Countrywide/Bank Of America Conspire Against A Borrower And Shareholders

I am infuriated. Wait until you hear this story. Countrywide/Bank Of America (BAC) has conspired to deceive a homeowner and shareholders. I am going to keep this simple. You will not believe this story.

This borrower has an $800k Pay Option ARM obtained in 2005 for $800k originally.  Last month they hit their max negative cap of 115% and their payment went from roughly $3k per month to $5k per month.  The total outstanding balance with the accrued negative amortization stood just above $900k. The home is now a rental and the gross rents are roughly $3k per month.  The home is currently worth $515k according to Zillow.

They called Countrywide for help. Boy, did Countrywide help…helped themselves.

Countrywide immediately sent them documents making the new monthly payment less than $1600 per month by giving them 2% interest only for the next 5-years. At the end of 5-years it returns to its original terms, which will be a fully-amortizing loan that must pay off within the remain 23-years. At this point undoubtedly the borrower will default.

The borrower received the documentation on a Friday and had to have them back by the following Tuesday. The borrower also had to agree to waive their rights against any claims against Countrywide in the future for any purpose.  The borrower accepted these terms immediately.

Essentially Countrwide:

• Refinanced a $515k home with a loan balance of $900k
• Put the borrower underwater by $385k in a pen stroke without recourse
• Stuck the borrower in a home that they can’t sell or refinance
• lured the borrower by using lo w monthly payments
• Hid an ultimate default and subsequent foreclosure
• Averted a 50% write-down and pushed out the loss indefinitely into the future

This is why homeowners should never their own mortgage modification.  Banks are only out for themselves and typical home owners have little understanding of the market, interest rates, qualifying ratios, banks thresholds, the consequences of their actions or even of their own household balance sheet.

For those of who who did not read my mortgage modification post here and here a couple of months ago or watch the Youtube version, please review. It could save your financial future.

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Comment by Dave

2008-09-04 11:31:33

Lets see. They rent it for $3,000 and pay a monthly mortgage of $1,600. No they are not building equity and will lose the home eventually. But like most owners of rental property in California, (I assume it’s Cal based on the value)the house is probably owned by their “company”, so their credit will not take a hit. In the mean time they are raking off a postive cash flow of $1,400 a month. Am I missing something????

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Comment by Mr Mortgage

2008-09-04 12:10:46

$1500 plus taxes and insurance is $3k a month.
This is an interest only loan so no equity is being built. The home is worth 515k and the mortgage is 900k. It will be a foreclosure in 5 years.

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