Bank of America Foreclosure & Mortgage Modification
I am in the middle of a mortgage modification with Bank of America, and it just sent me a foreclosure notice? Now what?
I bought a home for me and my 5 children in 2006. Countrywide was the mortgage holder (now Bank of America). They gave me the mortgage on a low-income but high child support and spousal maintenance. I got remarried in 2007 and by December of 2009 we were not able to keep up on the mortgage payments of $1715.00. In March of 2010 I applied for a modification. All information was received by BOA and the process began. Every week I call them and confirm that they have all required info. Yes they do and are still working on the workout. Now I received the letter that July 6,2010 the home is scheduled for foreclosure. I've been advised by BOA to wait 1 week call again and ask for a postponement on the date because I am in an active workout. They will contact the negotiator and who will put the request in. BOA did not even have the date in my file yet. Should I wait and hope for the workout? Should I proceed with a short sale? Do I have time for a short sale? Or would a Deed in Lieu of Foreclosure be another option? There's also a Web site NLPA that guarantees a postponement on sale date? The home is appraised at $240,000. $221,000 is owed on the home. I am current on HOA dues but behind on property taxes. I am located in Texas.
My short answer to your central question, "Should I worry that Bank of America foreclosed on my property while I am in the middle of a loan modification?" is "I do not know."
By outward signs such as the ones you are describing, and from discussions I have had with current and former employees, it is safe to state that Bank of America's mortgage operation is not functioning efficiently. Your case is a perfect example -- it makes no sense economically to both negotiate with a customer who seeks a loan modification and foreclose on him or her simultaneously . Foreclosure is an expensive last-resort for mortgagors, and loan modifications are an inexpensive alternative to foreclosure. Doing both suggests the Bank of America is not managing its loan modification or foreclosure operations effectively.
If you agree with my assumption that Bank of America is operating in a dysfunctional manner, then it would be folly for an outsider to predict Bank of America's next action regarding your mortgage. Will it complete the mortgage modification before the foreclosure? Perhaps. Will it foreclose before completing the mortgage modification? That is a possibility, too. Is Bank of America sending you a notice of foreclosure to preserve its rights under your state's laws? Maybe. I simply cannot answer these questions, and predicting which is more likely would be throw of the dice.
Quick Tip
Each state legislature created unique foreclosure and anti-deficiency laws. Follow the links just mentioned to learn the foreclosure rules relevant to you.
NLPA at a glance
I will comment briefly on the NLPA Web site mentioned. Unfortunately, the Web site is silent on the techniques it employs that will delay foreclosure. The only hint I can glean is that the Web site promises its techniques are based on federal law and apply in all states. My guess -- note that word choice -- is the $250 kit the company provides explains how to file for Chapter 13 bankruptcy. If that is the case, then you can get the same information at your local library for free, or your book store for $30. If you considering bankruptcy, consult with an attorney in your state who will review your situation in detail and advise you accordingly.
I invite readers who have had experience with NLPA to comment below.
Alternatives to foreclosure
The Home Affordable Foreclosure Alternatives Program (HAFA) is a part of the Obama Administration's Making Home Affordable (MHA) initiative. HAFA sets guidelines for short sales and deeds in lieu of foreclosure for distressed homeowners. If your servicer (the financial institution collecting your mortgage payments) participates in HAFA, then the servicer must follow HAFA's guidelines and deadlines. The guidelines provide financial incentives for both servicers and homeowners. The homeowner must also be eligible for HAMP, as set forth by the program guidelines.
Foreclosure
Foreclosure is the legal process through which a lender (most typically a mortgage lender) repossesses an asset from the consumer borrower who has defaulted on their mortgage payments. Because foreclosure is expensive and usually results in a poor return, lenders do not like foreclosure any more than homeowners do. Accordingly, learn more about HAFA, as discussed above.
Texas foreclosure law & deficiency balances
Texas foreclosure laws are found in Title 5, Subtitle B, Chapter 51, Section 003 to learn more about the rules surrounding foreclosure in this state, including deficiency balances (Property code § 51.003-51.005). Under Texas law, the lender may recover any deficiency balance. However, if your servicer participates in the HAFA program, then it is barred from collecting a deficiency balance.
For the benefit of readers residing in other states, see the Bills.com resources on mortgage foreclosure in California, Georgia, Illinois, Michigan, Nevada, and Virginia.
Bankruptcy
You can resolve a deficiency balance or deficiency judgment in bankruptcy or debt settlement. Bankruptcy is a complicated process. Chapter 7 and Chapter 13 bankruptcy are the options appropriate for most consumers seeking debt relief. Unfortunately, after the passage of the Bankruptcy Reform Act in 2005, it became harder to file for a liquidation bankruptcy, and there is now more complexity to an already intimidating process. Filing bankruptcy can be difficult and, though a consumer can do themselves, I advise consumers to consult with an attorney licensed in their state to ensure the filing is completed accurately.
Quick Tip
Debt distressing you? The Bills.com Debt Coach is a no-cost online tool that will analyze your debts and show you the options available to resolve them and the costs and benefits of each.
Recommendation
Uncooperative banks are the subject of many modern horror stories. Try to learn if the foreclosure notice is a prelude to Bank of America initiating a foreclosure, or if it is legal placeholder designed to preserve the bank's right. If you do not qualify for a mortgage modification and cannot afford to remain in your home, ask Bank of America about putting the home on the market in the HAFA program. Do what you can to avoid foreclosure.
Lastly, be sure to review our tips and Bank of America Profile and let us know what you think.
I hope this information helps you Find. Learn & Save.
Best,
Bill