Another Sneaky Bank of America Money Grab! - 01.25.11 | Real Estate News for Real Estate and Mortgage Professionals

jake.mmc: (February 02, 2011 7:39am)

Countrywide did this years ago and it only affects you if you use their AutoDraft. If you use your own BillPay through your bank you can still pay within the grace period stated. Countrywide had 3 periods when the change happened last time, 0-5 days $0, 6-10 days $10, 11-15 days $20, or something to that effect.

COShortSaleXpert: (January 31, 2011 8:24pm)

I'm stunned that servicers can arbitrarily change the grace period. Isn't that part of the written terms of the note? I'd like to arbitrarily change the terms of their note, too, if that's okay for them to do! Like an "you can if I can deal"? :-) Does Elizabeth Warren know about this???

corvin: (January 29, 2011 3:13pm)

tpetajr and the others have it right.............. the grace is part of my contract and BofA will be sucking more eggs on this one.........

tpetajr: (January 27, 2011 6:22am)

I don't think BoA can reduce the grace time for mortgage payments on previous loans. The 15 day grace is part of the contract (NOTE).

johnny: (January 26, 2011 9:58am)

Frank & Brian, By far, one of the best shows. Great tips and "Not telling" but "Showing". You rock.

NewParadigm: (January 25, 2011 3:19pm)

@JMA - I was thinking the same thing. Frank & Brian, how about doing a show on how we can show consumers the legal and proper way to challenge Bank of America in their change of grace period? Or do you know something we don't about their right to change agreed upon terms? The reason I watch this show every day for the past few years is because you stick up for the little guy. Calling up our borrowers to give them amunition against B of A is of far greater value than to tell them about Firefox's choice of not being tracked - although thanks for that info.

JeffFrank: (January 25, 2011 11:42am)

What markets is it cheaper to buy? My friends and clients would laugh at me if I used that pitch to try to get referrals. Here is a good example of reality in Chicago on a purchase I am handling. Clients are paying $1,200 rent. Their PITI will be $2,044.77 and that is after they are putting 20% down.

iam 2520: (January 25, 2011 11:08am)

re-listened... comments unchanged, even paused and read part of the article of BofA's Feb.14th change. While it is petty the $6.00 fee effects only select few borrowers and would be closer to 1/3 than grace period being cut "in half". Disappointed... shave the growth.

mark: (January 25, 2011 10:54am)

I thought that the note and mortgage set the time frame to impose a late fee. Are are they bypassing this?

iam 2520: (January 25, 2011 10:37am)

In many answers there is wisdom... BofA clarifification and retraction is called for from the over-zelous hosts. Credability is key, I do not believe the Congressional Budget Office when they score anything. As to your cheaper to buy claims, documentation as to the figures used to reach that conclusion...my friends are smart they ask questions like where did that come from? Isn't out market still depreiciating, are those markets appreciating in value ? Too many factors left unanswered to go out on the line with, protect your rep it maybe all you have left... Run a story on the '05/'06 & soon 2007 Pay-Option-Arms resetting CURRENTLY... there's some hard numbers and upper end homes heading for stragigic foreclosure.

Appraiser Micro: (January 25, 2011 9:45am)

I've got an offer in with a home that is cheaper to buy, than we're paying for rent. It's true. That's the low price point correlation that attracts available buyers currently in rental. As rental prices already flex consumers ability to pay, it's a typical situation they cannot afford more. These types of buyers shop based on monthly affordability, not by home sticker price.

G-says: (January 25, 2011 9:27am)

the bubble didn't happen because a bunch of people we talked into buying. they were breaking down the doors for the "American dream". the greedy banks came up with lousy loan guidelines, "Equal opportunity lending", means if they qualify, we can't deny. even if it was a terrible loan, they had the right to have it, no matter what you told them. it was the greed of the banks and those who in control of the money to allow this and then sell it on the secondary as A-paper, which it was not. I put a buyer into a payment of $666 mo.that home would rent approx. $1000 month with no tax advantages as a renter.

EdConarchy: (January 25, 2011 9:19am)

I always have advised clients to not enroll in a mortgage company's auto payment service. Don't let a company grab funds out of your bank account. This change by BOA is just one more reason. Instead I advise clients to pay the mortgage company using their own bill payment service where they control the funds exiting their account.

JeffFrank: (January 25, 2011 9:17am)

I thought you guys were mocking the 2006-2007 mentality with the "it's cheaper to buy than it is to rent" pitch. What #'s do you base that off of? What % down payment? A big problem of the meltdown was people who shouldn't have been buying being talked into it. We don't want to repeat that.

