Loan modification for this man becomes a nightmare

After five months of seeking a mortgage loan modification, Jeffery Feig's approval package arrived last March. His payment was cut in half.

But two months later, Bank of America called with bad news: The lender changed its mind and wanted him to start paying the larger amount again.

"I couldn't believe it," Feig said. "I thought, 'How is this possible?' I had gone through so much, jumped through all their hoops."

Then communication stopped. His calls weren't returned, and he said no one could give him an explanation. Feig kept paying the modified amount, and the bank kept cashing his checks. But it also turned his account over to a collection agency for not making the original mortgage payment.

The bank says the situation is more complicated and is fighting Feig in court.

Feig's situation highlights the frustration faced by thousands of borrowers. Although it's unusual for a lender to approve a modification only to cancel it later, recent Treasury Department reports show that many lenders aren't approving as many applications as the government anticipated.

The federal government is pushing lenders to lower mortgage payments to help homeowners stay in their homes, but borrowers and housing counselors say the modification process is no easier, despite governmental efforts. They complain of lost paperwork, unreturned calls and unexplained rejections.

Just 4 percent of the nation's applicants under the government's foreclosure-prevention program have received permanent help, according to a recent report from the U.S. Treasury Department.

Feig has sued Bank of America. The lender would not answer specific questions but placed the blame on Feig.

"Mr. Feig was offered a loan modification under Bank of America's National Homeownership Retention Program in March, however necessary financial information was not returned with the modification documents," Rick Simon, a spokesman for the bank, said in a statement.

Feig contends he's provided the bank with his documents multiple times but that the bank always says it didn't receive them. Feig's attorney, Ryan Snyder, with Snyder Law Group, said the lender produced the documents during the legal process. Snyder provided those documents to the Tribune.

Bank of America would not comment on that.

"During further review for a modification more recently, Mr. Feig chose to pursue legal action, and we are not in a position to comment further on a matter that is in litigation," Simon's statement said.

Meanwhile, Feig continues to make his modified monthly payments, even as his credit score plummets further each month.

"This is ruining my credit," he said.

Shari Olefson, a real estate attorney with Fowler, White and Boggs, said she's not surprised by Feig's situation.

"I've heard of this type of thing happening," Olefson said. "I'm sure there are others going through the same thing."

Synder said his firm is handling hundreds of loan modification cases. In nearly 100 of the cases, Bank of America is the lender. Feig's is the only case, however, in which the lender initially approved the modification, Snyder said.

"I'm a little shocked at how much this bank is fighting [Feig] on this modification," Synder said. "I really doubt this case will settle."

Snyder said he has noticed an improvement recently in the willingness of regional banks to work with homeowners.

Bank of America has come under criticism lately for lagging behind other lenders in signing up borrowers to the federal program, Making Home Affordable. By November, Bank of America had registered just 15 percent, or about 160,000 customers, of the more than 1 million delinquent borrowers who could be eligible for the three-month trial period, according to a report from the Treasury Department.

Anthony DiMarco, an executive vice president at the Florida Bankers Association, said he can't comment on what went wrong in Feig's case but said, "there are usually two sides of a story."

DiMarco said lenders are "learning as they go along" and are trying to modify as many loans as possible.

"All these lenders are working through their programs," DiMarco said. "It's trial and error. No one expected anything as massive as what we're going through right now."

Some lenders modify loans through their own internal programs. Feig and Bank of America agree that was what happened in his case. Others go through the federal program, often called HAMP. That program calls for a three-month trial period before a permanent modification is granted.

It's unclear how many area homeowners will avoid foreclosure this way, but many are participating in the plan. At least 12,044 active trial adjustments have been granted in the Tampa-St. Petersburg-Clearwater area. But just 1,159 homeowners have received a permanent modification.

In the case of Feig, he said he hopes a judge will end up forcing Bank of America to honor the modification it approved last March.

"I know I'll win this case," he said.

To learn more about the federal modification program, go to www.MakingHomeAffordable.gov.