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After instructing a California woman to miss her mortgage payments in order to qualify for a new loan, Bank of America foreclosed on the woman because she missed her mortgage payments. Annette Lake of Santa Clara was evicted from her home on May 24, and moved into her father’s basement.

A Bank of America spokesperson defended the bank’s decision, saying it was based on a review of Lake’s finances.

The ordeal began in 2008, according to the St. George News, when Lake and her husband divorced. Soon she was diagnosed with breast cancer, and was laid off from her job because of chemotherapy treatments, which made it challenging to pay her monthly mortgage.

Lake called Bank of America to ask for help. A bank representative told her that because she was current with her payments, there was nothing BofA could do. But if she stopped paying for three months the bank employee told her, she could qualify for lower payments under the federal Home Affordable Mortgage Program (HAMP).

“They told me they couldn’t assist me because I was paid up to date,” Lake told the newspaper. “I had to be behind on my payments before they would give me assistance.”

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So Lake stopped making payments. The technique seemed to work; Lake received a modified mortgage through HAMP, lowering her payments to $728.50 each month.

But the day after her mother died, in June 2010, Lake received a foreclosure notice. Why? Because she had missed a number of payments. Lake and her 15-year-old daughter were evicted. Now they share a bedroom in her father’s basement.

From Bank of America’s perspective, the story is somewhat different. Lake was never given a permanent loan modification. Instead, her modification was just a trial. But when the bank looked more deeply into Lake’s finances, it determined she couldn’t afford even the new, cheaper mortgage.

“In the final review of her updated and verified financials, we could not qualify her for a permanent HAMP modification within the government program guidelines,” Rick Simon, a BofA spokesman, said in an email. “A second-look review was conducted, but we were not able to structure a proprietary modification or other alternative within the tolerance of the mortgage investor.”

Under the government program, many people who received temporary modifications failed to qualify for permanent ones. As early as October 2009, “it was becoming clear that the rate of conversion from trial modifications to permanent modifications was very slow,” according to a report by Troubled Asset Relief Program’s Inspector General.

Meanwhile, Lake has given up hope of ever getting back into her home, which she bought in 1986. Instead, she is looking for a way to sue Bank of America over the incident.

“I honestly understand how people become homeless and how they give up and say they don’t care,” Lake said. “You get to the point where you don’t care. I get it. You just feel like saying, ‘Fine, you win.'”

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