Chuck@HRC: (January 25, 2011 9:08am)

EdConarchy: Thanks for the clarification. If BofA is choosing to charge a "draft-execution fee" for taking a payment from a non-BofA account, there should be no problem, other than a P.R. nightmare for BofA. I'd attribute this to FinReg as yet another unintended consequence for the bank's lossing so much fee income through regulatory fiat. There are only a couple of issues I can see might raise further questions: 1.) is this fee collected with, or a substitute for, a late charge? 2a.) If the late charge cannot be assessed until 15 days after the due date (typical for Calif.), will BofA still assess the fee after the 9th of the month? 2b.) If BofA assesses the fee [See Q 2a], why is the homeowner's payment not considered "good funds" on the next business day? A bank drafting against funds at another institution executes that draft via the ACH (Fed wire system) and funds are good upon receipt [think lender wire to escrow]. BofA can't have it both ways without violating some reg!

Mike8307: (January 25, 2011 9:04am)

Love the Iron Maiden reference... brings back memories. We used Iron Mountain as well, I think everyone on Wall St does. Any time you talked about having to call them to retrieve a box, or do some record retention you'd get a office full of guys doing air guitar and head bobbing... LOL, better days gone by.

EdConarchy: (January 25, 2011 8:56am)

JMA: See my post below. Rambomen: Thank you! Gald you are getting value from my Conarchy's Corners.

G-says: (January 25, 2011 8:55am)

absolutely cheaper to own now than rent! But home buyers can't buy! In many areas the income level is too low to save for the 3.5% down, and without the Feds giving that tax credit, those who can borrower from family to pay it back with that credit are Now out of the market. That is if they can even get a loan, with underwriting so crazy right now. 21 years in loans and RE and I never seen it this bad! but eventually it will get better! Investors are having problems remodeling and flipping because they can't sell their inventory. We need all buyers to get a tax credit!

JMA: (January 25, 2011 8:48am)

I am a little confused on this B of A crap changing the grace period. All the documents signed at closing specifically state the borrower has a 15 day grace period- how are they going to change these legal documents without the borrower's agreement to this change? Sounds like they are going down the same kind of "we'll make up our own rules and to hell with what the borrower signed" road that lead them to the foreclosure fiasco they are currently in. I see a bunch of lawyers salvatating on this one....

pugsy77: (January 25, 2011 8:48am)

Can't change the existing notes but Let's face it folks. Like my daddy told me...the banks are the ol boys club run by big fat cat cigar smokers who don't give a damn about anything but themselves. If it pertains to new originations well they can kiss their mortgage business good-bye, unless they get the other major cigar smoking buddie banks to follow suit. As Canadian Allan Hammell (married to Suzanne Sommers) once said, "Tell a Friend!" BOYCOTT BOFA, CITIBANK, WELLS AND CHASE! IF YOU BANK WITH THEM YOU ARE SHOWING YOUR LACK OF INTELLIGENCE!! RID YOURSELF OF CIGAR SMOKE!!!

GJColorado: (January 25, 2011 8:28am)

Brian- Is that Mickey's Grenade on your desk??

Rambomen: (January 25, 2011 8:25am)

Thanks Ed. That makes better sense. Love your articles on Mortgage Market Guide, keep it up!

kafprocessing: (January 25, 2011 8:15am)

I think kekkyjean is right - the change will only be for those who pay electronically THROUGH BoA and only affect the BoA charge. If you send payment yourself there's no change. I love you guys, but please get your facts checked before broadcast.

EdConarchy: (January 25, 2011 8:07am)

Guys please clarify this in your next show before everyone sends out wrong info to their clients. BOA has not changed their grace period on their mortgages. That is on the NOTE and they can't change that. The change is only if you are enrolled and pay them through their online payment tool, Mortgage Pay. Only then if you instruct them to take funds from your non BOA checking account after the 9th of the month you are assessed a fee of $6. Not the standard 5% late fee stated on the NOTE. If you pay BOA using your own bill payment service or the old fashion way of check, envelope and stamp. This does not affect you. I am afraid you got MLOs confused and misinformed and now spreading incorrect info. Congrats you guys can now be considered part of the Media. :)

Chuck@HRC: (January 25, 2011 7:58am)

I'm seriously confused! First, somewhere in each state's lending regulations, Civil Code in the case of Calif., a legal maximum late fee and in some states a minimum "grace period" is codified. When Fannie and Freddie designed their state-specific documents (i.e. Note and Deed of Trust/Mortgage) they built-in those allowable fee and time. Secondly, AdamMiller is correct, BofA would need to "modify" every Note under its administration- not a notice in the mail like a credit card- before embarking on shortening the "grace period". A unilateral change IS NOT POSSIBLE! If anyone has more info on this announcement, I'd appreciate reference to source documents/articles.

