After a Trial Loan Modification period with Bank of America I was Denied because Investor is Not Participating in HAMP - Is this LEGAL

by Peter Malka
(Aurora IL)

I was approved for a HAMP trial loan modification plan with Bank Of America. I signed the agreement and made all the payments on time for 6 months!, now I received a letter from Bank Of America stating that my loan is not eligible for a HAMP modification because the investor guarantor is not participating!!?? Which is not a valid reason as I know the only reasons after a trial period plan are : payments out of time, not sending complete information or they aren't true and NPV negative.

But if I was approved for a HAMP Trial Modification Plan with a signed agreement why can they say now that the investor is not participating, why didn't the Bank say this before they approved me for a trial period under HAMP.

Is this legal? Where can I call or go to claim..??

Mortgage Loan Modification Answer:

Sorry to hear about Bank of America's denial of your permanent loan modification although you've done everything they've asked you to do during your trial period.

You are right. One of the first things that Bank of America should have done and it is pretty standard practice, is to check whether the end investor for your loan participates in HAMP. This is how they determine which loan modification program you qualify for prior to starting the process. It seems
they did yours backwards.

And if you do not qualify for HAMP, because the investor on your loan does not participate (which is a valid reason by the way), the next step would be for Bank of America to qualify you for their own internal loan modification programs, sometimes called a traditional loan modification.

The good news is you can still qualify for Bank of America's traditional loan modification, but the bad news is you will more than likely be asked to re-apply and start the process again unless you can get a manager to expedite a new application for you. In addition, Bank of America's traditional loan application, if you are approved, may have less favorable rate and terms than what is dictated by HAMP.

If you would like to escalate a complaint against Bank of America, you can find instructions to do so at the Making Home Affordable website. The escalation process is detailed step by step on the site.

If you will be communicating your complaint via email, give it some teeth by copying The Escalation Team, the Bank of America Loss Mitigation Officer (by name and title), your Congressman and Senator (both by name and title).

Hope the above helps and good luck. Please come back and let us know your results. Feel free to post again if you have any further questions.

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May 15, 2011
Bank of America are crooks
by: Allison Pallone

We have been on trial program for over a year and a half,only for the bank to tell us we don't qualify. We submitted paperwork over 8-10 times,just for them to say we haven't recieved paperwork on time,which was false. We've spoken to at least 20 different people which all have different answers for us. How is the federal gov allowing this bank to strong hold people like this. we will fight to the end. My family and I have proven are income is there and are debt to ratio is low. Now they said were eligible for a traditional modification which we know they're just going decline for some made up reason. Keep in mind Bank of america contacted us and said we were eligible for this modification

May 01, 2011
Reply to: After a Trial Loan Modification period with Bank of America I was Denied because Investor is Not Participating in HAMP - Is this LEGAL
by: Dean, CDPE, CPA

I should add that since BA violated the legal guidelines you may want to consult an attorney about your legal recourse. Certainly pressure on BA that you know they violated the guidelines may make them do some back peddling.

It is my understanding that new documentation is NOT required to move from HAMP to HAFA. I remember reading this, but could not locate it again. I will continue searching.

The list of participating investors is to be current and that is the firt thing BA is to check is to see if the investor participates and immediately notify you.

There are also incentives for investors to participate and BA needs to explain to Treasury any investors that do not participate and why.

Further, you should request a Qualified Statement under the Real Estate Settlement Procedures Act which disputes the debt and requests a laundry list of documents. You need a professional to do this. In addition you need to submit a written request for the name of the investor and BA has to tell you. If your original mortgage was with Country Wide chances are the investor is CountryWide Mortgage Trust and they do not participate. However, the loan can be sold to a participating investor. BA knows this too!

May 01, 2011
Reply to: After a Trial Loan Modification period with Bank of America I was Denied because Investor is Not Participating in HAMP - Is this LEGAL
by: Dean, CDPE, CPA

According to the HAMP Hannbook V 3.0 effective January 1. The event that occurred regarding notification of Non-Investor participation is a clear and flagrant violation of these guidelines.

1.3 Investor Solicitation
Within 90 days of executing a SPA, the servicer must review all servicing agreements to
determine investor participation in HAMP. Within 30 days of identifying an investor as a nonparticipant, the servicer must contact the investor in writing at least once, encouraging the
investor to permit modifications under HAMP.
Servicers, within 120 days of signing the SPA, must create and maintain in their records an
Investor Participation List containing the following information: (1) the number of investors for whom it services loans; (2) a list of those investors who do not participate in HAMP; (3) the number of loans serviced for each investor that does not participate in HAMP; and (4) pool-level identification data, such as pool name and pool number, for loans serviced for each investor that does not participate in HAMP or whose participation is subject to any limitations or restrictions. In addition, servicers must provide a copy of the servicing agreement or other pool documentation to Treasury or its agents upon request.

