HAMP Loan Modification Scheme Exposed

by Deme from Bellwood, IL

Ask Kate about mortgage banks that scheme to avoid approving qualified homeowners for a loan modification: When lenders participate in HAMP as a means to foreclose on struggling homeowners, they'd be wise to watch out for whistle blowers in their midst! This flagrant Bank of America practice of going through the motions with no intent to modify mortgages became public as of June 2013! When you read Deme's experience, you'll understand why I say, Buyer Beware!


Deme asks Kate about Predatory Lending

Dear Kate,

I've been attempting to get a loan modification since 2009. I was first put on a 3-month trial modification that only reduced my payments by $36.

On top of that, after the trial period, Bank of America charged me fees that I was totally unaware of.

National Mortgage news: HAMP Loan Modification Scheme Exposed
In response, I contacted the BBB and had those charges reversed. However, in December 2009, they denied my modification and in January, 2010 I became unemployed. When I called and asked about the modification, the reason for being denied was that I was still current on by mortgage.

So, when I became unemployed in January 2010, I was still able to make my mortgage payments but was still requesting a modification.

However, at the end of 2010, I was denied again. This time it was based on lack of income, although I was making my payments. It is now 2013 and I haven't made a payment since December 2011.

I was served with foreclosure papers in April 2012 and just had a court appearance where I was told my case was no longer in case management.

I asked the case manager to explain and he told me, that means you'll have to work directly with the bank and it also gives them an opportunity to proceed with a foreclosure.

My question is... Do I have any recourse, since I know I've been a victim of predatory lending?

Also, I have a sub-prime negative amortization loan. I thought these were being phased out and that was the whole purpose of the 'bank' bail-out?

I'd appreciate whatever answers you can give. Thanks!

Kate Answers: HAMP Loan Modification Scheme Exposed at Major Bank

***zz-portrait-left.shtml*** Dear Deme,

The government puts pressure on the lenders to offer some type of homeowner mediation before proceeding to foreclosure.

So by participating in HAMP, lenders can make it appear they are busy at work trying to save homes.

But as you may know, banks are understaffed, paperwork is lost, phone calls aren't returned, and review periods drag on forever. Then the fiasco is blamed on the homeowner, making lenders free to proceed to foreclosure without so much government scrutiny.

But hey! In the meanwhile, they are squeezing out trial payments from homeowners. In some cases they've even extended the 3-month period up to a year before denying the request for modification.

Whistle Blowers at Bank of America Speak Out

Whistle blowers at Bank of America have now confirmed that they were instructed to lie and lose paperwork so that they could deny HAMP loan modifications to qualified homeowners.

Lender Hypocrisy and Loan Modification Program
As appalling as robo-signing, employees claim they were rewarded with gift certificates if they denied enough modification transactions or had their job status threatened for failing to meet a quota.

Will this alleged fraud result in another settlement agreement? In June of 2013, Bank of America employee statements were filed in federal court as part of a multi-state class action suit on behalf of affected homeowners. This action consolidates 29 individual suits against the bank.

Who knows if it will turn into another three ring circus like the National Mortgage Settlement and Independent Foreclosure Review Agreements. For now, I will watch as this suit unfolds and give updates at my mortgage blog.

Nothing can make up for the trauma of foreclosure. The track record of compensating borrowers for illegal robo-signing has been spotty at best. That being said, a check to qualified homeowners who were fraudulently denied a modification would be better than nothing.

Negative Amortization Loan

You also asked if the negative amortization loan is being phased out. I may sound a bit jaded but I strongly doubt that lenders have any intention of phasing out the pay-option ARM as long as it's bringing in money.

Read another homeowner's related question at Is HAMP a Negative Amortization Mortgage.

Good luck and best wishes,



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Banks Loan HAMP Loan Modification Exposed
by: Patricia

Hello Kate,

Deme, you are not alone. My situation is similar. I purchased my home in 2003. I was blessed with 2 decent paying jobs over the last 10 years. My home was affordable at the time.

Since then I have endured a divorce (marriage after buying home on my own). 2 job downsizings. Home is upside down 143500 purchased, now worth 88500. Income reduction from 52000 to 28000 a year.

I have literally been attempting a Modification via Indy Mac Bank dba One West Bank for about a year. Oh not to mention attempted a Chapter 13 Bankruptcy Plan that was bogus(unattainable). Have since converted to a Chapter 7. Still attempting a PRA (principal reduction) and all I keep getting is missing this document, missing that document that I have scanned and emailed directly to the Manager and Underwriter a dozen times.

I'm so over it. :)

At 50 years of age, my last half will be free of the American Dream 101. I don't say this cynically. I have learned that you truly do need at least 1 years savings in the bank or available for life on life terms. I am deciding to write the lender and thank them for extending the credit. Apologize for not being able to keep my end of the deal and wish them luck with a sale.

As I will not fax, email send 1 more ( missing ) document and play there game I will move to a 1 bed room apartment that will allow me to save a $1000 per month to secure a real future. Maybe purchase a Condo in 5 years with savings and small net worth. Maybe even a vacation:)

I will relax in peace and read your books :) on how to do it better next time.

Trying to refinance 1st and second with Bank of America
by: Robert N. from Frankfort, Illinois

I'm trying to refinance 1st and second with my current lender, Bank of America. In 2010 I had a loan modification done by them.

They did not sell it back to Fannie Mae. They kept the loan in their portfolio and I have not missed a payment since 9/2010.

My second mortgage is also with BOA. Its rate is at 9.65% , and I have not missed a payment since 2010 as well.

My current FICO is just above 720, after many months in the low 500- to 600 range. Both mortgages combined total $234,000. As you might have imagined the value of my property is currently in the range of $188,000 - $200,000.

BOA has no incentive to combine nor do they want to redo the second. No incentive here. There is also a expiration on the second which is in 4 years, at which time I must payoff or renegotiate.

I'm trying to combine the first and the second mortgages but getting no help from BOA. Any suggestions?

Hi Robert, Kate here...

I can't tell if your mortgage is eligible for HARP refinancing. Read a summary of the HARP 2 program's guidelines and if BOA has not mentioned HARP 2, ask for an application.

BOA is notorious for ignoring borrower requests to modify a second mortgage. Hopefully when it gets down to the wire, they will be more receptive.

But who wants to wait until the last second? I am sure you don't!

If your mortgage is underwater, besides loan modification, your choices are HARP and unenviable choices, such as strategic default, deed in lieu, deed for lease, and short sale. Except for strategic default, these options are offered by the HAFA (Home Affordable Foreclosure Alternatives) program.

There are not enough underwater options for homeowners like you. It's imperative to write Washington DC and your state government to tell them what is needed for underwater homeowners.

Best wishes, Kate

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