On Time Payment Bonus, Reality or Fiction?
Hi Arezo,
The way the HAMP incentive works is:
13.2 Borrower Incentive Compensation
Borrowers whose monthly mortgage payment is reduced through HAMP by six percent or more
and who make timely monthly payments will earn an annual “pay for performance†principal
balance reduction payment equal to the lesser of:
$1,000 ($83.33/month); or
One-half of the reduction in the borrower’s annualized monthly payment for each month a
timely payment is made.
The “pay for performance†principal balance reduction payment will accrue for each month in
which the borrower makes current payments. The payment will be payable annually for each of
the first five years after the anniversary of the month in which the TPP Effective Date occurred as
long as the loan is in good standing and has not been paid in full at the time the incentive is paid.
For example, if the borrower is current and makes 10 out of 12 payments on time, he or she will
be credited for 10/12 of the annual incentive payment as long as the loan is in good standing at
the time the annual incentive is paid. A borrower whose loan is delinquent on a rolling 30- or 60-
day basis will not accrue annual incentive payments.
This payment will be paid to the mortgage servicer to be applied first towards reducing the
interest bearing UPB on the mortgage loan and then to any principal forbearance amount (if
applicable). Any applicable prepayment penalties on partial principal prepayments made by the
government must be waived. In the event the borrower is delinquent, but still in good standing,
the borrower’s incentive should continue to be applied as a curtailment to the interest-bearing
UPB.
If the loan ceases to be in good standing or is paid in full, the borrower will forfeit any incentive
payments that have accrued but are unpaid and will cease to be eligible for any further incentive
payments after that time, even if the borrower subsequently cures his or her delinquency. With
respect to PRA, if a borrower loses good standing before the entire PRA Forbearance Amount
has been applied as principal reduction to the UPB, the unapplied PRA Forbearance Amount
shall remain as non-interest bearing principal forbearance for the remaining life of the loan.
“Pay for performance†principal balance reduction payments are excluded from gross income for
tax reporting purposes.
Have you ever seen Bank of America do this? It wouldnt be the first time BoA just refuses to follow the program as written. Let me explain.
I was 100% current but an early lay off victim after the banking collapse, watching my savings dwindle on my old monthly payments (based on A credit when I was employed at 5 3/8% Fixed for 30), literally a poster boy for this program as it was proposed.
I battled BofA tooth and nail from the day the Recovery Act was passed, for six months while they were waiting for the regs to be written, then another six months of misplaced duplicate run around stall tactics (all very well documented, even notes and quotes from every BS Customer Service Rep with direct contradictions and outright lies), finally receiving my official Welcome to HAMP Letter and trial payment plan on January 25, 2010, calling for the documents to be completed and returned and first trial payment to be made no later than March 1, 2010.
I FedEx them all the docs, literally the next day, Jan 21st, and made the first trial payment, due no later than 3/1 on 1/21/10, the second on 2/13, the third on 3/10 with 100% on time or early monthly "trial" payments each month as I put up with more well documented stalls and misinformation from their customer service reps on why 3 trial payments had already gone on for 4, then 5, then 6, then 7, then 8, and finally 9 months with no decision.
Finally, in Sept of 2010, after 9 mos of trial payments, they rejected my HAMP request on a form letter lie (that I dont qualify on the numbers, when I qualified when they put me on trial payments and nothing had changed) and the form letter listed a totally bogus phone number to contact them with questions or disputes, it was answered by the attendance office recorded line at some high school in Texas.
Over the next three weeks, they immediately barraged me with a notice almost every day, imposing back late fees, on balances caused by making less than the original payments per their instructions in the "trial period" (so a late balance and fees they manipulated me into because I was 100% current when I contacted them) and a demand to pay every penny that I was in arrears or they would accelerate/foreclose 10/29/2010. So they manipulated me into having a $5800 balance by saying I qualified for the program, stringing me along on trial payments longer than the govt prescribed 90 days, then falsely denied my application and inflated by balance with all the retroactively imposed late fees upon rejecting me and then demanding immediate payment in full to avoid immediate acceleration of the entire loan. If that isnt predatory lending, I dont know what is, maybe better described as PsychoPathic Lending!
Fortunately, when I got the bogus rejection letter with the wrong phone number, I contacted my US Senator's office, Kit Bond, since retired. It took a week or so to go thru the process of explaining what my situation was, getting them to understand and giving them some documentation to get them to believe me about what BofA was doing, then signing a privacy release so they could inquire on my behalf, but one phone call from their office and all of a sudden my permanent mod was approved on November 6th, with payments shrinking from $1200/mo to $800, at 2% for 34 years and 6 month term, just the way the program was intended/written, with all late fees eliminated.
It took me another 6 months and at least 20 calls to finally get them to rescind the negative credit reporting information per the govt rules. Of course, the first correction wasnt done correctly, leaving one month that tripped the whole credit report into "Late on Mortgage Status" and I had to get to the actual Mod Dept, with Cust Svc transferring you and then getting disconnected, before I could get that one last negative comment removed.
So, I have been making "OnTime" or even early modified payments, beginning with the first trial payment I made in Jan 2010 thru yesterday's, due 8/1/12, and have never seen a credit. I called them about it 4 or 5 months ago, I think Jan 2012 to inquire, and guess what, you have to talk to the Loan Mod Dept, I'll transfer you and then you hold for about 5 minutes before it disconnects with no answer. It brought back so many bad memories from the Mod Stuggle that I said to heck with it.
So, as you can tell, BofA, not following the rules is what I expect. Have you seen anybody actually get the incentive?
Have a wonderful day.