How I Got a Loan Mod Accepted by Bank of America

Even with all of the distress being experienced by bank lenders and borrowers alike, it is surprising how few success stories of loan modifications are out there. This is one of them.

A loan modification is simply when the lender will redo the terms of the mortgage to make it more affordable. They may even take the back payments, add them back on to the principal payment, and lower the interest rate and/or extend the term of the loan to make it more affordable to help a borrower stay in the property.

I refinanced with a loan originator in Arizona who sold the loan to Countrywide early 2008. My loan amount was $365,000.00 and the interest rate was 6.125% approximately, interest only for 5-10 years, and then the loan amortizes.

Around October 2008, I was scheduled for a medical procedure and contacted Countrywide. They immediately offered a forbearance, in which I did not have to pay any payments for 6 months. Actually, I insisted on paying 500.00 per month to show my good faith.

After the end of the forbearance, I may be eligible for a loan modification, or extension of the forbearance, unless I paid back the back payments or entire balance sooner.

In February 2009, despite my written agreement and timely payments, Countrywide/Bank of America reported my loan as past due. This ruined my credit and compounded my medical hardship.

Around March/April 2009 the loan was transferred to Bank of America, and this is where some of the confusion began.

Bank of America sent over a new repayment plan, which contained confusing language to the effect that the loan would continue to report late even if I paid on time. I conditionally accepted this agreement in May, but asked for clarification of the misleading and confusing wording.

Throughout June, the representative failed to return my calls. I mailed in a payment that was returned by the bank, and I called in to ask why. The representative said it was because my agreement expired because it was not received on time, but the representative also said the file showed up in her system, so it was resubmitted.

Meanwhile, the loan origination company began leaving threatening messages, apparently because the investor was forcing them to buy back the loan (for reasons beyond my comprehension). The loan origination company also sent me strange requests for my tax returns, pay stubs, and explanation for why the mortgage payments were made by a company which actually NEVER made the payments.

I responded firmly and clearly. At the same time, I kept at Bank of America/Countrywide relentlessly with letter after letter documenting their default and misconduct. I even filed a complaint with the Office of the Comptroller of the Currency (OCC.gov) because they repeatedly ignored my certified letters addressed to the CEOs regarding the damage done to my credit.

(Perhaps the CEOs were too preoccupied with their pending indictments to respond to me.)

My concerns continued to grow into July because BofA was refusing my payments and not returning my calls. On top of this, the loan originator kept harassing me with difficult to answer questions and threatening messages. I felt attacked, as if they were planning an elaborate trap to damage me with any apparent inconsistency I would state. But I would not succumb to their tactics.

However, I received a fedex package dated July 11, 2009, containing loan modification documents from Bank of America. All I need to do is sign, notarize, and return them by August 10, 2009, and I am on my way.

I sent the documents over to my researcher and to a banking attorney to review, and apparently these documents seem kosher. Also the documents do state that my loan will be considered and reported as current, which was an important "sticking point" for me.

The next step is to send a notice of fault and opportunity to cure to the originator, for their failure to respond. My researcher tells me to invoice them for damages, treble the amount of the mortgage originated. This is for their damaging correspondence. And who knows, many law firms now are representing consumers and would love to take this case on contingency and ultimately get my mortgage forgiven.

So although the circumstances leading up to this loan modification are a bit unusual, and someone else's case is likely to be different there are many lessons in this process appliable universally:

1. have a goal and stick to it relentlessly. But remain flexible to new developments.
2. keep accurate records and notify parties in writing (certified) of any discrepancies.
3. any errors the lender makes, properly documented, can be utilized in your favor if documented properly
4. fight back and refuse to be intimidated
5. plan for the worst but expect the best outcome
6. if you have a medical issue or other hardship that is compounded by the lender's conduct/misconduct, be sure to document this thoroughly
7. have thorough documentation to justify your case for loan modification