Bank Of America Failing To Comply With Treasury’s Mortgage Modification Program
Bank Of America Failing To Comply With Treasury’s Mortgage Modification Program
This post was co-written by Andrew Jakabovics, Associate Director for for Housing and Economics at the Center for American Progress Action Fund, and Pat Garofalo.
Seemingly deliberate noncompliance with the Home Affordable Modification Program (HAMP) may explain why Bank of America has consistently lagged behind the other large servicers in the share of delinquent loans that have been modified under the program. Ever since the Treasury Department began releasing data on the performance of servicers participating in HAMP, Bank of America has always been dead last of the four large servicers.
BofA has been participating in HAMP since its inception in mid-April. As of the end of October, it had active trial modifications on 14 percent of its estimated 991,000 eligible mortgages. This rate is less than half that of Wells Fargo (29 percent), which is third among the big servicers. Even US Bank, which has a much smaller portfolio but only signed up for the program on September 9, has been able to get 15 percent of its borrowers into trial modifications.
The reported percentage of modifications for each servicer is calculated based on the number of active modifications divided by the number of loans that are at least 60 days late and otherwise meet eligibility criteria. But as this recent letter demonstrates (which is available here, courtesy of the Coalition for Mortgage Industry Solutions), BofA is actively soliciting borrowers to participate in its own private mortgage modification program, without first verifying whether or not the borrower is eligible for HAMP. (In the full document, the borrower’s personal information has been blacked out.)
The letter clearly indicates that BofA has no idea whether or not the borrower qualifies for HAMP, yet they are still offering an alternative program. This diversion is an apparent violation of the contract signed with Treasury. The Servicer Participation Agreement stipulates:
Servicer shall perform the Services for all mortgage loans it services, whether it services such mortgage loans for its own account or for the account of another party, including any holders of mortgage-backed securities (each such other party, an “Investor”).
The “Services” referred to in this section are elsewhere in the contract defined as “All services required to be performed by a participating servicer…including, but not limited to, obligations relating to the modification of first lien mortgage loans and the provision of loan modification and foreclosure prevention services relating thereto.”
The program guidelines released in March by Treasury quite plainly state that “participating servicers are required to consider all eligible loans under the program guidelines unless prohibited by the rules of the applicable PSA and/or other investor servicing agreements. Participating servicers are required to use reasonable efforts to remove any prohibitions and obtain waivers or approvals from all necessary parties.”
In case there remains any ambiguity as to whether a servicer can pull borrowers out of the pool to offer them a non-HAMP-compliant modification before determining their status under HAMP, Treasury official Herbert Allison recently testified, “under HAMP’s loan modification guidelines, mortgage servicers are prevented from ‘cherry-picking’ which loans to modify in a manner that might deny assistance to borrowers at greatest risk of foreclosure.”
So BofA can’t simply suggest an alternative program to this homeowner without determining eligibility for HAMP, and by doing so, it is potentially lowering the number of successful HAMP modifications it completes. Given the size of BofA’s portfolio, its compliance with program rules — particularly as it pertains to getting eligible borrowers into the program — directly impacts the public’s perception of the success of HAMP. If BofA were performing as well as CitiMortgage, Treasury would have reported an additional quarter million mortgages in its HAMP totals.
Diverting eligible borrowers from HAMP threatens to undermine support for the program. Treasury should not allow any contractual breaches to continue.
3 Responses to “Bank Of America Failing To Comply With Treasury’s Mortgage Modification Program”
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Or you could be trying to get through a BofA HAMP like I am.
3 payment trial period started in July, and I just made the 5th payment. They are trying to schedule me for a “FREE mobile notary” for the paperwork I haven’t received yet. On the 16th, when I tried to make my payment, they were undergoing a “massive systems upgrade” and couldn’t comment, take a payment, or transfer me to the area that could take payment. I got a call from their collections department who doesn’t seem to know that I am in the trial program until I point it out to them, and then needs about 20 minutes to find the information to direct me to those who (may) know about my status.
No wonder why participation rates are so low. The banks are barely participating themselves.
November 18th, 2009 at 2:48 pmThis is 100% on the money and exactly what they have been doing this whole time. I posted an article and excerpt on loansafe.org quoting Barbara Desoer in how they waited to implement the NPV model into their system, a clear indicator that they dragged their feet on this and any and all requests for HAMP were obviously not being reviewed for it but rather their own in-house mod programs. See here: http://www.loansafe.org/forum/countrywide-home-loans-tell-us-your-countrywide-story/13870-please-only-post-articles-official-letters-testimony-rules-regs-moe-perhaps-sticky-order-10.html#post138034
I requested HAMP back in April and in June was offered a forbearance from Fannie Mae. The Fannie loan workout hierarchy clearly states that this forbearance should be offered only when the borrower is not eligible for HAMP. The offer I got only said I was not eligible for a loan modification and said nothing about HAMP.
I applied again, this time sending in a hardship letter on the HAMP hardship affidavit along with cover letter specifying I wanted reviewed for HAMP. This request never went anywhere.
Then I emailed Barbara Desoer (president of home loans) and asked the customer advocate if I had EVER been reviewed for HAMP and she said from what she could tell, NO. I asked my negotiator the same question and got the same response.
I then faxed over another HAMP hardship affidavit complete with paperwork, every page with a label reading “HAMP request” and my loan numbers. I was told I was being submitted for a modification under MHA guidelines in August/Sept but the numbers did not support those guidelines (it had me at a 35% DTI with no principal forbearance…step 3 of the standard waterfall which should have been applied to get the DTI down to 31%). In addition, no NPV test was run and I was told the investor would run the test. I knew better. I complained to Fannie, Freddie and my state AG’s office. I then got a call telling me we failed the NPV test. I asked if they used my current property taxes (because they can use estimated taxes for NPV and I had appealed mine and were to be lowered and gave them everything necessary to determine what they should be). Of course, they did not use the estimated taxes which I felt using the current taxes would cause the NPV to fail.
Fast forward to October and much back and forth and me supplying the figures for those taxes, now being told I am pre-approved for HAMP and to await a packet with further instructions. And what am I waiting for…a letter requesting X amount of dollars to start the trial. I call this up-front funds to start the HAMP trial which for me will not start until at least Jan 1. I should not have to pay them anything until my trial actually begins. So once again, BofA is bending/breaking the rules set forth for the HAMP program.
I despise them! Looks like I will have to open up a can of whoop-@ss when this FedEx packet finally comes (been waiting 4 weeks now despite being told 2 to 3 weeks). They are so grossly incompetent! I hope someone cracks a whip on them soon!
November 19th, 2009 at 10:50 amBOA did everything to deny me on HAMP.
November 19th, 2009 at 11:52 amtrying to force me accept their in house offer which i can’t afford in future.
besides delay all process to wait my situation change to disqualify,
they also made stupid mistake to dely and deny me.
They even breach the law to charge me excessive amount to make me disqualify.