Bank of America Defrauded HUD and left us holding the bag!

ncampbell

LoanSafe Member
Oct 15, 2019
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0
Hello,
I was hoping someone could help me. I’ll try and make this short and sweet. I currently own a home in Massachusetts that is under agreement to sell with a closing date of 10.16.19. I just found out that Bank of America when doing a home loan modification with them back in 2012 added a partial claim with HUD for $65k. After the loan modification was complete, BOA sold our loan to another mortgage lender and never rolled over / or discharged the 65k partial claim. We never ever were behind 65k on our mortgage. Maybe about 20k max with arrearages, fees, taxes, etc. Having this partial claim for 65k would mean we owe $311,000 for our home we paid $314,900 for back in 2015. If you do the math, we have paid over $300,000 in payments in the past 15 years and we owe $5k less than what we paid 15 years ago? Makes no sense at all. We are selling our home (supposed to close tomorrow) for $340K. After all is said and done we would only receive approx 7K in proceeds. Our proceeds should be $75k based on our $245,000 mortgage payoff. We have decided we want to go through with the sale and pay the 65k partial claim out of proceeds. We don’t want to own this home anymore. My question is, has anyone else had this issue where BOA defrauded HUD for triple the amount that was needed to modify the loan? Can we go after BOA for the 65k after we sell the home. We know that HUD is not entitled to these funds as this was fraudulently added. Can anyone help? I do have an attorney working on this relentlessly but BOA is very hard to deal with and we can’t seem to get a straight answer from anyone. Help!
 

just_me

LoanSafe Member
Sep 14, 2015
508
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I agree with selling the property and taking this claim outside of the sales process. It may be difficult to do as you probably had a balloon payment as part of a modification. It's not impossible to argue your case but the lender may have a contract on it making you less likely to win.
 
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Nicole26

Guest
Just_me thank you. That is what I was thinking. I figure sell the house, take the loss and deal with it later as I’m not sure I’ll ever see back a penny from that 65k. There was in fact a partial claim but it would have never exceeded $35k max. We were only behind at the time about 4 payments (they made us be behind or they wouldn’t modify) if I remember correctly they said to us just sign the paperwork and roll the dice. Well I guess we didn’t have any luck with that bet. just waiting on the payoff for the HUD partial claim and then we should be able to close. FYI for anyone in the future trying to sell their home that has a modification and partial claim, make sure you contact NOVAD early on before closing as they do not make it easy for the homeowners to obtain the pay off for the 2nd lien. It took 3 phone calls to them and 4 hours on the phone before I finally got the paperwork sent, filled out and sent back. Still our closing is delayed as they allow 4 business days to get the payoff request sent to the owner/closing attorney. This nightmare is almost over. I’ll keep you all posted.
 

OneHugeMess

LoanSafe Member
May 30, 2016
473
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I think the Partial Claim lien is the maximum advances allowed under the loan, in some cases. Like... they may submit a partial claim for $18k, but the actual lien will be for $45k.The good news is, if my theory is correct, you won't owe the full amount and the payoff should be much lower.

FHA loans are incredibly crappy in a lot of regards, and I'm thankful I never was placed into one. This is just another reason. At the time most people were getting mods, a lot of the investors were just forgiving the past due interest, or reducing it significantly. The Federal Housing Administration would never forgive delinquent interest, hardly budged on interest rates, and generally handed out awful terms on modifications.
 
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N Campbell

Guest
I think the Partial Claim lien is the maximum advances allowed under the loan, in some cases. Like... they may submit a partial claim for $18k, but the actual lien will be for $45k.The good news is, if my theory is correct, you won't owe the full amount and the payoff should be much lower.

FHA loans are incredibly crappy in a lot of regards, and I'm thankful I never was placed into one. This is just another reason. At the time most people were getting mods, a lot of the investors were just forgiving the past due interest, or reducing it significantly. The Federal Housing Administration would never forgive delinquent interest, hardly budged on interest rates, and generally handed out awful terms on modifications.
@OneHugeMess you are correct. We actually were able to get a HUD Rep on the phone last night and the actual payoff to them for the second lien (partial claim) is only 34k and not the 65k that we had originally thought. We should be able to close this loan and sell the home within the next few days. Let me say that I would never ever do a home loan modification again. I would sell a kidney before I would sign documents like those again. The good news is we have enough from the proceeds of this home sale to put down a significant down payment on our next (hopefully forever) home. I can’t believe the hours I spent on the phone with HUD just trying to retrieve the payoff. Luckily someone reached out to us directly after we emailed the payoff request forms and she was able to expedite a payoff via email to us last night. Appreciate the response.
 
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n campbell

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Update! 10.18.19
Our closing was pushed out a week. I had to spend 4 hours on the phone with HUD to retrieve the correct payoff request paperwork. Finally as I stated above we received the payoff for the partial claim. Still, even though we had the payoff, our title showed 3 partial claims on our deed! One was for 34k (recorded and assigned) the second was for 34k (recorded and discharged) and the 3rd was for 65k (recorded). Bank of America made a mistake back in 2014 and recorded the wrong amount and never discharged the 65k! Therefore if we hadn’t sold our house, we wouldn’t have know what partial claim was for until the first mortgage had been paid off! I am actually shocked that HUD admitted this has been a problem for BOA for years although they exclaimed they are “getting better”

HUD had to speak to our closing attorney and assure them that BOA made a mistake and the payoff we received for 30k was in fact the balance and what was needed to release the 65k lien!
What a nightmare! Never ever would I do a home loan modification ever again! I would sell a kidney before I did one these!
The good news is our proceeds from the sale will be more than we anticipated and we have already been preapproved to purchase a new home although living rent free for the remainder of the year sounds like a breath of fresh air!

closing is set for this week. We will finally be rid of this house that has been nothing but a thorn in my side for the past 15 years. Good riddance! Lol
 

Jzone

LoanSafe Member
Jun 20, 2017
158
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Update! 10.18.19
Our closing was pushed out a week. I had to spend 4 hours on the phone with HUD to retrieve the correct payoff request paperwork. Finally as I stated above we received the payoff for the partial claim. Still, even though we had the payoff, our title showed 3 partial claims on our deed! One was for 34k (recorded and assigned) the second was for 34k (recorded and discharged) and the 3rd was for 65k (recorded). Bank of America made a mistake back in 2014 and recorded the wrong amount and never discharged the 65k! Therefore if we hadn’t sold our house, we wouldn’t have know what partial claim was for until the first mortgage had been paid off! I am actually shocked that HUD admitted this has been a problem for BOA for years although they exclaimed they are “getting better”

HUD had to speak to our closing attorney and assure them that BOA made a mistake and the payoff we received for 30k was in fact the balance and what was needed to release the 65k lien!
What a nightmare! Never ever would I do a home loan modification ever again! I would sell a kidney before I did one these!
The good news is our proceeds from the sale will be more than we anticipated and we have already been preapproved to purchase a new home although living rent free for the remainder of the year sounds like a breath of fresh air!

closing is set for this week. We will finally be rid of this house that has been nothing but a thorn in my side for the past 15 years. Good riddance! Lol
This is why I check with my county register of deeds once a year. Its usually free to look up liens and assignments on your property. If anyone is thinking of selling or refinancing, do this first. It will save you a possible headache down the road.
Good luck with your closing. Keep us updated.