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My Bank of America Mortgage Modification is a Joke. – Susan

“Dear Steve,

Proposed Loan Modification-Only 17 dollars less than my original mortgage. Why?

I have been trying to get a loan modification with Bank of America for 4 years now. I kept getting the run around and it seemed every time I called I got the same old story-the paperwork has expired and must be resubmitted.

I went through this for at least 4 years. I finally got a packet via Fed Ex telling me I have been approved for a modification.

At first I was happy but then I continued to read. My original mortgage was 1,037.00 a month. The proposed modification tells me I will need to make 3 consecutive payments of 1,020.47 beginning April 1 and then the 1,020.47 will be my new modified payment.

That is only $17.00 less than before. I thought modifications were supposed to help reduce a payment to a more reasonable amount.

My loan has a ridiculously high interest rate at 6.95. I am very hesitant to agree to this since I can’t possibly make that payment on my bring home income. I am very discouraged and wonder if I should do a deed in liu and bail.


Real Estate Concept

Dear Susan,

Let me be blunt for a moment. You have no “right” to a mortgage modification and no bank is required to modify your mortgage.

Overall the mortgage modification programs out there have been a joke. Except for some people which received meaningful reductions in their mortgage amount owed, the majority of people received little significant help.

All banks that consider mortgage modifications run your conforming application through their modification policy and procedure. What it spits out on the other side is what they generate.

Mortgage modifications are not supposed to help reduce a payment to a more manageable. They are supposed to meet the internal program the bank agreed to. There are a couple of federal programs (links below) that if you are eligible for, may help.

I would suggest you immediately contact a HUD Housing Counselor and discuss your specific situation. Their services are free to you and subsidized by the government. They have experience with the programs available and can advise you if there is a more suitable program for you.

If your home is unaffordable a strategic default, where you walk away from the house and file bankruptcy, is always an option. But you’d have to evaluate that based on the dollars and cents of your specific situation and if it makes sense for you at this time to take advantage of the legal fresh start and second chance you are entitled to.

If that is something you’d like to explore then I’d suggest you click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.

Bonus Video Answer

Mortgage Help

Be sure to first read How Not to Get Scammed by a Mortgage Loan Modification Company.

Debt-to-Income Calculator

First you’ll need to determine your current debt-to-income ratio. The target debt-to-income ratio under the Home Affordable Modification program is 31%. Use this free online DTI calculator.

Mortgage Modification Calculator

The mortgage modification eligibility calculator will ask you several questions and then show you which programs you may be eligible for.

The free mortgage modification calculator can be found here.

Free Mortgage Modification Help and Counseling

If you have questions about the process or eligibility you can call 888-995-4673 and get connected with an mortgage modification adviser for free. This help is provided by government subsidized HUD Housing Counselors and they can be a big help in navigating the modification process.

In order to assist you, the housing expert will need to gather some information from you. Have the following documents handy:

  • Information about your first mortgage, such as your monthly mortgage statement.
  • Information about any second mortgage or home equity line of credit on the house.
  • Information about the monthly gross (before tax) income of all household members contributing to pay the mortgage, including recent pay stubs if you receive them or documentation of income you receive from other sources.
  • Information about your savings and other assets.
  • Account balances and minimum monthly payments due on all of your credit cards.
  • Account balances and monthly payments on all your other debts such as student loans and car loans.
  • Your most recent income tax return.
  • It may also be helpful to have: A letter describing any circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.), if applicable.

You can also get free help and housing counseling from a local HUD approved counselor. You can find your local free housing counselor, here.

Contact Your Mortgage Company

Not sure if your mortgage company offers modification programs? Not all do. You can contact your mortgage company to ask them about mortgage modification programs you might be eligible for. Click here to find your mortgage company.

NPV Calculator

Want to know the net present value (NPV) of your home for the mortgage modification process? No problem, use the free NPV calculator to find out. The NPV calculator is right here.

The calculator can be used by homeowners who have been denied a HAMP modification because of their NPV result or can also be used by homeowners prior to applying for a HAMP modification to help them better understand the NPV evaluation.

No Advance Fees

The Federal Trade Commission has a Mortgage Assistance Relief Services Rule which prohibits advance fees for mortgage rescue services or mortgage modification help.

Please post your responses and follow-up messages to me on this in the comments section below.

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • chris

    When the banks took taxpayer $for modifications those who qualified then became entitled. So yes they owe it. Your wrong

    • Steve Rhode

      While I certainly understand your emotional reaction the reality is your assumption is incorrect.

  • Buddy H.

    I strongly agree that the HAMP (Home Affordable Modification Program) is not only a big joke but also a big calamity. When I applied for mortgage modification, what I got was an arduous process which not only ended up with a decline on my application, but it also caused me foreclosure threat (because the bank asked me to default my mortgage payments for 3 months in order to “pre-qualify” the HAMP – remember, before HAMP, my mortgage payments were immaculate and ontime always – and that default lead to the foreclosure proceedings side-by-side while the bank did the HAMP process which I beleive they deliberately melting the time to deny anyway at the end). As the result later post-HAMP application was: HAMP was denied, my house almost got foreclosed, my 800+ FICO credit scores ruined, all my other Credit Card companies demanded due payments and raised their interest rates to 24% or higher, I went through major depression, disabled and lost my job, my wife brought our kid to her parents home and stayed there for full 2 years since she could not bear to experience what happened … do I need to go on?
    Now I am to sell our house and plan to move out far away State where we think the living costs are cheaper. I wish you luck!

    • Steve Rhode

      Your impression mirrors that of many. A total busted process.

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