B of A using their DOJ settlement obligation amount to 'settle' their own deliquent 2nd loans???

stephanies

LoanSafe Member
Jan 24, 2011
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Just when you think this bank can't get any more slimy in their actions... I am starting to read about quite a few 'homeowners' that are getting their 2nd loans - that are still owned by B of A - foregiven completely, when the homeowner is delinquent and in default on the 1st, or in some cases, when they have already lost their home to foreclosure!!! No help for the first, if B of A is not the 'owner' or has gotten permission from the actual owner to take action... no loan that has been securitized will even be able to participate in this settlement, as there is no ONE OWNER, to give B of A permission... the PSA might already do so, but that is to the master servicer, which B o fA is rarely one named in any of the trust PSA's that I have read to date.

So, Bankster of America is able to 'write off' and get 'credit' under the settlement terms of this deal, for their own 2nd loans that they would have had to take a loss for anyway ( but kept the loans on their books, so that they did not have to declare the losses yet OR already 'collected' the insurance on them) and now the DOJ settlement is giving them another 'get out of jail free' card, vs. actually saving peoples homes.....

As I see it, the only party 'winning' here with this settlement is B of A....AGAIN!!!

I sincerely doubt that this is what the GOVT and DOJ had in mind - as the settlement's purpose was to keep people in their homes with principal foregiveness, mods, etc!! What a JOKE, if this is another way for B of A to 'clean up its own losses, right?

Someone, please tell me this ain't so... how can we shine a light on what this bank is really doing here with the DOJ settlement funds?
 

Jeffrey L. Shurtliff

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Dec 4, 2010
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As I understand what you are saying; I do think it is great that some of these homeowners are getting nice mods from this settlement. This is the only real positive thing happening to the borrower in this mess as I can see.
 

stephanies

LoanSafe Member
Jan 24, 2011
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I guess I was a little vague on making my point.... its only the 2nds that B of A is forgiving, when the first is still way under water or already in foreclosure, and does not help the homeowner that is delinquent on the first, and still subject to foreclosure down the road - as the 2nd is immaterial to saving their home, if they can't get the first loan modified or reduced.... and many of those that the bank is foregiving the 2nd on, are homes that homeowners have already lost to foreclosure ( another recent post on loansafe ) ... so while it might help a consumer avoid a debt collection on the 2nd... its already too late to save their home - which the settlement was intended to accomplish..

Why would B of A send a consumer a notice that they have forgiven the entire balance on a home equity loan that was more than a year or so in default, and more than one year after the homeowner lost their home to foreclosure? Its a 'bad debt' to the bank that has been uncollectible to this point, but with this DOJ settlement, the bank gets a 'credit' for the entire bad home equity debt....

I would love to hear about some 1st's that are being modified under this settlement that are really underwater, where the loan was years ago in the 2002 to 2007 'heyday' for CW and other predatory lenders, and then securitized and B of A is just the servicer, but not the 'owner' of the note....
 

freedomwon

LoanSafe Member
Oct 30, 2010
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Hi Stephanies - I clearly remember posting on one of the threads where there was a lot of people reporting these DOJ full principal forgiveness letters. And the homeowner need do nothing. It's automatic. Struck me odd & I posted I couldn't quite put my finger on it but there had to be some wonderful incentive for BofA to do so many of these in such a short period of time.

While I am absolutely thrilled for those that have received the letters & will benefit from it in a way that could help them stay in their home, it's quite concerning that letters are going out to those that have already been foreclosed upon.

For every homeowner that received that letter & did nothing (as instructed by BofA) so their FULL PRINCIPAL FORGIVENESS would take effect, all of them are aiding & abetting BofA to continue with this criminal activity. Nobody in their right mind is going to call up BofA & say "NO, don't give me the principal forgiveness).

It's been pointed out before, this was designed by some of the greatest masterminds in the country. I do not pass judgement on those homeowners, because after all, it may be some relief to their financial demise or serve some benefit to their credit reports. Homeowners have come to realize, it's important to do what's in their own best financial interest.

Now, if BofA is sending these letters to those that have already been foreclosed on, that's just ridiculous. There's lots of empty porches & abandoned homes because the banks preyed upon homeowners fears & did plenty with their tactics to instill intimidation. It's like BofA is saying, we know we bullied you, but here, we're going to throw you a bone!
 

fraudfighter

LoanSafe Member
Jul 25, 2012
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I can almost promise you that BofA (and the four parties to the settlement) will pick and choose the loans to forgive in such a way that makes the most business sense while still complying with the letter of the settlement.

They won't forgive on already foreclosed homes (as that wouldn't fit the letter of the agreement) but they might forgive 2nds that they expect they would have lost money on anyway (really far underwater, delinquent first, etc). Yes it is a slimy business tactic - the Attorneys General should have installed some sort of language or oversight mechanism to prevent self-serving forgiveness but it is likey that it was either overlooked or a loophole built in by the lawyers for the banks.
 

sac42375

LoanSafe Member
May 10, 2011
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We don't have a second, but are currently 230,000 underwater. Our home was discharged in Chpt 7 two years ago. We received a DOJ principal forgiveness offer which brings our loan to current market value. We could not be happier. We are basically buying our home with no money down and at current market value. I don't see how having it discharged already in a BK has anything to do with turning down these new DOJ settlement offers.
 

davephx

LoanSafe Member
Jul 21, 2009
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Back to the topic.

