I took three different calls this past week from homeowners who have sought the assistance of Bank of America’s servicing subsidiary, BAC Home Loans Solutions, for a loan modification. What most unsuspecting homeowners do not realize is that BAC simply has no vested interest in actually making good on the false promises it continues to peddle to these homeowners. Is it any wonder that the Arizona Attorney General has intervened. In summing up the over 400 complaints it has received about Bank of America and its servicer BAC’s handling of loan modifications, the A.G. states the following in its Complaint against these entities:
"Defendants have continued to engage in widespread consumer fraud by misrepresenting to Arizona consumers whether they were eligible for modifications of their mortgage loans, when Bank of America would make a decision on their loan modification requests, whether Bank of America had approved their modification requests, why Bank of America declined their modification requests, and whether and when Bank of America would foreclose upon their homes."
BAC, like many other servicers, systematically lulls homeowners into believing that a loan modification is something other than a pipe dream. However, and as noted in the A.G.’s Complaint, BAC, again, like many other servicers, has been "dual tracking" delinquent loans. While BAC promises that it is working on a homeowner’s loan modification, it is at the same time, in a different department, pushing forward with a foreclosure action. Indeed, servicers habitually allow howeowners to make lower "trial modification" payments and then send the homeowner a Notice of Intent to Accelerate. So the servicers accept the lower payment and then use the fact that the homeowner is paying less each month to create lump sum delinquencies that most homeowners cannot pay.
Indeed, in one case I reviewed this past week, the homeowner had never missed a payment, but sought a loan modification to try and ease their struggle. They sent in the requisite paperwork, then sent it in again, then sent it in again. They were promised a lower trial modification payment, which they dutifully made each month for several months, and then they received word a Notice to Accelerate. While BAC was happy to take the new trial modification payments each month and cash those checks, it was at the same time reporting to credit agencies that the homeowners were delinquent each month (due to the difference between the old payment and the lower trial modification payment). BAC was again dual tracking this loan towards foreclosure.
We would have been far better off if the banks had just said to homeowners, "Sorry, we are not offering any loan modifications. Make your payment or lose your house." Instead, in no small part due to the federal HAMP program, howeowners are instead lulled into the very mistaken belief that they are going to receive a loan modification. Well, guess what, BAC, like most other laon servicers, get paid whether they string you along or foreclose. Indeed, it is best to "dual track" by stringing people along and then foreclosing on them. That way, the servicer makes the most money – even if it is contrary to the best interest of the actual investor holding the mortgage. Perverse times we live in, eh?