B of A Loan mod application - Help

[tejasp]

First of all guys (everyone in this forum) thank you for helping each other and you guys are doing a tremendous job on helping people with your knowledge.

My Story:
Bought home in corona,ca for $660k with 10% down and both 1st and 2nd with BOA. Todays guestimate value of the home $ 420k. Wife lost job and my salary got reduced by 10% with no bonus and salary freeze for 3 years.

What i did so far:
Did not pay the BOA payment for the month of May 2009 but resumed payment on a late basis i.e. after the 16th and before 30th of the month in June 2009. BOA contacted me and asked me to submit the hardship letter which i did on 15th of June. When i called on 25th of June they assisgned analysts to both my loans and confirmed they received all the necessary documents. On July 2nd i received call from analyst regarding what options i had with the loan. One of the option he mentioned was 40 year loan with 3% fixed for 5 years and then resume back to 6% (my original rate on the 1st) for the remaining balance. According to BOA, they want to make sure that they leave 10% of the net income surplus with the family as savings. They have not committed anything yet but said this offer will be sent for approval first and then confirmed.


My question:

1. Is BOA even accepting any principal reduction offers?
2. BOA analyst mentioned that short sale will be my last resort - so why would bank end up loosing more than $200k (in my case) and not do a principal reduction of lets assume $100k and move on?
3. Is the above mentioned offer good without any principal reduction?
4. What are the tactics or rules to push for principal reduction?

Hope to hear from someone soon.
Thanks guys
TJ

[Evan Bedard]

Hi tejasp welcome and thank you for joining.

1. Is BOA even accepting any principal reduction offers?
2. BOA analyst mentioned that short sale will be my last resort - so why would bank end up loosing more than $200k (in my case) and not do a principal reduction of lets assume $100k and move on?
3. Is the above mentioned offer good without any principal reduction?

I'm sorry to say but it is very unlikely to get a principle redustion with any lender.

The above offer does look very well and should save you quite a bit of money for the next 5 years. You can go back and see if they can fix it at that rate for the life of the loan, but this may be the best offer your investor will offer..

BofA is correct, if a loan modification will not be suitable in your situation then a short sale may be the last resort.

[LHarveyMadman]

I haven't heard of anyone here reporting principal reductions with B of A. The structure of the modification offer that was discussed is in line with what a lot of us have gotten - low rate for 5 years and then back to our original (and reasonable) interest rates.

On paper, the modification is good. Would this result in an affordable payment for you? If so, then the principal reduction isn't necessary for a workable modification.

If B of A can offer you a modification that makes your loan affordable without a principal reduction, then they have zero incentive to reduce your principal. After all, why should they offer to lose money right away if they can both keep the original loan balance and make it affordable for you? If there is no combination of lower interest rate and extended loan terms that can make your payments affordable, then B of A might consider a principal reduction.

Keep in mind that without a reduced principal balance, it will a long time before you have any equity in your home again, unless the housing market in Corona explodes again (which is highly unlikely). If you end up having to move in the next several years, you would still be faced with a short sale situation.

[tejasp]

Thanks guys for the clarification and quick response.
When the bank asked me for my income and exp i supplied them with a negative of $ 500.00
so my question here is that do you have to be in surplus before the mod could be considered or you have to work out a plan according to the bank to be in surplus after the mod?
the analyst at BOA said that after the mod they would like to see a 10% surplus of my net income.
Also everytime i call for a status there is someone new to pick up the phone and they go over my financials again and again with me - is this normal? are they just trying to frustrate the crap out of clients and make them go away?
please advice guys

[LHarveyMadman]

There's no magic number with regard to surplus or deficit. Generally speaking, though, a very large deficit or surplus will probably lead to a denial of modification. A $500 deficit is pretty high, since you have a large loan balance, a modification with a cut in interest rate to 3% might actually overcome this deficit. Did you crunch the numbers to see what your monthly payments would be with the 3% rate?

Give the analysts a break at B of A. They're overworked and underpaid pawns of the the system, dealing with tens of thousands of desperate homeowners each with their own unique stories. My personal experience with them, having dealt with dozens of analysts over the course of about 6 months, was almost always positive, but I had to accept the fact that I would have to restate my case over and over again with each new person who got involved in my case. My advice is to be persistent but polite, and eventually you'll get results.

[Walking Away]

tejasp; I've never seen anyone get a loan mod who had a deficit. Most success stories here seem to have a surplus in the $150 to $300 range. Mine was $200 and it worked although I did not have BOA. I'd check BOA success stories here and see what surplus most had. If you get rejected due to $500 deficit; ask to apply again

[Kavman25]

Walking Away- from what you are stating, I might as well give up. I am -$1200 each month with lost of job and income. What are my chances of BofA considering a interest rate decrease?

Also, do you think NACA will be able to work a modification offer that is suitable for my situation? I have seen people get 2% for the rest of their loan.

[Walking Away]

Kavman; in all honesty; I don't think anyone can get a loan mod if they are unemployed. I might be wrong though; so don't give up just because of me. I got mod through Aurora and other banks might be different. I would suggest posting on the BOA thread and asking Moe or his brother Evan. They're the experts here so I would suggest asking them for suggestions or help. Good luck

[Kavman25]

Thanks. I did get a job but my pay is 33% less than before. I will try to msg Moe and Evan.