Immediately raise this issue with the loan servicer and point out they are in violation. In addition file a complaint with the Office of the Controller of the Currency and the Federal Reserve. You can google them or search for my links on this forum.

Let me know if I can be of further assistance.

Dean Eshelman, CPA, CDPE, HRC
RE/Max Best Choice
St Louis, MO

Apr 30, 2011
by: Anonymous

Ok, desperate here to keep my home, been in a loan mod for over 2 years, finally was told by the attorney I hired to do this, we were approved and to expect the paper work the next day FedEx, well were we surprised , Hamp denied, and we got a re payment mod, which raised our payments 2000 more than what we pay, we pay 1,800 per our attorney, we should have been paying 2,900 with taxes, ,the paper says they want 3000 a month, for 4 months, no principle forgiveness, we paid 455.000 in 2005, now home worth 280.000. they also want a hugh lump sum, after 4 months, on top of the 3000. we could never afford that. They claim, Investor not participating in Hamp. What I find strange is I recieved a paper a few weeks ago, something to do with a change or transaction of the loan? I called my attorney who has been working on my modify to ask what that paper was, he said its just informing us of any transactions?? we dont know what it meant? But now I am starting to wonder if BofA is selling off all these troubled loans underwater or in the middle of being modified to investors who dont participate in Hamp? wouldnt this be against the law? just seems im reading alot about people not being modified even after trial periods due to investor not participating? Could BofA be trying to sell these loans off, so they dont have to modify?

Jul 19, 2010
CitiMortgage told me the who the investor is on my mortgage loan
by: Foreclosure Help Center

Hi Dean,

Thank you for the useful information!

Just one thing I wanted to add: It is a hit or miss whether your loan servicer will tell you who your loan's end investor is. A CitiMortgage representative (from the regular customer service toll-free number, not the loss mitigation department) actually told me that Bank of the West was the investor on my loan the first time I called them to ask.

I was not delinquent at the time I called to ask so they were quite friendly and open with the information.

However, just to check again, I called back after our loan was behind in payments approximately 30 days, and they would not give me the investor's information.

I know from first hand experience that both CitiMortgage and Wells Fargo do check first if the end investor participates in HAMP prior to starting the loan modification process.

Unfortunately servicers and lenders vary widely with their loan modification procedures. On top of that, each of their representatives have different levels of knowledge and personalities, so you may get different answers from different reps to the same questions. Some are definitely better than others.

Foreclosure Help Center

Jul 19, 2010
Loan servicer says investor not participating
by: Dean Eshelman

First. The loan servicer will not tell you who the investor is. It is not the investors option to participate. The loan servicer is being paid under TARP for these modifications. I have done roughly 60 of these mods. I do them one at a time as one is a full time job.

This process I am about to tell you ALWAYS - REPEAT ALWAYS gets results.

1)Contact your Federal Reserve Consumer Complaint Division by telephone. They will tell you who regulates the loan servicer -- ie Federal Reserve and which office or Comptroller of the Currency.
2) File a formal written complaint. Federal Reserve you can do this by letter or fax. Comptroller of the Currency has a web site to file a complaint -
3) You will receive a response from the financial institution and the Regulatory Agency in about 30 days. If not call them. The regualtory agency at this point will know who the investor is and will likely tell you. For example, a Litton Loan Servicer may have an investor that is Goldeman Sacks. (Purchased using Credit Default Swaps inusred by Guess who -- AIG!)
4) Shortly after you will get the paper work promised.
5)NEVER EVER do any agreement or payment that is not the result of a written agreement signed by both parties. In real estate a verbal agreement does not count. For example, Bank of America Loan Servicing told a couple who had just received Social Security Disability and had just received a Lump sum of money for back disablility payments to catch up the loan and then submit for HAMP as they qualified and would be approved. So they paid and Bank of America Loan Servicing denied the HAMP. They walked away from the property.
6)In the end it may be true that you do not qualify for HAMP. There are so many unwritten rules and they are different for each servicer. So keep wriiten notes of every conversation. The Date, Time, Phone number and extension (if given)and name and the ID of the person you talk to.

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