If you think the foreclosure crisis is over, think again. Delinquencies were up 7 percent in Washington State in the first quarter of 2012 and nearly one in every 1,600 homes is in foreclosure, according to RealtyTrac, a company that tracks foreclosure data nationwide.
Under a recent government settlement, five of the country’s biggest banks agreed to provide billions of dollars of relief in the form of forgiven principal and mortgage reductions.
You might expect people would jump at any chance to get a modified loan that could help them fend off foreclosure.
That’s certainly what Bank of America expected when it began sending out the first of 5,000 letters asking Washington homeowners to apply for a loan modification program that could reduce their payments by, on average, 35 percent.
“This is a very important program, starting with the fact that most of the customers we’re working with have a foreclosure sale date in the near future, and this is probably the last best opportunity for those customers to stay in their home,” said Dan Frahm, Bank of America senior vice president.
Instead of being flooded with applications, Frahm said the response rate has been less than 50%.
Some homeowners are skeptical that the offer is real.
“But more importantly, we’re concerned about customers who are just tired of the process and are giving up. And we would encourage them not to do that,” Frahm said.
Lorie Cole of Tacoma is one of those tired homeowners.
Cole said two years ago a divorce and a salary cut made it clear she could no longer afford a $3,000 a month mortgage payment, so she contacted Bank of America to try and obtain a loan modification. Cole said the application process was a nightmare.
“It was ‘we didn’t receive it,’ or ‘it’s still being reviewed’ or ‘it’s too old now, you gotta send some more.’ So it’s almost like you’re being given the runaround just to appear like they’re helping you but in the end, we really didn’t get any help,” Cole said.
Cole said after three attempts at a loan modification, she stopped making payments and let the house go into foreclosure. She doesn’t even know if she got one of those letters from Bank of America.
“To be honest, I’ve stopped looking at the mail since I stopped making payments. I’ve already given up,” she said.
After Bank of America bought Countrywide in 2008, the bank struggled to handle the huge portfolio of mortgages. But under the government settlement Bank of America committed to spending $5 billion nationwide to help distressed homeowners.
The Washington State Office of the Attorney General fought for the banks to step up and hopes homeowners won’t let the opportunity slip by.
“Contact a housing counselor if you already threw the letter away. You can have the housing counselor contact the lender and see if you’re eligible. See if the offer is still open,” said Jim Sugarman, Asst. Attorney General of the office’s Consumer Protection Division.
(Housing counselors are available at no charge by calling the Washington Home Ownership Hotline: 1-877-894-HOME).
“Just consider that you’re being given the option to lower you monthly mortgage rate by maybe 35% or over $100,000 in principal forgiveness and think about why wouldn’t you take that option seriously?” Frahm said.
Lori Cole will never know if the new program could have helped her. She declared bankruptcy. She and her daughter are moving into a rental and saying goodbye to the house they once called home.
“I’m just ready to move on,” Cole said.
Bank of America is the first of the five big banks included in the government settlement to do a mass mailing, asking customers to apply for load modifications. There are a number of conditions. To find out more, click on the resource links below.
Read details of the government settlement with the banks:
Bank of America's Loan Modification Program
Bank of America Home Loans: 1-877-488-7814
Bank of America's Seattle Customer Assistance Center is located at 800 5th Ave. Phones: 206.358.4338, 855.602.2981. These centers work on an appointment basis and are not set up for drop-in business, so customers should be advised to call first. Appointments are available from 9-8 Mon-Thurs; 9-6 Fri; 9-1 Sat.
Read Bank of America’s Letter to Homeowners
Free help from Washington Homeownership Hotline: