After five months of seeking a mortgage loan modification, Jeffery Feig’s approval package arrived in March. His payment was cut in half.
But two months later, Bank of America called with bad news: The lender changed its mind and wanted him to start paying the larger amount again.
“I couldn’t believe it,” Feig said. “I thought, ‘How is this possible?’ I had gone through so much, jumped through all their hoops.”
Then communication stopped. His calls weren’t returned, and he says no one could give him an explanation. Feig kept paying the modified amount, and the bank kept cashing his checks. But it also turned his account over to a collection agency for not making the original mortgage payment.
The bank says the situation is more complicated and is fighting Feig in court.
Feig’s case highlights the frustration faced by thousands of borrowers. Although it’s unusual for a lender to approve a modification and then cancel it, recent Treasury Department reports show that many lenders aren’t approving as many applications as anticipated.
The government is pushing lenders to lower mortgage payments to help homeowners stay in their homes, but borrowers and housing counselors say the modification process is no easier. They complain of lost paperwork, unreturned calls and unexplained rejections.
Just 4 percent of the nation’s applicants under the government’s foreclosure-prevention program have received permanent help, according to a recent report from the Treasury Department. Feig has sued Bank of America. The lender would not answer specific questions, but placed the blame on Feig.
“Mr. Feig was offered a loan modification under Bank of America’s National Homeownership Retention Program in March, however necessary financial information was not returned with the modification documents,” Rick Simon, a spokesman for the bank, said in a statement. Feig contends that he has provided the bank with his documents multiple times, but that the bank always says it didn’t receive them. Feig’s attorney, Ryan Snyder, said the lender produced the documents during the legal process. Snyder provided those documents to the Tribune. Bank of America would not comment on that.
“During further review for a modification more recently, Mr. Feig chose to pursue legal action, and we are not in a position to comment further on a matter that is in litigation,” Simon’s statement said.
Meanwhile, Feig continues to make his modified monthly payments, even as his credit score plummets each month.
“This is ruining my credit,” he said.
Shari Olefson, a real estate lawyer with Fowler, White and Boggs, said she’s not surprised by Feig’s situation.
“I’ve heard of this type of thing happening,” Olefson said. “I’m sure there are others going through the same thing.”
Synder said his firm, Snyder Law Group, is handling hundreds of loan modification cases. In nearly 100 of the cases, Bank of America is the lender. Feig’s is the only case, however, in which the lender initially approved the modification, Snyder said.
“I’m a little shocked at how much this bank is fighting (Feig) on this modification,” Synder said. “I really doubt this case will settle.”
Snyder said he has noticed an improvement recently in the willingness of regional banks to work with homeowners. Bank of America has come under criticism lately for lagging behind other lenders in signing up borrowers to the federal Home Affordable Modification Program. By November, Bank of America had registered 15 percent, or about 160,000 customers, of the more than 1 million delinquent borrowers who could be eligible for the three-month trial, according to a Treasury Department report.
Anthony DiMarco, an executive vice president at the Florida Bankers Association, said he can’t comment on what went wrong in Feig’s case but said, “There are usually two sides of a story.”
DiMarco said lenders are “learning as they go along” and are trying to modify as many loans as possible.
“All these lenders are working through their programs,” DiMarco said. “It’s trial and error. No one expected anything as massive as what we’re going through right now.”
Some lenders modify loans through internal programs. Feig and Bank of America agree that was what happened in his case. Others go through HAMP, commonly called Making Home Affordable. That program calls for a three-month trial before a permanent modification is granted.
It’s unclear how many area homeowners will avoid foreclosure this way, but many are participating in the plan. At least 12,044 active trial adjustments have been granted in the Tampa-St. Petersburg-Clearwater metro area. But only 1,159 homeowners have received a permanent modification.
The Treasury Department announced Thursday that it was streamlining HAMP with the intent of increasing the number of successful modifications.
Starting June 1, mortgage companies will be required to collect a borrower’s official documents as part of the initial process. Now, most borrowers are enrolled in a trial modification, then asked for more extensive documentation. Borrowers complain that the documents are routinely lost, causing delays and preventing the modification from becoming permanent.
In the case of Feig, he said he hopes a judge will force Bank of America to honor the modification it approved in March. “I know I’ll win this case,” he said.
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