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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."

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33 Comments
Charles
July 03, 2012 at 10:05 pm

I notice that one thing not mentioned anywhere in the article is that BofA, almost overnite, sold off a lot of their upside down loans to Greentree financing which acts more like a collection agency than a mortgage company and at present has thousands of complaints listed against it for its unsavory collection practices and almost impossible expectations, such as doubling the escrow balance required"in case it goes up" and necessary to be paid within 30 days.

Lauren
July 03, 2012 at 7:28 pm

One more thing -- search "National Mortgage Settlement". Most of these large banks are REQUIRED by this settlement to help the following homeowners: those who are CURRENT on their mortgage, but their home has "negative equity" -- meaning, you owe more on it than the market bears today i.e.: "under water". Secondly, on a first OR second mortgage on your home, if you are "having trouble making payments" or have "missed payments." Last, It applies to Borrowers who "lost their home to foreclosure between January 1, 2008 and December 31, 2011."

Basically, the attorney general's negotiated this deal to make the banks "make it up to those they should have helped to begin with." What a joke -- but it's better than nothing. BE PERSISTENT! THE BANKS AND THEIR DRONES COUNT ON YOU GIVING UP! It's ok to call initially and get the ball rolling, but always send your HARDSHIP LETTER via the US MAIL/CERTIFIED MAIL/RETURN RECEIPT! Don't send it Fed Ex or UPS, but via the USPS ONLY. This is per attorney's and other activists who deal with loan modifications. It will stand up in court for your defense. I had a neighbor who kept complaining that "I've faxed them the information five time, blah, blah, blah." I told her what to do. Presto, she finally got a loan mod. They are counting on your lack of knowledge in regard to the law. Good luck.

Joy
July 03, 2012 at 5:59 pm

I have lived in this house for 21 years and until BofA took over the loan was through Countrywide. I called BofA to see if I qualified for the "Modified Mortgage" program and they said yes. I had been laid off in Feb of 2009 and finally landed a full time job in July 2011 that resulted in a 40% reduction of pay, but it is a full time job.
After being told that I qualified initially and jumping through hoops to provide the necessary paperwork requested I was sent a letter telling me that I did not qualify and they suggested I put the house up for short sale. End of discussion, period.
Why did I not qualify? Because the first thing I did, no matter what, was pay my mortgage before anything else so I would have a roof over my head, I was not behind in any payments. May not be food in the fridge or I may get behind in my utilities etc., but my mortgage got paid.
Who turned me down? not BofA - but the "investor", Fannie May.
BofA is only a collection agency in a lot of cases, not the holder of the loan.

Mark
July 03, 2012 at 5:19 pm

I have a mtg that's under 60K, but has a 45k home equity attached through Wells Fargo. Is there a program that will combine the two and reduce my overall mtg payments?

Jim Freeman
July 03, 2012 at 3:42 pm

I see that Wells Fargo is one of the lending institutes that was part of the agreement; have they been in the process and ar they now implementing? I am one of those individuals who is in an upside-down mortgage and would like to investigate possibilities allowed under their provisions. If they have implemented can you direct me to the office that would handle the matter with Wells Fargo.

Beverly Lee
July 03, 2012 at 2:42 pm

I have a couple of questions about htis offer. I know it's a loan reduction, but will the loan start all over from the start date of the loan, or will it continue and just be reduced. Our loan was brought from Country Wide. Could you please let me know what my options are.

R
July 03, 2012 at 2:37 pm

Some of us are judgemental because it is our taxes that are bailing out many people who borrowed beyond reasonable expectation. When making financial decisions, one MUST plan ahead for an occasional downfall, by first choosing a home we have a good and reasonable expectation of paying off, putting some of our own equity into it (which would have made selling it possible in case of job loss), and preparing some savings to cover such a loss, instead of mortgaging to the hilt and expecting someone else to bail us out. Corporate greed doesn't justify individual greed. We need a renewed sensibility in this country both corporately and individually.

David Hughes
July 03, 2012 at 1:43 pm

I have a mortgage with Bank of America serviced and owned, they aquired my mortgage when they bought Country Wide Funding. The question that I have is, I am 65 years old now and my income is declining and fixed, why have I not been offered an oppertunity to have loan forgivness or lower payments since my home is not worth any where near the $308,000.00 that I still owe on my loan balance and the out look is bleek with the payments going up!
And the payments are scheduled to increase with higher interest and increase with higher impounds from fire insurance and taxes?
How will I go about reaching the right source because you understand these bank corporations are only doing this program for a select few compaired to the millions of people that have already lost their homes from the bankers greed and past performances on handeling these loans in the past!
I will welcome help with this matter and be willing to have it documented by a reputable third party reporting company, please let me know how to proceed and accomplish this offer.
Sincerely;
David Hughes

Larry
July 03, 2012 at 1:26 pm

The title is misleading! It isn't free money; it's just loan modification or reduction.

John
July 03, 2012 at 1:17 pm

Why are some people so judgmental about unfortunate persons who, through no fault of their own, can't make their mortgage payments? I lost my job in 2003 but still manage to make my monthly mortage payment. I have sympathy for those people who cannot. The large banks were bailed out by the federal government before they became bankrupt. They are certainly morally bankrupt. Their past actions (credit default swaps, liar loans,etc.) prove that they will do anything that they can get away with to make a profit.