

THIS SUCKS!

My husband and I have been struggling to make payments on a condo that we thought we'd be moving out of by this time. We've got two young children to care for. Our household has already took a pay cut, not to mention the fact that my profession (teaching) is one of the lowest paid jobs in this country.

If we moved to Canada, would we be in this predicament?

I voted for President Obama. I rooted for him since the 2004 DNC and now that I need some help his plan cannot help me. It's not my fault that my mortgage is not with Fannie Mae or Freddie Mac.

In fact, I asked Bank of America to tell me who my investor is and they said it is a private investor and that's all. So what... some rich guy is playing cards with my life? Who gave him the right to do so?

I'm so frustrated right now... I just need to vent.

Good luck to everybody who is trying to deal with Bank of America. I tried and I failed.

If anybody else has any advice to go about this, please let me know. Thanks!

[LHarveyMadman]

Sorry to hear about your denial. I can't think of any other options available to you if the investor is unwilling to modify.

[aurers]

New question... since my loan modification was denied is it better just to have our home foreclosed? My husband's name is not any of the paperwork since I bought the condo before we got married. Any advice would help. Thanks!

[LHarveyMadman]

Is the second loan purchase money? Who is the lender?

[aurers]

The 2nd mortgage was used to purchase our place (being in California, our condo was more than $500K). Both loans are with Bank of America.