Mikeshan does not intend to keep the property so the lien to him is meaningless since any personal obligation is discharged. In one sense I would rather have him turn down the offer since has nothing to gain or lose so it can be made to someone for the DOJ credit that DOES care! Again the key point is he does not care about the lien.

If he did want to stay in house then it would be foolish to turn it down in my view.

On Jeffrey mostly discussing with Sr members - dah... that is because we post the most are are the more vocal. Obviously those that post the most are most likely to be in discussions with/about Jeffrey. He responds to newer folks as much as us olders but often senior members have more to say, and often have had a lot more experience with the issues. However there may be some that have read the boards for years, soaked up knowledge but simply are not as vocal active posters as some of us.
 

stephanies

LoanSafe Member
Jan 24, 2011
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Thank you Davephx for bringing the conversation back to the topic at hand here....my point was and still is that the reason that B of A is offering these principal foregiveness is NOT to help homeowners stay in their homes, but be able to 'use' the DOJ settlement and their financial obligation to that settlement, which is very sizable , to WRITE OFF their bad debt and improve their balance sheet! IT has nothing to do with the purpose of the settlement - to KEEP homeowners from foreclosure ... so many getting these principal foregiveness letters have already had their debt foregiven in bankruptcy court.. so its not helping the homeowner, but B of A first and foremost clean up its bad debt that its been holding onto for years, without taking the hit by wall street - basically, 'cooking' their books, and now the DOJ settlement gave them the OK to get BILLIONS of dollars of bad debt off of their balance sheet... I too would like to remind everyone to keep open minds about everyone's situation... no one has a monopoly on who's situation is worse, or who knows more... the beauty of a site like this is that we all have a contribution to make.... so I am a bit disappointed to see a new member jumped on by senior members without understanding the situation, or walking it that new members shoes... that is why I have not posted as much as in the past either... because I too feel there are a handful of senior members here that pass on their own judgements or feelings about a posting that they do not quite fully understand and do not try to, and are not open minded enough to try and walk in someone elses shoes who is coming to this forum and donating their time and feelings as well....personal feelings are welcome, but should not be the only context of a comment... just my two cents....
 

davephx

LoanSafe Member
Jul 21, 2009
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I am not sure it makes much difference financially if carry a delinquent loan on books or write it off since neither counts for Tier 1 capital which is most important under various banking solvency tests etc. When they write-it-off for DOJ settlement credit could hurt them more since now totally gone with no chance of sueing etc.

But it is more complicated since they don't directly writeoff loan for loan but have to set up a reserve for bad debts that goes against the assets in total of their loans etc.

Banks are in business with their only obligation is to maximize profits to its shareholders. That is a purpose of any corporation legally as long as not a non-profit corp (which can still pay huge salaries etc to execs). Banks have large tier of million dollar executives and then need to maximize stock values by larger and larger profits - that is how the free enterprise system works

And of course all their political donations to be sure Republicans get elected to support them and not to have to bother with nasty regulations or being able to gamble like hedge funds with taxpayer guaranteed assets (via FDIC etc).

The banks and Republicans want to clean up housing and get rid of all us deadbeats as fast as possible without the burden of their HAMP agreements etc.

HAMP was supposed to be an agreed to balance of contract rights (mortgages) and funding (TARP) vs helping homeowners who had a not of their own fault hardship. But the banks position is many did not need TARP funding and were forced to take it (so not stigmatize any that really needed it), they repaid TARP with big profits to taxpayers, and therefore should not be bound by their HAMP agreements forced upon the as part of TARP.

The conflict of interest issue was never addressed where for most 1sts make more money by foreclosing while investors or taxpayers take the large loss. But on 2nds the banks that service them also own them, unlike with 1sts so becomes more a issue for the banks to modify or have recourse in states where they can.
 

troubleinriverside

LoanSafe Member
Nov 30, 2008
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Nice how this thread went from someone concerned about sneaky tactics at B of A into a political rant accusing a political party of supporting the banks on the backs of the american people. i am an investor in my pension plan and am interested in maximizing my stock values too. But i'm not a big exec, just a little guy . So if it's the Republicans that get me a better return on my money, I'm good with that.
 

