Consumer complaint received 2015-09-24
Company: BANK OF AMERICA, NATIONAL ASSOCIATION
State: GA
Product: Mortgage
Sub-product: Other mortgage
Issue: Loan servicing, payments, escrow account

Complaint:
A Georgia based non-profit procured a loan from Bank of America in XXXX of XXXX in the amount of {$430000.00} with a 20 year maturity on a 30 year amortization at the rate of 8.5 %. The purpose of the loan was to acquire and renovate a XXXX unit apartment community in XXXX XXXX, Georgia for rental by low income households. The project also had a second mortgage HOME loan from the County to cover the full cost of renovation. For the past 15 years the project has provided much needed affordable housing to mostly XXXX households. The organization kept the loan current throughout the term of the loan. Recently, the non-profit was approached about selling the property, which it decided to do since it was no longer able to keep the project property maintained ( after 15 years it needs to be re-capitalized and renovated ) and could not procure new financing itself. The outstanding balance of the loan is about {$280000.00}. With that, the organization agreed to a sale in which it would recapture the initial {$44000.00} it had invested in the project at acquisition in XXXX. However, upon requesting a payoff from Bank of America, it was informed that the pre-payment penalty for the loan would be {$38000.00}. When it requested the justification for this, it was given a schedule that also showed that at maturity in XXXX, even with all payments being current, the pre-payment penalty would be {$26000.00}. Thus, at no point was this loan merely an 8.5 % loan. As such, at no point could the organization have taken advantage of the lower interest rate market, even had it tried to improve the operational efficiency of the project, without a usurious penalty being exacted. At {$38000.00} in penalties, this is 13 % of the outstanding loan balance, which coupled with the 8.5 % interest rate already being charged becomes usurious under any definition. Requests to Bank of America to redress this unjust lending practice have fallen on deaf ears. The specifics of this penalty were not disclosed in the Loan Documents, as the pre-payment reference was a vaguely worded requirement with no calculations or parameters. In any other lending context, there are pre-payment penalties that are tied to percentages and burn-off timelines. In this case, there was nothing but a pre-conceived effort on the part of Bank of America to gouge the borrower from the start to the finish on this loan. We can provide documentation regarding all of the above information, and provide significantly more information if needed. If this is legal, it should not be. Given the TARP bail-outs of banks and all of the misery they have caused, it is equally unethical that a small non-profit, doing its tax exempt mission, should be extorted by one of the biggest culprits in the illegal predatory lending and skulduggery that occurred over the past decade. Shame on Bank of America. As an American taxpayer, a Veteran who served his country, and a non-profit developer who has spent his entire professional career trying to literally make America a better place to live for its poorer citizens, I am appalled and disgusted by this egregious behavior of a bank that makes a farce out of its name.

Company public response: Company chooses not to provide a public response
Company response to consumer: Closed with explanation