Massachusetts Attorney Blog: Consumer Protection & Personal Injury Information

Bank Forecloses Despite Paid-Up Loan Modification Agreement

Since we filed the lawsuit against Bank of America, many consumers have been calling us with their wrongful foreclosure stories.  We had suspected that the boom in the foreclosure market had resulted in sloppy bank practices but we could not have predicted what we have been hearing.  One particular type of wrongful foreclosure involves foreclosing on a borrower's home after they have signed a loan modification agreement and made all their payments on time. 

How does this happen?  From what we are hearing, the banks, including Bank of America, have been encouraging borrowers who are behind on their mortgages to apply for loan modifications.  For  a real life example, a borrower who is behind on a couple of payments calls the bank to bring the loan current.  Despite having the money to bring the loan current, the borrower is advised by the bank to apply for a loan modification to reduce payments and told not to make payments while the loan modification application is pending.  The problem is that the bank representatives processing loan modifications do not talk to the people (at the same bank) who handle collections and foreclosures.  The right hand of the bank is proceeding to foreclosure, racking-up legal fees in the process, while the left hand of the bank is "processing" the loan modification agreement where it told the borrower to stop making payments. 

An additional problem is that the loan modification application may be pending with the bank for several months.  According to reports, banks are failing to timely process loan modification requests, despite receiving  billions in funds to process applications for loan modifications.  A January 19, 2010 story by Paul Kiel at ProPublica reported:  "The big names are among the worst-performing servicers. Bank of America, JPMorgan Chase, CitiMortgage and Wells Fargo together account for more than 60 percent of the 3.4 million mortgages eligible for the program. All four have converted a small percentage of the trials begun three or more months ago into permanent modifications. The highest is Wells Fargo, with only 13 percent."  The article indicates that Bank of America is the worst offender.

So, back to the story.  The borrower's loan modification agreement is finally approved by the bank, but the bank makes the borrower add the $10,000 in legal fees for collection and foreclosure proceedings onto the principal of the loan. This is a borrower who initially called the bank with the money necessary to become current.  Capitalizing $10,000 in legal fees onto the principal, which is now paid back over 30 years, is not even the worse part of this story.  Despite being up to date on the terms of the loan modification agreement, the bank still forecloses, seizing the home, changing the locks and winterizing the home (a process called "trashing out") causing thousands of dollars in damage.  The bank had no right to break into and enter this borrower's home.

These are real stories and they are happening every day in the United States of America, Inc.

Contact One of the Leading Wrongful Foreclosure Attorneys

If you've been the victim of a wrongful foreclosure or a home seizure, the Massachusetts wrongful foreclosure and class action attorneys at Phillips & Garcia want to hear your story. We are committed to protecting your best interests and helping you collect any damages to which you are rightfully entitled. To share your story with us, contact Phillips & Garcia today to schedule your FREE legal consultation - (877) 892-5620.

Labels: Bank of america bank seizure of home loan modification foreclosure wrongful foreclosure BOA