Bank of America’s refusal to participate in foreclosure prevention programs even though it accepted $25 billion in TARP (Troubled Asset Relief Program) money has plaintiffs in St. Louis, Connecticut, claiming that the beleaguered lender broke faith with the U.S. Treasury and let borrowers in foreclosure down[1]. The lawsuit, which was filed today, is similar to suits brought against BofA by the attorneys general of Arizona and Nevada last week. Plaintiffs in the suits claim that “by accepting TARP money, [BofA] agreed to participate in at least one TARP-authorized program to minimize foreclosures” and agreed via contract with the U.S. Treasury to comply with HAMP (Home Affordable Modification Program) regulations to “perform loan modifications and other foreclosure prevention services.” The plaintiffs allege that the bank has done neither.
The suit claims that because BofA does not actually service most of the loans it holds, the financial incentives against modification prevented servicers from dedicating serious time or good-faith effort to loan modifications and foreclosure prevention. “Bank of America has serially strung out, delayed and otherwise hindered the modification processes it contractually undertook to facilitate when it accepted billions of dollars from the United States,” the complaint alleges. Participants in the suit are seeking both injunction and damages.
Bank of America reported a complete payback of TARP money on December 9, 2009[2]. It has consistently reported the lowest completion rates on loan modifications of any lender and has repeatedly “streamlined” the time frame and modification process in an effort to maintain a good public image and good rapport with consumers[3]. However, the lender has complained on record – along with others – that the processes required by HAMP place too much strain on lenders, requiring them to “collect too much paperwork” and not placing enough responsibility for timely submission and accuracy on borrowers themselves.
What do you think? Your comments and questions are welcomed and encouraged below. Thank you for reading the Bryan Ellis Real Estate Letter!
[1] http://www.courthousenews.com/2010/12/27/32871.htm
[2] http://www.thestreet.com/story/10642398/bank-of-america-completes-tarp-payback.html
[3] http://myloanmodificationcenter.com/blog/bank-of-america-loan-modification-2010-hamp-updates/
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I received a 10 day notice to receive Trial Mod papers in May 2010, and again a 30 day notice in Oct 2010. When they didn’t arrive in November, a conference call was held with B of A and free advisers, when they promised again to send them by December. Advisers educated me on the nature of the program, and if accepted I do not want it. I am now only concerned with class action lawsuits against B of A, and State of Illinois actions against them and my private mortgage lawyers.
The entire Loan Modification idea, is a blatant scam! What gives anyone the right to expect a legal contract to be changed just because the majority of people crying about this did not read their own contracts or enlist the services of an outside professional that could read it for them?
Loan Mods are no different than going back to the auto dealer after 3 years and demanding they reduce the selling price of the car because there are rock chips in the windshield, or the resale value is not what they need to buy another car for too much money!
For those whining about this, including the whiners in government only looking for re-election by an ignorant electorate, being promised something by a politician, something the politician has no business being involved in, because the buyer does not have the money they promised when the mortgage papers were signed, man up and get a life.
Where is it stated in your contract you can expect to change it when you no longer like the terms? Of all the contracts I have read and signed, I could not find this clause! A loan modification is nothing other than people looking for something for nothing, and when the loan mod takes too long or does not come out the way the buy decided it should, people start crying foul, bad bank, bad lender, bad everyone except the person that signed the loan and promised to pay the money back that was lent them.
So who is the criminal here? Is it the government, bank, or the person who signed? A contract was signed, a promise was made both directions, honor the paperwork and the promise originally made! Loosing a house is a hard thing, so are many other things in life, get real and either pay up on time or walk away. People need to stop looking for some way to weasel out of the promise made to pay the agree on price and terms when they signed the loan.
Loan Modifications will soon be a thing of the past! Think I am wrong, just keep attempting to squeeze the lenders and not look at where the real issues are in the economy.
I have four files in equator right now. It is not efficient. I have lost two deals this year with buyers left hanging…real buyers! What a joke. And we do nothing because B of A has too many politicians in their back pocket. A news release will hit, politicians feign outrage, but a few weeks later it is back to business as usual.
See for all those who was egar to place the Repblican but in controll this is why BofA can do this because the rich take care of the rich and step all over the the not so luck people who get up every morining and make this so called country called the USA a big JOKE. When will you people learn the Repblican do not care. The only way they were willing to give the less fortune people more help on extend unemployed was to make a rich man deal. If the deal had not been taking then BofA and every other lender would be doing even more forclosure on us. One person can not do this we must see who is on ourside and stick with that person…….USA has really gone to the dogs and the once again the RICH WON… THANKS TO THE GOOD OLD BOY!!!!!!!!!!!!!!!!!!!!!!!!!
