Bank of America HELOC issues

Bank of America continues to outdo themselves with their ridiculous short sale policies & procedures and one of the biggest time-bombs that they are setting to go off is the future HELOC mess they are creating for themselves.

Bank of America HELOCS (Home Equity Line of Credit) are basically handled by the charge-off department of Bank of America. In a short sale situation banks usually approve the short sale thereby releasing the lien on the property so the property can be sold. So far, this is all good.

The problem is that Bank of America will NOT RELEASE THE DEBT!! This means that the borrower is still responsible for the mortgage amount, even though they no longer own the property! This is where their future problems begin.

They “charge-off” this debt to their collection department where it is then “collected” in the future. Now I’m not an accountant but I believe this still shows on the Bank of America books as an asset, at least for a certain period of time. So let’s multiply the average $50,000 HELOC that has been charged off by thousands of customers who NEVER will end up paying any of this.

I’m not sure what that number is but its a lot! So how does a bank have the right to show that much money as an asset on the books when in reality they will probably collect less than 10% of that amount? And why won’t they just go the route of 95% of the other banks out there that will settle the debt up front for an amount feasible for both parties, rather than dragging it out and collecting even less money??

That just doesn’t make any sense to me, unless of course you were trying to show that your company was worth a lot more than it really was…and they certainly wouldn’t be doing that!

Related posts:

1. Bank of America Short sale changes??
2. Bank Of America settles for 8.5 Billion but who gets it??
3. Standard & Poor’s to Downgrade Bank of America & Citibank?
4. Bank of America Approval in less than 30 days!!
5. More Bank of America Short Sale Tales…