Consumer complaint received 2017-06-16
Company: BANK OF AMERICA, NATIONAL ASSOCIATION
State: MA
Product: Mortgage
Sub-product: Other type of mortgage
Issue: Trouble during payment process

Complaint:
I/We obtained a product that is, I believe, no-longer offered in the mortgage market. At the loan inception it was called a " Pay-Option ARM Mortgage ''. This product, as was disclosed & as agreed, gave the Mortgagee 4 payment options when making their required monthly payment ( s ). a ) amortized payment, b ) 15-Year Am Pmt, c ) Min Payment & d ) Interest Only ( Copy attached as Proof ). If I made the minimum payment, which I did, I would remain and be in full compliance with the loan terms, and any unpaid interested would then defer and add to the principal balance for later payment on the loan as future interest as added. Accordingly, over a period of several years, our note and principal balance grew from $ 246K to nearly $ 290K. None of this was due to fees, or lates, delinquency ( s ) or other causes, ONLY Un-paid and deferred interest. Concerned about receiving both the credit for and the interest deduction I was entitled to receive, I contacted Bank of America. On that call some years ago, I was told I would get full credit for paying that interest as interest that was added to the principal once I paid it which ultimately meant the interest credit and subsequent 1098INT would incorporate all my payments involving the last ~ {$44000.00} in regular payments.
<P/>
I became suspicious about what I was told verbally by the Bank of America C/S rep. and asked my CPA what I should do. He suggested that I insist on getting a letter from Bank of America on letterhead stating that the last ~ $ 44K in principal that was added to my loan balance as interest is actually & rightfully interest and that it will be reported totally on a 1098INT as interest to support the true interest deduction it actually was. Then this would at least, in-effect, on paper look like I was paying principal but in actuality I was paying accrued interest on the last $ 44K of my loan and would likely have trouble getting the 1089INT from the bank in 15 years from now when no body there will have know about this " Pay-Option ARM '' product.
<P/>
Today I just learned the Bank is refusing to write a letter and now claims the interest they charged me and then added to my loan balance as interest is now principal and, in-effect, my interest deduction has been forfeited for this amount. In effect what they did added to/increased my principal balance by legally adding as interest is now principal and is now refusing to report it appropriately as interest on the government approved forms as required to be on a form 1098-INT.
<P/>
This is nothing short of Deceptive Business Practices, Fraud and what amounts to a failure to disclose those same deceptive business practices. By this act, Bank of America just gave itself nearly {$50000.00} in Tax free money/income and evaded the taxes they are required to both report & pay. That is criminal, deceptive and much more.
<P/>
The bank had an obligation to disclose that deferred interested deduction ( s ) would be, in-effect, forfeited if you used the minimum payment option. Deliberately not disclosing this term is a crime and makes the mortgage likely non-enforceable. I/we were never told of this deceptive claim and were never given the full impact of our selecting this legitimate option which is an illegal act.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation