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Free mortgages ignored

By Polyana da Costa · Bankrate.com
Thursday, June 28, 2012
Posted: 8 am ET

Why are borrowers passing on free money?

Bank of America has been mailing letters to more than 200,000 homeowners, offering to forgive part of their mortgage balances, but few borrowers have responded to the offers.

No, this isn't charity. The loan forgiveness offers resulted from the National Mortgage Settlement agreement signed by some of the nation's largest lenders this year. They apply only to loans owned and serviced by Bank of America. Loans owned by Fannie Mae or Freddie Mac and serviced by Bank of America do not qualify.

Borrowers who respond and qualify are having their loan balances reduced by an average of $150,000 and their monthly payments reduced by 30 to 35 percent, says Ron Sturzenegger, a legacy assets servicing executive at Bank of America.

"What's the catch?" Sturzenegger was recently asked during a panel at the National Association of Real Estate Editors conference in Denver.

There really isn't one, he says. The offers may sound too good to be true, but they are legit.

The problem is that frustrated borrowers don’t believe that anything good will come out of it, says Marietta Rodriguez, director of national homeownership programs at NeighborWorks America.

Often, you'll find that many of these borrowers are frustrated by their unsuccessful attempts at working something out with their lenders.  They are overwhelmed by scammers offering to help them with their mortgage issues. And they are afraid to open correspondence or answer the phone to talk to their lending institution when they haven't been able to pay their mortgages, she says.

There's an emotional wall between borrowers and these offers, she adds.

"There are a lot of exciting programs being rolled out," she says. "But it takes a very sophisticated borrower to understand them. They are very complex. That's why we encourage folks to reach out to a HUD-approved counselor."

Follow me on Twitter @Polyanad

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33 Comments
Gayle
July 03, 2012 at 12:36 pm

I haven't read all these stories but the first few got to me. First off, we did choose our lender but they sold our mortgage to Countrywide after only a few months, then Countrywide sold our mortgage to Bank of America. I have news for most of you waiting for help from Bank of America, you aren't going to get it! My husband lost his job and was out of work for almost a year. We kept trying to get help from Countrywide but no luck. When B of A got their hands on our mortgage, we tried constantly asking for help from them. We sent paperwork several times, made, God only knows, how many phone calls to them, and we had our own person working on it for us. I even asked this young lady if we stood a chance in hell of getting help from them and she said yes, that there were people further behind and owed more in back payments than we did that got help. We too were faced with more and more threats of foreclosure. I called everywhere I could think of to get help and had no luck at all. The girl from B of A that we were working also told me that if the decision were anywhere near the time we were to be foreclosed on, that they would push back the foreclosure date to allow us the time to find a place, pack and move. One month to the day of our foreclosure we got a phone call from another B of A person and was informed that there was "no way" that they were going to help us. I got right back on the phone to our "worker", and I might add that she worked in a department that handle the harder cases, and she said she had planned to call us that day. She said, "NO", they weren't going to help us, and when I asked about them pushing back the foreclosure date, she said, "NO", they weren't going to do that either. I asked her why she waited till we only had a month to move, and our answer "oh well". It's not just the people that couldn't afford to make their payments because they over bought, others had their own problems such as job loss, health issues etc...that caused the ordeal for them, just as we suffered through. I am disabled and can't work and we lived on 530.00 a month SSDI a few months during that time, until my husband finally found a job. My husband found a website called BankofAmericasucks.com that has complaint after complaint about how B of A conducts their business. They give you the hope, then the round around. Send paperwork, ok...how many times should I do that? Call us back, ok...how many times do I do that? Bank of America is a joke and I laughed my a$$ off when I heard about them losing 1.5 million dollars because of their stupidity!! They aren't doing people any favors with this mortgage help they are offering, out of the kindness of their heart, they broke the law in a lot of foreclosure cases and are now having to pay up for it. We filled out the paperwork sent to us about B of A's unlawful foreclosures and didn't qualify only because our loan happened to be backed by Fanniemae. They are the worst lenders and offenders out there, and I hope this payback causes a powerful blow to their financial pocketbook!

STEVE
July 03, 2012 at 12:14 pm

As a casual observer, I believe the USA is a rif-raf country made up of people who obviously couldnt make it in their own country. What we may consider good character may not be viewed the same by a person from a different country. Example: Its considered "good business" to walk away from your mortgage if it becomes unfavorable to you. In fact, when the economic climate began to sour, I simply asked my bank to forgive one of my mortgages, and they happily obliged!!!! My lesson learned: we are ALL a pathetic bunch of low-lifes, and 16 th cousins to boot. (like it or not) Sadly, this wasteful money system tends to bring out the worst in all of us-Hooray for the USA, but please, GOD, BLESS the WORLD!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1

Greg
July 03, 2012 at 11:26 am

To those who say they have character, (but really don't), are you going to live like a man or a mouse? A mouse comes up with every excuse in the book to get out of their debt. A man pays thier debt, regardless of the situation. Did someone force you to sign the mortgage agreement? I didn't think so. Pay your debt.

Jordan
July 03, 2012 at 11:21 am

By the way, I don't work for a bank. I'm just a US citizen who enjoys the ability to understand what I'm agreeing to and lives up to my end of the arrangement.

Jordan
July 03, 2012 at 11:19 am

I think it's very telling about people and their values/beliefs that if they are in a position to need the break being offered, they still continue to blame the bank.

To everyone complaining and whining about the big bad bank - when you're dumb a$$ wanted a loan for a home that perhaps you couldn't afford, they were there to give it to you. You went through a lengthy process and were provided contracts (which you should have read in full) that obligated you to live up to your commitment. Now you can't meet the commitment and it's the fault of the big bad bank??? They suckered you into that loan??? They wouldn't let you read the contract and forced you to sign it by threat of death???

Regarding the modification process, of course you have to be months behind in payments. If they just made modifications for every person that wanted one, they would be modifying 99% of all outstanding loans. They are well within their right to modify only the loans that fit the criteria they establish so that they can remain profitable.

A larger matter that most people are ignoring is that the problem with unaffordable loans was greatly exacerbated by loan officers that worked with third party originators (not the bank) that lied about your documentation, or didn't require you to provide documentation - so that you could get that loan for more than you could knowingly afford. As for the folks you're working with when you have payment problems, they are typically a third party servicer (not the bank) that simply acts as the administrator of your loan. If you're working with a loan servicer, there is absolutely no reason in the world for them to do anything to help you. They don't own the loan, they don't have skin in the game and they don't care about your problems. They get paid to get your money, count your money and deliver your money to the bank. That's it!

If you have mortgage issues, I feel for you. There was a point in my life when I literally had 8 cents and no job. I've been down. However, purchasing a home was your decision. Choosing the originator and lender to work with was your decision. Signing the CONTRACT that you signed was your decision. If you bought more than you could afford - YOUR DECISION!!

Quit whining about the bank. If you loaned a stranger $200,000 and they came back to you and said "I can't pay you because...", you'd do the same thing as the bank - "F... you, give me my money!!"

marinia
July 03, 2012 at 11:14 am

I have been trying to get a loan modification with bank of america for a year. They have put me in foreclosure and my court dates have been postponed three times. I worked with them for months on my own and can write a book about the process and the horror story. They hav not even attempted to help. I receive a letter every fifteen days saying my loan is under review and postponed for 15 days. I have been receiving this since NOVEMBER 2011. They promised me answer by December 2011. Explain to me what happened? I would like to start class action lawsuit here in pennsylvania but do not know where to begin. This has been a horrendous experience and I see no end in sight. In the meantime my fees are piling up because they will not take payment and cannot offer me resolution other than delay tactics and request more paperwork. would love some info or suggestions.

Armand
July 03, 2012 at 10:23 am

I agree with both of you. We have kept up with the mortgage payments, never been late. We explained to the bank by phone, letters, faxes that our bills are too high and since my business went down and my wife will have to retire in 2 years, we mentioned that fact that eventually we will not be able to afford all the bills next year and that we need help now. First, it takes them a long time to respond. When they do, they assign a person to you whom they changes as soon as the assigned person gets familiar with your case. And then they change the phone nos. ALL THE TIME that they will transfer you, all gthese personnel do not have any idea about governementperograms you can qualify for, and after hours on the phone, the next time you try to get in touch with them, you start all over again. I was told that we are not in trouble because our paymentsw are not late. We have to be in foreclosure mode. I t is frustrating. This is Bank of America where we do all our banking. I am thinking of getting in touch with local senators and repfresentatives.

rayseeme
July 03, 2012 at 10:16 am

simple answer ,the guy who wrote this is brain dead ,Polyana da Costa grow up and get a real job !

Tony
July 03, 2012 at 8:56 am

@PW-
Having character and walking away from a bad financial decision are two completely different things. Have you been laid off twice in three years? Can't find another job?, had a medical emergency with one of your children? Well...

I have and you know what? I did what any one with half a brain would do when he has exhausted all other options with the "bailout kings" and walk away with at least a fighting chance.

We have plenty of character, trouble is the banks are sorely lacking in that department and you know what? the banks have walked away from properties they own for years and write it off as a "business decision". we are talking billion dollar deals, look it up...

People are finally waking up and playing by the financial institutions rules and ignoring scare tactics and moral hand wringing the banks don't like it, but maybe the next time they stick their hands out for money to stay afloat someone will "character" will stand up and say no.

PW
July 03, 2012 at 7:51 am

Maybe there are people of character! and that is why mortgage forgiveness is being ignored. Like everyone else, back in the 90's when builders were building McMansions in every vacant farm field and the banks were offering interest only loans or over qualifying customers by encouraging them to roll their cars, furniture and home improvemts into the mortgage. There were familys like mine who bought within their means and maintained their payments even if it meant some sacrifice from time to time. I haven't been offered any loan forgiveness, but then again I've been a good customer to the banks and responsible to my neighbors by not walking away from my home. Perhaps having good character truly doesn't pay.