Chris, you are a bit misguided. BOA took billions of taxpayer dollars to bail themselves out of their losses. Those losses were of their own doing. In accepting those funds(TARP) They agreed to modify loans to keep people in their homes. End of story. They made a contract with the Govt. in order to get their loan and now they do not want to provide the same relief to honest Americans that are in trouble due to the economy. Not that they were in over their heads, they lost their jobs!!!! How would you be if you lost your job tomorrow? I am sick of people like you stating that everyone who is in foreclosure is there because they were in over their heads. Thats BS. I want a bailout just like BOA received. All it takes is lowering the interest to make the mortgage affordable until the economy improves. We have 7 or 8 foreclosed propertys in our neighborhood. It has killed property values and the houses are un-mowed, un-kept, and being sold for a song. Now my house is worth less. Keeping people in their homes is good for the recovery. Millions of foreclosed empty properties hurts everyone.
I agree with Rick. I’m glad you straighten out the misguided Chris. I would like him to lose his job and can’t get one for about two years and see what kind of bail out he’ll be looking for. I know alot of hard working people out of work, my wife is one of them (she has been working for 30 years) because of the Good ole Boys. Thank you
Thank you Rick for saying everything I wanted to say to the ignorant person named Chris. There are so many situations that no one can predict; losing a stable job is one of them. If Chris were in the same situation as myself and my mother, he wouldn’t be so quick to call us whiners! So before sharing your opinion, you may want to educate yourself a little better and read up on what’s happening to the rest of us. Like Rick said, BofA got a bailout, why can’t we?
The analogy of Chris saying that “Loan Mods are no different than going back to the auto dealer after 3 years and demanding they reduce the selling price of the car because there are rock chips in the windshield…” is absolute LUDACRIS! A mortgage on a home can be 20 years vs. 5 years for a damn car! There’s a big difference. You rely on your car for many things, but people don’t generally live in their car. And that’s beside the point.
To answer Chris’ question, the criminal is BofA. They also signed a contract stating they’d do everything they could to reduce the number of forclosures of homes in AZ. Chris even says that an agreement was made by BOTH parties. One of those parties was BofA and they are not owning up to their side of the agreement. So how can you say it’s not OK for homeowners to complain about a bank who breeched their own contract?
B of A, along with Fannie Mae and Wells Fargo, is a pain to deal with when foreclosure is a possibility. But the whole TARP program was a mess from the beginning, because the govt. didn’t have the regulations in place to do what had to be done with banks too big to fail–(1) chop them up into little pieces, (2) fire everyone who ever wrote or securitized a toxic mortgage, putting them on a “do not hire in finance, insurance or real estate” list, and (3) force them to write off principal for every underwater mortgage on a first home in proportion to the home’s loss of value. Until the bad guys are recognized and punished and the good guys get bailouts, there can be no recovery, because we cannot assume that things will get better with the same old crooks in charge.
The banks are insensitive to the homeowners when the homeowners need help, so why so they receive any type of ocnsideration when they break the law, violate a rule or whatever. in the real world when you screw up on the job you get terminated. We need to really start seeing some heads roll from these bank execs on down the line to the man on the bottom. They are not the ones loisng their homes and being put out on the street. ythey don’t care if you do and a lot of the them tell you over the phone its not their problem and you should pay your bills, well they need to stay within the guidelines of their regulations. Really where is the true public outrage?
I was a Mortgage Banker myself for over 15 years & am appalled by the whole scenario. Several years ago, I became very ill & could not work anymore. Since I was the primary breadwinner, this made things very difficult. Then my husband was diagnosed with stage 4 cancer & we didn’t think he would make it, but we both made it but just our share of the medical expenses we still owe is REALLY high & I have to take a lot of medication just to stay stable. Just 2 of my meds are $300. a month. On top of that, when Bank of America took over our loan from Countrywide, we were told we had to have wind & hail insurance, which we had never had before & we had bought several houses in the past. That premium increased our mortgage payment over $100.per month & all total, my pmt has increased over $400.
I live in NC & would LOVE to join a class action, especially since they have been “working” on my Loan Mod since Sept!
Cris specifically. Modification are not about whining over a yougurt stain on your leather seat or resale value. Modifications are a very (in theory) simple way to stabilize our soon to be third world county economy. A borrower attempting to modify is asking the back to meet him somewhere (not the middle) to allow the borrower to regain the ability to pay the original loan back. In essence it is asking for a lower percentage rate on the mortgage rather than forclosing or filing for bankruptcy.
I bogle my mind to think that “banks” would rather foreclose on a 350K house, lose out on the value of that loan to auction off the property or resale it to a new borrower for half the price of the original loan. I know I am over simplifying, but if Cris owed me money and said “hey, I need to pay you 75 instead of one hundred a month to finish paying you the 1000 I owe” I would probably take it because it means getting back 1000 plus interests rather than losing the whole amount.
To make matter worse, this is no longer a problem of the poor or ignorant but of a disappearing middle class…the class that made America a super power post WWII…. so in essence you are making poor the poeple that were able to buy in the first place.
This is a major major problem for our sustainability as a first world country.