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Loan Modification Success: 2 Key Steps

At least Sonia Thomas has enough of a sense of humor to recognize the irony of her situation. Though she is a government employee, she was unable to get into the government program that's supposed to help people like her, who get behind on their mortgages.

“Part of my job is to manage the money given out to people from the Recovery Act,” she says. Thomas had always been told to invest in real estate, and like so many other Americans, she did so, with loans from Countrywide on a home and on a condo. It turned out she really couldn’t afford them. “I thought I was an informed consumer, but I got taken,” says Thomas, who is part of a class action against Countrywide.

Realizing she simply couldn’t afford to carry both loans, in October 2009 she moved into her condo in Jersey City, N.J., and sold her house in nearby Hoboken. But she found she was struggling to even make payments on one property, so she applied for enrollment in the Making Home Affordable Loan Modification Program and got a trial modification. Her monthly payments dropped from $1,850 to $1,500.


“I figured if I made all the payments and did all the paperwork they’d pick me up in the program,” Thomas says. But a year went by, and still Thomas hadn’t received an offer for a permanent loan modification. “It was so frustrating. I don’t know how many duplicate sets of documents I’ve sent, how many phone calls I’ve made, how many numbers I’ve been given,” she said.

After Countrywide collapsed in 2008, Thomas was told that Bank of America held her mortgage, but she eventually learned that Freddie Mac actually owned the loan.

Getting the Bank’s Attention

Bank of America sent countless letters telling her she was in foreclosure and should consider a short sale. Thomas kept calling the bank to ask why she was being foreclosed on — as far as she could tell, her only outstanding debt was a tax bill she owed the state of New Jersey for $2,720 — but didn’t receive a clear answer. It’s another example of how difficult the process is: A tax bill unrelated to the property now threatened to torpedo the loan modification.

She says it was in complete desperation that she went online and found my blog.

“Sometimes when you’re so mired in a situation, sometimes you need somebody to give you some clarity, and that’s what Ilyce did for me,” said Thomas. She followed the advice in my posts and filed a complaint with the Office of the Comptroller of the Currency (OCC) and wrote a letter to the president’s office at Bank of America.

Thomas says those steps seemed to light a fire under the negotiators.

“The turnaround time was amazing,” she said. “A couple of weeks later I get a phone call from Bank of America, out of the blue, saying they were looking into my case and were concerned and that they were calling on behalf of the president’s office,” Thomas says.

It didn’t happen right away, but after she made the complaint, Bank of America removed the foreclosure threat on her home and offered Thomas an in-house loan modification for $12 less than her payments in the trial program.

‘Kicked in the Teeth’

An in-house loan modification is offered by your lender, and has nothing to do with HAMP. The good news with these programs is that, unlike HAMP, an in-house loan mod erases any fees and missed payments you have accrued and allows you to start over.

“I think I’m going to take it because I can start fresh,” said Thomas, whose payments dropped from $1,850 per month, which was a huge financial hardship, to $1,488 per month. And she won’t owe thousands of dollars in fees and penalties.

Bank of America spokesman Dan Frahm said he could not discuss individual loans, but that the bank has completed 840,000 permanent modifications,110,000 of them through the HAMP program.

Despite the happy resolution, Thomas says she still has a lot of anger. “Here’s the rub for me: Why on earth would Bank of America put me through hell for a year and then, just like that, offer me an in-house loan program?” she asked. “I felt like I’ve been kicked in the teeth for a year.”

“I used to pride myself on being the most organized person in the universe but even I’m not a worthy opponent for this machine,” Thomas said.

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