Bank Of America Trial Loan Modification Offered But Payments Increased

by Jane T.
(St Augustine FL)

The terms seem to be from Bank of America loan modification program that all monies in arrears were just added to the unpaid principal balance and my interest rate was slightly reduced.

However, payments have increased by about $200 and it is no where near 31% of my gross income.

Is there any way to try to negotiate a better deal - reduction of principal, combining my BofA heloc $25,000 which was not part of my loan modification package? Or do I just have to accept whatever they offer? Should I seek legal counsel?

Thanks for any help,
Jane T

Mortgage Loan Modification Answer:

by Loan Modification Expert - Dan North

Ask to have the offer clarified so that you know exactly what they are asking you to agree to.

• Are delinquent payments being added to the unpaid principal balance or is this a repayment plan


• Is this a Home Affordable Modification Program offer?


• If not, specifically request a HAMP modification


• Ask that your 1st mortgage monthly payment be lowered to 31% of your gross monthly income if you can afford that amount


• Specifically request the 2nd Lien Modifiction Program (2MP) for your HELOC as it is eligible for modification under Making Home Affordable (MHA) automatically if the 1st mortgage modifies under HAMP


• An interest only HELOC is lowered to 2% for 5 years


• An amortizing HELOC is lowered to 1% for 5 years


• Both will then increase 1% a year until it reaches a cap of the modified 1st mortgage interest rate

Even if you are delinquent 12 months on your payments before a HAMP modification the total monthly payment including the escrow for property tax and home owners insurance is 31% of your gross monthly income.

The only principal reductions that Bank of America is likely to do is a principal forebearance (deferment of principal interest free) and not to forgive principal, they want their money back.

You do not have to accept the BofA offer and can make a counter offer. Ask for either a HAMP modification to 31% of your gross monthly income or request a specific interest rate reduction and you can also ask for a specific principal reduction by forbearance. Ask for one or the other so that they do not just turn down your counter offer without considering you for HAMP at 31% of your gross income. Make it very clear you want the HAMP modification if they will not approve your alternate counter offer.

You do not necisarily need legal counsel but there is advantage in having a professional loan mod negotiator represent you.

If you would like me to check out what modification BofA will approve complete the Pre-Qualification for Hardship Loan Modification Form and I will get back to you with what they will likely settle for.


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