It looks as if Daniel A. Bailey Jr. will be allowed to keep the home where he endured the wrath of Countrywide Financial kingpin Angelo Mozilo — and then skipped more than five years of mortgage payments.
A loan modification, now close to final, would resolve a bizarre chain of events that began in May 2008 when the frustrated North Carolina homeowner sent mass emails to Countrywide executives, begging them to ease his mortgage payments.
Mozilo, the headstrong Countrywide co-founder who aimed to dominate the mortgage business, wrote an impulsive e-mail meant for colleagues. In it, he called Bailey's plea a "disgusting" example of form letters from troubled borrowers that were then inundating the Calabasas lender.
But instead of hitting "forward" on his computer, Mozilo hit "reply." Bailey got the note and posted it on an online borrowers forum. Before long, the misfired missive went viral.
A day after The Times reported the snafu, TV crews were camped outside Bailey's house and Countrywide staffers rushed to silence him.
Bailey said they offered him a modified loan, but one that he still couldn't afford. That's when, he said, he was promised a special bonus — he'd never actually have to make payments, and the bank would never foreclose as long as he kept his mouth shut.
And that's what happened — at least until last summer.
Bank of America Corp. had taken over Countrywide in July 2008 and Mozilo departed. Then in August, the bank finally took notice of the situation and sent Bailey a letter demanding $98,462 in missed payments, interest and penalties, or else he would get kicked out.
Bailey insisted that Bank of America was obligated to honor the agreement that Mozilo's damage-control squad had struck to silence him.
And in December he went public with his plight, telling The Times that the oral deal entitled him to live for free in the two-bedroom, 938-square-foot bungalow he had called home for more than 20 years.
Bank of America spokeswoman Jumana Bauwens said at the time that Bank of America could find no documentation of such an agreement. The bank confirmed that Bailey had skipped 62 straight monthly payments and conceded that "it is unusual" to go unpaid that long without foreclosing.
Its statement said "foreclosure holds" — seizures halted by changing regulations or investigations into abuses — caused some of the delay.
But within a week of publication of the Times story, the bank had sent Bailey papers to apply for a loan modification, and by February he began negotiating new loan terms.
Bailey, a photographer whose income plummeted during the recession and never recovered, has made three trial payments on a modified loan.
"The permanent modification documents will be generated by the end of the month," the bank spokeswoman said.
The modification reduces the amount owed from $144,000 to $125,000, the current value of his Wilmington, N.C., home. And it lowers the interest rate, which once topped 11%, to 2% for the first five years. As part of the deal, Bank of America is to forgive the nearly $100,000 in back payments and fees that it said Bailey owed.
Having made his third trial payment of $765 this month, Bailey said he was assured by Karen Arakelian, a supervising workout specialist for Bank of America, that the permanent modification would arrive for his signature in mid-June.
"I'm just waiting for the paperwork," he said in a telephone interview. "Of course I'm nervous; you hear all the horror stories about modifications falling through. But ... she promised that this is really going to happen."
Bailey blamed the notoriety of his situation for ruining his commercial photography business, saying engaged couples would research his name on the Internet, read about him and decide to hire a less controversial person to document their nuptials.
He still gets a few photo assignments and works part time for a veterinarian. But he said the wages his live-in girlfriend earns at a country club restaurant are what makes it possible to pay the loan.
"My stress level has certainly come down," he said. "It's back to a little bit of a normal life."
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