Bank of America Loan Modification – Problems and Solutions

If you are struggling with a Bank of America loan modification, you are not alone!

Read on to learn how to contact Bank of America, how to deal with their loss mitigation department and how to apply for a loan modification.

Additional Resources:

Here’s how to prevent a foreclosure if you are behind on your mortgage payments

Here’s what you need to know about any foreclosure notice you may have received

How do I contact Bank of America’s loss mitigation department?

Here is how to contact Bank of America if you are having trouble paying your mortgage:

• If you haven’t already done so, create your “online portal” so you have access to all the documents Bank of America issues related to your loan
• Call Bank of America Loan Servicing’s loss mitigation department at: 800-669-6607  or 800-669-6650
• Fax their loss mitigation department at: 866-580-9307

Bank of America’s 5 loss mitigation options to avoid foreclosure

Unless you decide to reinstate your loan (meaning – unless you can pay back all the payments you missed at one time), familiarize yourself with the 5 loss mitigation options offered by Bank of America.

You have to apply and receive Bank of America’s approval to move forward with one of these options.

• Loan Modification: A loan modification is a new loan with new terms that allows you to resume mortgage payments without having to pay everything you owe all at once. Usually, your missed mortgage payments get added to your total principal balance and become due at the maturity date of the loan. It is common for loan modifications to offer reductions in interest rates, extended maturity dates, and sometimes – they lower the monthly mortgage payments.

• Repayment Plan: A repayment plan is an agreement that allows you to resume your regular mortgage payment and pay an extra amount on top of your mortgage payment until you’ve paid back all your missed payments. Once you have paid everything back, you continue making your regular monthly mortgage payment.

• Forbearance: A forbearance gives you a temporary break in having to pay your mortgage. Once approved for a forbearance, you are allowed to stop payments for the approved months without the lender taking foreclosure action against you.

• Short Sale: A short sale allows you to sell an underwater property for less than what is owed on the mortgage. Your mortgage lender approves the sale and then typically waives the deficiency balance (the remaining amount owed) so you can sell your home and move on without owing the remaining balance.

• Deed in Lieu of Foreclosure: A deed in lieu of foreclosure is an agreement between yourself and your mortgage lender where you sign a document giving the house back to the bank in exchange for the bank agreeing not to foreclose on you.

What documents are required in Bank of America’s loan modification application?

To apply for a mortgage modification, you will be required to submit a “complete loss mitigation package.” This is basically the lender’s application form plus all of the required financial documents that they require.

The documents include:

• Bank of America’s loss mitigation form
• 4506-C form
• 60-days worth of bank statements
• Hardship letter
• 30-days worth of pay stubs (if you have a W-2 job)
• All other income verification for the household
• The two most recent years of tax returns
• Other relevant documents that relate to your particular situation.

Note: Bank of America has their own authorization form for third parties (if you’re wanting to give access to your account to a third party like an attorney or housing counselor)

Here’s what you need to know about each of the loan modification documents

Bank of America’s options for transitioning off of a forbearance plan

If you went on a COVID-19 Forbearance Plan with Bank of America, you may have additional options to transition back to normal payments:

• If you have a qualifying investor backing your mortgage (FHA, VA, USDA, Fannie Mae, Freddie Mac) and;

• You took a COVID-19 forbearance plan as a result of financial hardship caused by the pandemic and;

• You were current on your mortgage prior to March 1, 2020

You should be able to transition off of your forbearance plan using:

• A payment deferral – where Bank of America puts the missed payments on to the end of your loan to help you resume regular monthly payments

• A partial claim – where Bank of America creates a subordinate lien containing the lump sum of payments you missed which becomes due at the maturity date of your loan

• A streamlined loan modification (no documents)

• A repayment plan

Bank of America services a lot of “in-house” loans

Unlike other mortgage servicers who handle the servicing of mortgages backed by the main government-backed investors (Fannie Mae, Freddie Mac, FHA, VA or USDA),  Bank of America is often the investor AND the servicer on their mortgages.

Bank of America calls these “in-house loans.”

If you have an in-house loan, some of the protections and programs that may be available to you under the CARES Act (or specific investor-backed programs like the FlexMod program) may not be available to you because your mortgage would be considered a private-backed loan.

You can still apply for loss mitigation with Bank of America even if you have an in-house loan but you will go through review for their in-house options only.

5 Tips for communicating with Bank of America

1. Learn how to bypass their aggressive phone tree

Unlike other mortgage servicers, Bank of America has enough customer service representatives to handle high call volumes so you won’t be on hold very long.

BUT – they try to make it nearly impossible to bypass the automated phone tree. After you verify your information, the phone tree will give you 9 – 10 automated options to get you to choose one.