stephanies

LoanSafe Member
Jan 24, 2011
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Nice how this thread went from someone concerned about sneaky tactics at B of A into a political rant accusing a political party of supporting the banks on the backs of the american people. i am an investor in my pension plan and am interested in maximizing my stock values too. But i'm not a big exec, just a little guy . So if it's the Republicans that get me a better return on my money, I'm good with that.
Hi troubleinriverside
The trouble is is that most of these securitized trusts did end up in peoples pension plans, which is why most homeowners that have had their mortgage's securitized can't get their loans modified by institutions like Bank of America... B of A is a symbol of how our country has gotten so off track.. more concerned with the quarterly bottom line and short term stock price vs. doing ethical and honest business as banks use to do, and follow the letter of the law...no party is going to get you a better bang for your buck in the stock market today, as long as its as stable as a deck of cards... the other shoe is going to drop soon on the stock market, due to the foreclosures that these banks are ramping up, vs. actually helping modifying homeowners predatory loans to stay in their homes.....for example, the bank would rather take my house in a foreclosure and sell it for less money than what I would be willing to modify my loans for ,... why? the simple reason that they make more money as the servicer on the loans, and its the 'investors' i.e your pension account, that is going to take the financial loss.... doesn't make alot of sense for the economy does it... there are so many bottom feeders right now paying almost nothing in cash for foreclosed homes.... and you and I are not profiting a bit off of their greed....you might want to find out exactly what your pension fund is invested in, and see how solid of investments they are in... as another day of hurt for all of us is just around the corner, I'm afraid... and turn into the republican convention and see if you hear of any solid plans to create jobs in this country, as that is what is needed more than anything... good luck with your pension fund!
 

daryn atkinson

LoanSafe Member
Aug 28, 2012
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This is an interesting thread and I wanted to bump back to the top. I received the DOJ principal forgiveness letter from BofA, as many have, on our 2nd. Normally this would be good news but our 2nd was discharged in Chapter 7 2 years ago, I'm not sure what advantage we would get out of this and it's up in the air whether a forgiven debt is taxable after bk. I'm really considering telling BofA thanks but not thanks, we plan on leaving the house in the next year anyway. Maybe our DOJ settlement can be used on somebody who really needs it... if it was only that easy. This DOJ settlement would have kept us in our house 2 years ago.
 

indeep1959

LoanSafe Member
Jan 14, 2009
358
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This is an interesting thread and I wanted to bump back to the top. I received the DOJ principal forgiveness letter from BofA, as many have, on our 2nd. Normally this would be good news but our 2nd was discharged in Chapter 7 2 years ago, I'm not sure what advantage we would get out of this and it's up in the air whether a forgiven debt is taxable after bk. I'm really considering telling BofA thanks but not thanks, we plan on leaving the house in the next year anyway. Maybe our DOJ settlement can be used on somebody who really needs it... if it was only that easy. This DOJ settlement would have kept us in our house 2 years ago.

I'm in the same boat, discharged home eq loan in bk that was also forgiven last week.

I feel it's a good thing in my situation at least. It puts me very close to break even (right now) on my home, so if I can hang in there a few more years I may actually be able to turn a profit upon selling. That's no guarantee of course, but I'm hoping the housing market has bottomed out and it can only go up from here, albeit at a glacier's pace.

Those of you considering not taking the forgiveness it seems to have come a little too late. However by wiping out the second, are you still underwater?

As for the tax implications, I think if you've discharged in a bk 7 then you are not on the hook for any tax due. I'm not an accountant but this is what mine has led me to believe,as I've had another home that I also discharged a couple years ago and was 1099'd on. No tax due.
 

daryn atkinson

LoanSafe Member
Aug 28, 2012
13
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I'm in the same boat, discharged home eq loan in bk that was also forgiven last week.

I feel it's a good thing in my situation at least. It puts me very close to break even (right now) on my home, so if I can hang in there a few more years I may actually be able to turn a profit upon selling. That's no guarantee of course, but I'm hoping the housing market has bottomed out and it can only go up from here, albeit at a glacier's pace.

Those of you considering not taking the forgiveness it seems to have come a little too late. However by wiping out the second, are you still underwater?

As for the tax implications, I think if you've discharged in a bk 7 then you are not on the hook for any tax due. I'm not an accountant but this is what mine has led me to believe,as I've had another home that I also discharged a couple years ago and was 1099'd on. No tax due.

Even with the forgiveness on the HELOC we are still underwater by about 60k. We are paycheck to paycheck paying on our 1st and will be having two college bound kids this year... this isn't going to work. It's time for me to put my pride aside and do what's best for me an my family and that is to let the house go and find something we can afford now.

Doing a little more research it does looks like a debt that has been discharged is not taxable. Thanks for reaffirming that for me. Like I said, if BofA would have worked on our 2nd two years ago I wouldn't be in the situation.
 

indeep1959

LoanSafe Member
Jan 14, 2009
358
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Even with the forgiveness on the HELOC we are still underwater by about 60k. We are paycheck to paycheck paying on our 1st and will be having two college bound kids this year... this isn't going to work. It's time for me to put my pride aside and do what's best for me an my family and that is to let the house go and find something we can afford now.

Doing a little more research it does looks like a debt that has been discharged is not taxable. Thanks for reaffirming that for me. Like I said, if BofA would have worked on our 2nd two years ago I wouldn't be in the situation.

Good luck to you, hope it all works out.