Bank of America representatives clad in red polo shirts manned the entrances to the Marriott's 11th floor in midtown Manhattan on a recent Thursday. Tables were stocked with ballpoint pens and breath mints. Signage in English and Spanish pointed distressed New York City-area homeowners and their families to the registration desk, and onward through a flow of rooms that contained all the resources required to arrange a loan modification, get counseling, or make a plan to transition out of a home they could no longer afford.

Yet relative to the size of the space and the manpower the bank had on site, few homeowners were in attendance. The event was one of 40 that Bank of America (BAC) is holding across the United States in 2011 as part of outreach efforts to help distressed homeowners get loan mods or apply to attempt a short sale. The number of people who need such assistance is huge. But of the 30,000 distressed homeowners invited by mail to the event, representatives from Bank of America said they expected around 1,500 to attend.

Bank of America's experience is not unusual. In the last several years, outreach events by loan servicers, housing organizations and nonprofits have been held all over the country, offering to provide access and resources to distressed homeowners. The Treasury Department, working on behalf of the Obama administration, has sponsored 58 events since June 2009 with an average of 1,000 attendees at each one. In the government's outreach program, participating servicers send out letters to distressed homeowners in the area. Yet the response rate is around 2% to 3%, says Andrea Risotto, a Treasury spokeswoman.

While every homeowner has a different set of circumstances, the mediocre attendance rates underscore the emotional and financial challenges homeowners and banks face in reaching distressed borrowers with their assistance programs. Rebecca Mairone, the national head of outreach for Bank of America, said a common theme she has heard from homeowners was worry over school quality as families face the possibility of moving from an owned home into a rental property. Exhaustion, frustration and fear compound worries over what to do next and how to take action.

"There are lot of homeowners who feel overwhelmed or frozen into place," Risotto said. "If you're delinquent, are you even going to open the letter from [your servicer]? They may be afraid of what will happen."

Faith Schwartz, executive director of mortgage industry/consumer counselor alliance HopeNow, says the group has organized 115 events over the last four years, with varying turnout levels. However, a growing number of independent players have launched outreach events for distressed homeowners, creating confusion about where to go and whom to speak with. Add to that an growing number of scams and dubious offers, and it's easy to see why homeowners find it increasingly difficult to chart a navigable, quality path to assistance, she says.

"All these things make it complicated for a [homeowner] to come out," said Schwartz. "As an industry, we have to do a better job communicating."

Documents, Documents and More Documents

Even as emotional hurdles and questions of trust continue, the material steps involved in getting help remain daunting. The administrative paperstorm presents a vast challenge: On average, a successful mortgage modification application requires around 38 pieces of documentation. Schwartz says the sheer volume impedes many borrowers from accessing potential assistance.

For each borrower listed on a loan, the list is of necessary paperwork is extensive. It can include: utility bills for proof of residence; two years of signed, dated tax returns; bank statements for all accounts; an itemized household budget; homeowner association bills; and pay stubs. All this in addition to the four documents -- a request for modification; IRS form 4506; the Dodd-Frank Certification form; and a letter of hardship -- that comprise the loan-mod application request.

One Brooklyn homeowner leaving the Bank of America event looked exhausted, saying she was too tired to complete the process and planned to come back on a different day to keep working on it.

Of those who showed up to the Bank of America event with all the documentation necessary, only half were expected to receive an on site-decision for a loan modification, said Mairone. A loan modification could result in the bank resetting the interest rate to as low as 2%, extending the loan's terms, or offering a forbearance period. Subprime loans can qualify for principal reduction as well. Homeowners who don't receive on-site decisions get their answers within 30 days, Bank of America said.

"We take a lot of people to 2%, but a lot need 0%," said Mairone.

Even with all the documentation, additional economic issues hinder the ability of many homeowners to qualify for a loan modification. Any nuance around income -- especially if it can't be documented or is cash income, or if a homeowner is self-employed -- can be a choke point on the road to a successful modification, said Mairone.

Other obstacles that prevent homeowners from getting a loan mod are mounting personal debt and expenses -- from credit card debts to auto loans -- and the total debt to income ratio (DTI) for a household. Bank of America representatives said they -- and the vast majority of their investors -- used HAMP guidelines for affordability and DTI to determine whether a modification was possible. For homeowners, that means calculating a monthly payment of 31% of monthly gross income, and a DTI of less than 60.

The majority of declined modification applications, Mairone said, were turned down because of the borrower's extended unemployment or other significant income reduction, or the expiration of a prior forbearance period.

But there is also the question of putting names to faces. Outreach events add a level of accountability that so many borrowers felt has been missing in the process of getting help.

"There are [many] homeowners who are still frustrated because [servicers] didn't have the processes or staff to assist in crisis," said Risotto. That is changing now. Bank of America alone has more than 35,000 trained staff to work with borrowers who are in default. Beginning in September, all servicers under the HAMP guidelines must assign a single point of contact for each borrower.

And this summer, more options emerged for homeowners, including tapping into Hardest Hit Funds, and other government forebearance programs, says Schwartz.

A Clearer Path to Next Steps

At the Marriott , a young child clambered over chairs while a family-friendly movie played on a projector screen in the waiting room. A man sat in the back row sorting through papers in the empty room as he waited for an answer from the bank. Only steps away in, another room, more red-shirt clad servicers worked on underwriting.

For one homeowner, the event helped him slim down his monthly payment by $500. At a recent Making Home Affordable event in Novi, Mich., another homeowner succeeded in reducing her monthly mortgage payments from from $1,011 to $670 each month, according to the Treasury.

