My Offer with B of A

[movinon]

I'm new here - here is what I was just offered.

My loan is with Bank of America - formerly Countrywide. I had a negative amortization loan - they were forced to offer me some kind of package. I live in CA.

New Terms. 4.5% - 5 years. Payment $2550/mo. my take home is around $6000 so it's more than 31%. This is interest only - no insurance, property taxes or principal. Previous loan amt. $562K. New loan amount $644K - they tacked on 9 months of payments plus the negative amortization amount owed.

House is worth around $525K at current value and dropping daily as more foreclosures coming in neighborhood.

Advice? ideas? Should I ask for principal reduction or a lower interest rate?

My question is what happens to us after 5 years? I still have to pay insurance and property taxes and that actually brings my payments to over $3,000 a month. Plus I have a second I have been paying on - around $250 a month - I'm current on that loan. I didn't pay on my mortgage as I needed the money to pay son's medical bills. I can't really afford the $2500 a month. What to do?

[Evan Bedard]

Hi movion,

Advice? ideas? Should I ask for principal reduction or a lower interest rate?

My question is what happens to us after 5 years? I still have to pay insurance and property taxes and that actually brings my payments to over $3,000 a month. Plus I have a second I have been paying on - around $250 a month - I'm current on that loan. I didn't pay on my mortgage as I needed the money to pay son's medical bills. I can't really afford the $2500 a month. What to do?

If you cannot afford the agreement you do not have to accept it. You can go back and try to negoitate a lower interest rate, but principle reductions are not being offered.

Which dept are you speaking with?

[movinon]

I got a letter fed ex from Home Retention Division in Pittsburgh. The letter was signed by Jill Balentine, Senior VP Home Retention Division. I'm supposed to notarize and return to accept.

Actually, my new interest rate is 4.75%.

What I don't understand if people are going to accept these five year interest only deals with high principal balances, aren't we going to be in the same position in five years? I can't imagine my house is going to appreciate over $150K in five years with this economy. Also, what will interest rates be at that time? I'm sure they know they will be higher and that's why they are only offering a band-aid.

[stuck123]

I got the same packet only they gave me 3.875% which is actually todays rate for a 5 year Arm. It was sent out on Aug. 29, 2009.

[BadBobMo]

Sounds like a BofA Mod the 31% is HAMP be careful, I was offered a Std Mod from my lender @ (47 1/2%) of gross. If you can go for the HAMP program it is 31% of gross.
Gook Luck

[mojamz]

In my opinion, I think the banks are trying to pacify time. Hoping you take what is offered for the 5 year term.During The five years the market starts to slightly increase and if after the 5 years if the have to foreclose you will have paid down some of the principal and they will not lose as much. Easier for them to keep you in the home as long as you agree to it. Ask specifically if you qualify for MHA. Continue reading threads on this site as you may find a story similar to yours.

[movinon]

I'm sorry but I don't know what HAMP or MHA is. Thanks for your responses. I agree with you mojamz - they are trying to buy time. But what does it get them in the long run? There will be more foreclosures in the future. I'm about $500 from what I'm comfortable paying each month so maybe they will reconsider or give me a different deal. But then I am stuck here for five years and probably many years after if the prices don't appreciate. So I'll be in the same position in five years when I'll probably want to move (when my son graduates from high school).

[scarylarry]

Mojamz,

I am not trying to nitpick here but I was offered a similar proposed loan. They were offering various Interest Only proposals for 2 -5 yrs. With interest only the principle stays the same.
Then when the "adjusted payment" with principle starts it is ridiculously high.
In my case $4000 plus for 21 years. I told them no thanks, try the MHA mod.

[CALI HLP]

I need some advice....I finally got through to the HOPE program with BofA....submitted expenses, all requested docs. I was recently laid off and we can affor the payments if we pull from our savings, but I dont want to deplete it! Should we not pay now that we have submitted doc? Will that make their response quicker? I dont want to affect our credit score but we need a mod asap!!! Thanks for any input....

[Lhuynh]

Ask yourself whats more important credit score or keep your house?..HAMP is Home Affordable Mortgage Program which is the bill pass by the President, on March 4th and you have to be under an FHA loan which is a Fannie Mae or Freddie Mac, because over 70% of homeowners I believe are under those two investors. If you are with those two you can get your new payments as low as 31% or 38%.

I'm not too sure about MHA I think its Making Home Affordable and i guess those are just private investors modification? not too sure.

Regarding after what they do after the 5 years, on the 6th year they can start raising the interest rate on you. Its like 4.75% for 5 years, 6th year it goes up, than 7th year goes up, depending on how GOOD you negotiated. You can negotiate a 5 year like lets say 3% than the 6th year it goes up but than after like the 7th or whatever there can be a CAP which mean it'll stop like at whatever the APR is during the time you finish your mod I believe so lets say 5.25%.

