Q: Is it true that Freddie Mac does not allow property type changes for refinances under the Making Home Affordable program?

Our property type is a condo townhouse. In our original mortgage note with Bank of America (our original lender and loan processor) we signed a Planned Unit Development rider. Bank of America then sold our loan to Freddie Mac under the property type single family home (Bank of America remains the servicer).

We qualify for refinancing under the Making home affordable program but Bank of America has refused to go through with the closing for the refinance on the basis that our property type is now being considered as a condo. Since Freddie Mac has it under a single family house, the loan officer at Bank of America claims that Freddie Mac will not allow a property type change, and therefore they cannot proceed with refinancing our loan under this program. Neither the physical property itself nor its legal description have ever changed (this is confirmed by the original and current title reports).

Isn’t Bank of America’s responsibility to correct the property type in its records since it is a mistake on its part in its capacity as the original lender and loan processor?

A: Your lender should probably correct the error. If they won’t you should file a complaint with the OCC, which regulates BOA. Go to www.helpwithmybank.gov and look under the heading “Need more help?”

Many lenders have made document errors when processing loans over the past 3 to 5 years. If your home was always a condo townhouse and never a single-family house, and this error wasn’t caught at closing, and wasn’t caught when the loan was sold, it should be dealt with now.

That said, you might have to sue the bank if filing a complaint with the OCC doesn’t produce any results. While that may not seem appealing, your only other option is to refinance your loan and not going through the government program.