But for others, at least at the BOA event, a transition counseling team awaited to prepare homeowners for less fortunate outcomes. Bank of America has teamed up with United Way and provide information about renting, food stamps and other social services to help homeowners move into new living arrangements. Those who cannot find an affordable way to sustain mortgage payments get $3,000 for relocation assistance from the bank.

Through end of June, Bank of America reports it has completed 128,771 modifications and more than 54,000 short sales and deed-in-lieus in 2011. Between July 2007 and June 2011, HopeNow reported that there were a total of 4,723,618 completed loan modifications in the United States.

Regardless of the borrower's outcome, the outreach events provide something that was missing for too many for too long in the process: human contact and a way to explore all the possibilities.

"Everyone leaves with a clearer idea of next steps," says Risotto.



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17 Comments

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ugojoreds

I have been trying since sept. 2009 to get a modification. I am 60 years old and all overtime and bonus's have been cut off. no more raises and less hours.. I have never been behind on my house payment I have had my home for 17 yearsand now can no longer meet the payments. there is no equity in my home anymore I live in a distressed area and the home values have hit rock bottom as with many others.. so I can not sell my home. I can honestly say the governement MOD program does not work.. BOA has lost all my paperwork 3 times I have applied 4 times and still waiting I fax docusment every few weeks upon request and wait.. no return phone calls no return anything just more papaer work needede that they can;t find???? THIS is a scam and a lie they do not want to help anyone.

September 26 2011 at 6:30 PM Report abuse rate up rate down Reply
texturesource

Loan modification is a joke. It has wasted my time as I had to jump through every hoop to provide every piece of paperwork imaginable to the table which only was to stall and try to find reasons not to qualify you. Which obvious there would be some reasons since you are pursing help for your mortgage in the first place. My application was denied due to insuffcient funds Da! Will during a period I had no income and hardship as a struggling small business owner I needed some help to keep my mortgage as I tried to reinstate my income. NOW FOR THE KICKER BECAUSE i DID NOT QUALIFY FOR OBAMA MAKING HOMES AFFORDABLE PROGRAM THROUGH MY LIE LIE MORTGAGE COMPANY 'OCWEN' I HAVE TO WAIT A YEAR BEFORE I CAN PURSUE REFINANCING. I WILL REFINANCE AND OCWEN CAN KISS MY BEHIND TO PUT IT NICE 2 MORE MONTHS.

September 01 2011 at 4:20 PM Report abuse rate up rate down Reply
Bubba

I volunteer for a nonprofit mortgage foreclosure counseling agency. Here is the process that happens with nearly every servicer, including BOA: You maintain a list of usually 4-8 fax numbers used for different documents. In one to three months, without warning, those fax numbers will change. Documents faxed to the old number are ignored. Once you have prepared the loan mod request and faxed it in (we call every time to get the right number for the loan mod), the bank replies with silence. When you call a week later to follow up, the bank claims no knowledge of your loan package. Practically *every* bank loses *every* first loan mod. After the 10th client this happens with, you realize it is no coincidence.

Oh, by the way, this has nothing to do with "don't buy a house you can't afford." People bought homes in areas where the schools were good, and they could afford those homes. Then one of two things happen: One or both people lose their jobs, or one or both of them is hit with crushing medical bills.

September 01 2011 at 3:58 PM Report abuse rate up rate down Reply
Frank

The reality is the banks are "slow" to help you if you have been able to keep your mortgage up to date. I know homeowners who have been told they must be delinquent first, otherwise don't bother. On the flip side I know a few people trying to buy (short sales) but the banks keep throwing road blocks and drag their feet requesting incredible amounts of information. If you have any change in your history, no matter how small, it seems everything grinds to a halt again while they re-check and re-check and re-check. Two of the short sale (purchases) would be cash deals......just waiting on the banks.

September 01 2011 at 8:41 AM Report abuse rate up rate down Reply
georgii1

BOA aren't getting enough people? Could it be all those that tried and had trouble with the bank have people expecting nothing but more trouble and hence, why bother?

September 01 2011 at 12:45 AM Report abuse +1 rate up rate down Reply
Artie

What a freakin mess. There is no easy answer or remedy to this housing "fiasco"and the economic meltdown which was caused by it. Hopefully, in it's aftermath the "banksters" and Wall Street "wise guys" along with the moron politicians who caused the housing meltdown will have learned a major lesson. And, to those folks that got into homes and took on mortgages under conditions that were "too good to be true"....I hope another valuable lesson was learned. There is certainly plenty of guilt to go around..

August 31 2011 at 9:46 PM Report abuse +1 rate up rate down Reply
Wealth Builder

This is too little too late. People are too disheartned and are convinced that this process is a waste of time. And don't even get me started on how BOA and the other banks have bungled the process. So even when people submitted all the forms in triplicate, they lost them and people had to submit the forms repeatedly.

August 31 2011 at 3:08 PM Report abuse +2 rate up rate down Reply
savemycountry911

Don't buy a house you can't afford.

August 31 2011 at 3:06 PM Report abuse +2 rate up rate down Reply
frank1946

Thousands of Homeowners tried to qualify for the original Homeowners Mortgage Program only to ingnored
and frustrated to spend a year or more and then be told "No" or threatened with Foreclosure !

First 18 months were dreadful until the FEDS threatened the Banks !

Now the Banks say nobody shows up for the Seminars ? Bait and Switch, SOP for the Banks !

August 31 2011 at 2:55 PM Report abuse +1 rate up rate down Reply
evd10

Let's admit the vast majority of people who need help probably can't really be helped. It's human nature to deny that a crisis exists and by the time it is acknowledged it is often too late.

August 31 2011 at 1:37 PM Report abuse +1 rate up rate down Reply