P.s you cannot choose to go with HAMP it just depend on your investor. INVESTOR is not your LENDER. You can always call your lender and ask who is the investor they HAVE to tell you. They call it HAM Program (HAMP) anyways if you qualify for a HAM program you can go as low as 2%.

Hope that help, correct me If I'm wrong

[Lhuynh]

Also, regarding the bank taking their sweet time. They are really hoping for the economy to pick up again so people are not having a hard time with their mortgage. BANKS ARE IN THE INTEREST FOR THEMSELVES!!! Most homeowners go with the first offer they get which most of the time is the worse offer you can get. Bank will try to offer you something stupid to make you satisfy while still making money off you, even if you can get a better mod.

[trying hard]

Originally Posted by movinon

I got a letter fed ex from Home Retention Division in Pittsburgh. The letter was signed by Jill Balentine, Senior VP Home Retention Division. I'm supposed to notarize and return to accept.

Actually, my new interest rate is 4.75%.

What I don't understand if people are going to accept these five year interest only deals with high principal balances, aren't we going to be in the same position in five years? I can't imagine my house is going to appreciate over $150K in five years with this economy. Also, what will interest rates be at that time? I'm sure they know they will be higher and that's why they are only offering a band-aid.

Movinon. Did you accept that Mod? I got the same thing at the same time from the same Home Retention group.

I sent mine to NACA but want to talk to B of A about a lower rate or a fixed rate.

Have you had any luck negotiating or did you accept the mod?

[movinon]

Originally Posted by trying hard

Movinon. Did you accept that Mod? I got the same thing at the same time from the same Home Retention group.

I sent mine to NACA but want to talk to B of A about a lower rate or a fixed rate.

Have you had any luck negotiating or did you accept the mod?

I accepted the modification. I talked to them about the other programs and this was a better deal. The 31% payment they refer to is of gross pay. I pay the maximum in taxes in both state and federal so my gross is a lot higher than my take home so my payment would be a lot higher. I'm just going to accept it and see how I do. I'm talking to the bank about my second (Wells) but they said they aren't doing any principal reductions. Not sure I can get any relief there or not. I may end up doing a chapter 13 eventually but then will have to pay part of that back as well, so will wait until I have to.

I'm worried about five years from now - wonder if I should take the credit hit all now and work on rebuilding my credit. Otherwise if prices don't go up I"m in the same position in five years. B of A was saying they will probably offer me another program in five years, but who knows what interest rates will be. It's a tough situation. If it weren't for the damned property taxes I would probably be ok. But at $500 a month they are killing me now.

[trying hard]

Originally Posted by movinon

I accepted the modification. I talked to them about the other programs and this was a better deal. The 31% payment they refer to is of gross pay. I pay the maximum in taxes in both state and federal so my gross is a lot higher than my take home so my payment would be a lot higher. I'm just going to accept it and see how I do. I'm talking to the bank about my second (Wells) but they said they aren't doing any principal reductions. Not sure I can get any relief there or not. I may end up doing a chapter 13 eventually but then will have to pay part of that back as well, so will wait until I have to.

I'm worried about five years from now - wonder if I should take the credit hit all now and work on rebuilding my credit. Otherwise if prices don't go up I"m in the same position in five years. B of A was saying they will probably offer me another program in five years, but who knows what interest rates will be. It's a tough situation. If it weren't for the damned property taxes I would probably be ok. But at $500 a month they are killing me now.

I hope it works out. I can't imagine going through this 5 years from now, again. I'm shooting for a long-term solution.

[so-cal-gal]

Originally Posted by trying hard

I hope it works out. I can't imagine going through this 5 years from now, again. I'm shooting for a long-term solution.

If you make the 5 years and can do a refi, instead of another mod, look over all the possible lenders and note the group that were such pieces of crap to deal with now. Try to get any future refi with some place NOT on the list of the current crappy lenders.

We have to stay with them for now, if you get the opportunity, dump THEM. (Find a lender that is stable and normally holds onto their own paper.) Check into any local banks and credit unions.

Just suggestions for the future. You might as well 'dump' on them if/when YOU get a chance.

I hope you don't just have to repeat the current torture again in 5 years.

[movinon]

Originally Posted by trying hard

I hope it works out. I can't imagine going through this 5 years from now, again. I'm shooting for a long-term solution.

Let us know what they offer you long term. My problem is keeping the payments lower. If I went to a 30 year fixed mortgage my payments would be really high. Unfortunately I bought into the interest only options and was qualified based on that - I bet I wouldn't have qualified if I had to pay the full option with principal. In fact I know I wouldn't have. That's how they got so many people into this mess in the first place. If you can afford a fixed term, go for it - that is definitely the best scenario - to pay off some principal as well.