BATERRY: (January 25, 2011 7:36am)

Love the great "on the phone" sales technique and scripts, however, I live and work in the Portland, Oregon / Vancouver, Washington metro area. It is not cheaper to buy than rent here (makes it alot tougher to be a Realtor).

kekkyjean: (January 25, 2011 7:29am)

I think that there may be some confusion. As of 02/14/11, Bank of America is changing the way they charge for paying your mortgage payment online, or through an external bank account. Previously they charged $0 if paid within the 1st 3rd of the grace period, $3 if paid in the middle 3rd, and $6 if paid in the last 3rd of the grace. After 2/14, they will charge $0 if paid in the first half of the grace and $6 if paid, electronically in the last half of the grace period. They cannot change the grace period on current mortgages. Now, if they are actually considering making the grace periods shorter than 15 days, on new mortgages, I have not heard that from any other source. I guess I will have to see if I can find that in writing.

Evil Genius: (January 25, 2011 7:15am)

geez that's $12 Trillion in mortgages.

Evil Genius: (January 25, 2011 7:14am)

Barbara: B of A services more then 14,000,000 loans and more then $3.5 Trillion. Our economy includes $12 Trikkion in morthahes outstanding. There are $18 Trillion in pension funds invested. Tell me why we need Fannie and Freddie to securitize and de-value oue mortgage notes once again. To keep the flow going? This is wrong thinking. These banks use these assets to create even more debt.

Rambomen: (January 25, 2011 7:09am)

Does B of A not know that they cannot change loan documents? If they are changing grace periods going forward, that would be different. I think they are setting themselves up for future lawsuits!

echo.wentz: (January 25, 2011 6:49am)

Is BOA looking at this for new mortgages only or for existing mortgages as well? Isn't the grace period for existing mortgages a matter of contract? I think the Note clearly states the late fee and when it is incurred.

Daggone: (January 25, 2011 6:49am)

Gary P - would be nice if NAMB got 140,000 comments/questions on that video, wouldn't it. We are where we are because no more than 6000 L O's commented on the fed rule. Also, if they don't get in gear to delay the April 01 deadline, it won't matter because the lenders I know are kicking it off in February. We all know when they set it up, there is no going back, just like HVCC.

Rob in AZ: (January 25, 2011 6:43am)

Good thing we bailed them out so they wouldn't fail. What nice people! :-)

barbara: (January 25, 2011 5:43am)

I'm on my 4th day waiting for an FHA Case # now that the lender must order it. I worked through showing the ysp as a credit. . .borrowers don't understand that. But waiting an extra week for an appraisal gives my DE competitors a potent stake to drive into me. They're wondering if the appraisal is in, and I haven't been able to order it!

barbara: (January 25, 2011 5:33am)

Ooooh. Anybody know a good lawyer who would like to put together a profitable "class?" Could Frank and Brian get a finders fee? How many loans does BOA service?

ddurbin: (January 25, 2011 5:11am)

Too big to fail = Too big to care

KKS: (January 25, 2011 5:00am)

"Just to big to fail" BOA appears to believe they can further breach contracts, e.g. notes and mortgages, and make changes. Problem is Fed Reserve and Respa/TILA control the grace period regs for 1st mortgages, which are not like Credit Cards and equity loans.In the old days, Credit Cards had grace periods too. Then the "smart" bankers thought they'd eliminate this feature to make lots of money. And even with the credit cards banks like BOA got in trouble as they attempted to charge fees even if payment postmarked prior to due date. And yes our government regs had something to say about that too - the banks lost that one too. Clearly, some executive did not double check the grace period written in to loan documents and regulations. OOPS! BOA needs to be broken up. They are too big for their britches.

GaryP: (January 25, 2011 4:13am)

Besides Adams point, isn't the "grace period" regulated by the Fed? Isn't that why we have to fill out that section of the TIL on every set of loan disclosures? Hmmmmm... Maybe the Fed should be taking care of business instead of worrying about frivilous things like compensation.

GaryP: (January 25, 2011 4:01am)

The National Association of Mortgage Brokers (NAMB) has learned today that the Federal Reserve Board (FRB) is working on a compliance guide for small entities on the loan officer (LO) compensation rule, pursuant to Section 212 of the Small Business Regulatory Enforcement Fairness Act (SBREFA), and it will be published in the immediate future. NAMB will ask for a significant delay on the April 1st deadline in order for Office of Advocacy Small Business Administration to interpret and implement any guidelines coming from the federal reserve board at such a late date.

Adam Miller: (January 25, 2011 3:24am)

How is B of A going to change the grace period on any loan. Paragraph 6 of the "Note" clearly states the grace period. IF they change the grace period they would have to modify the "Note". Sounds unethical and illegal but I am sure B of A will get away with it. After all, if they do get fined or punished, they will just pass the fine along to the same consumer they violated in the first place. Pretty creative... B of A never looses. Lets be honest, they are shorting the "grace period" to shore up cash to pay fannie and fredie the 8 billion they owe them. case in point, B of A doesn't lose nor do they pay for their mistakes. The consumer pays for their mistakes in higher bank fees.

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