Unless you feel that your needs can be met by choosing one of the options offered, you need to say loudly to the phone tree “TALK TO A PERSON.”

Once you say this, the phone tree will try AGAIN to divert routing you to a person. It will say this:

“I understand that you may want to talk to a representative but there is usually a way for me to help you first.”

Once you start hearing this message, you need to say “TALK TO A PERSON” again. Once you do this two times, they will send you to a representative.

It’s aggressive that they try twice to get you to stay with the automated system but don’t get frustrated. Just be patient and keep repeating that you want to talk to a person.

2. Use the online portal – it is the fastest way to receive and submit documents from them

Unlike other mortgage lenders, Bank of America’s online portal system is pretty good. The representatives are pretty consistent about uploading correspondence to the online portal and you have a portal to submit documents to them within your online account.

If you submit your documents through the portal, there will always be a record of your submission so if you’re trying to work on a loan modification on your own, I would recommend doing all your document submissions through their online portal.

3. Always ask them the most recent date someone made a note on your file

When you call to get an update on your file, you can expect the customer service representatives to tell you that your file is “in process” or “in review.”

When they say this, ask them to tell you the “date the most recent note was made on your file.”

By getting them to tell you the date of the most recent update, you can ensure that your file is moving forward. Bank of America is known for letting files sit without movement for longer than 7 business days.

By getting the customer service representatives to tell you the date the last time someone touched your file, you’ll be able to track your file’s progress and feel good about what’s going on. If more than 10 business days have passed with no note made on your file, escalate the matter to a supervisor.

4. Use Bank of America’ escalation procedures and ask for a supervisor at the first sign of a problem

Bank of America representatives are able to connect you with a supervisor, if needed. Their supervisors have a good amount of authority to get a file moving forward.

Below are some common situations where asking for a supervisor would be helpful:

• Your file has not had a recent note made on it in over 10 business days
• It has been 30-days or more following your last Trial Payment and you have not received your final loan modification documents yet
• The same document(s) is being requested over and over again, despite you sending it in
• They are not understanding something unique about your file or your income situation that is causing a delay

To get to a supervisor, tell the customer service representative that you want to speak with a supervisor to open an escalation.

5. Refuse to be transferred to a voicemail and make clear that you’re willing to wait on hold as long as it takes.

Supervisors at Bank of America DO have email addresses and they CAN email out even though they will do everything they can to avoid doing this. Unlike other lenders (where their representatives actually do not have the ability in the system to email you), Bank of America supervisors can email you.

Bank of America has a long lag time in between when documents are generated and when they are mailed

Bank of America has a hard time mailing documents to borrowers as soon as the documents are ready. Sometimes, you will receive a document from Bank of America that is dated 2-3 weeks prior.

This can be very stressful because some documents have deadlines for action and sometimes, Bank of America will mail your documents after the deadline in the document has passed.

If you receive a document that has a deadline in it that has already passed, call Bank of America immediately and instruct the customer service representative to make a note attached to your file stating that you just received the documents.

Tell the representative to have your note state the date you received the document and that you’re working to execute the document as soon as possible. Don’t just let the customer service representative say “okay” after you ask them to make a note.

Make them read the note they’re writing back to you to ensure all the information is included in the note.

The note should read something like this:

“Borrower received documents that were dated 12/10 on 12/29. The lag time between the date and the mail time was caused by Bank of America. Borrower is working on executing them as soon as possible.”

If you’re in the middle of your review, prevent document lag time issues by calling regularly for updates

To prevent issues with their mailing system, call Bank of America every 48 hours to get an update on your file. If you’re at the phase in your loss mitigation review where you believe documents are coming, ask this question every time you call:

“Have the documents been generated on my file yet?”

If the answer is yes, ask them if the documents have been mailed. If they tell you that the documents have been generated but have NOT been mailed, you can make a request to have the documents emailed to you.

The customer service representative will put in a request to have the documents emailed to you within 48 hours. In 48 hours, you should receive your emailed copy. If 48 hours have passed, call them back and stay on the line until you get to a supervisor who can email you a copy.

Having an active online portal can also prevent Bank of America’s document lag time problem. Documents often get attached in your online portal before they get mailed so make sure you’re checking your online portal regularly.

Mortgage relief options for Washington homeowners

Mortgage issues are complex. Banks and mortgage servicers can be very uncooperative. If you think you might need some help, you have some good options. Here are two articles to help you understand the help that is available to you.

What to Look For In a Loan Modification Attorney

What Can a Foreclosure Attorney Do For You

Next steps

It’s great that you are reading about Bank of America’s loss mitigation options. If you are a Washington State homeowner, the next step would be to schedule a free, mortgage relief consultation with me.

Please give me a call today at (425) 654-1674 to discuss your situation.