The housing market meltdown seems to be truly making life miserable for Bank of America. As things started unraveling in the residential real estate sector and pushed countless mortgage lenders to either bankruptcy or to the brink of one, BofA figured it'd buy one of them on the cheap and really grow even bigger just like that. It promptly acquired Countrywide and apparently got much more than it bargained for. The once dominant mortgage lender had plenty of bad paper in its books which then became BofA's headache. On top of that it may have had its own internal issues, but Countrywide certainly wasn't as clean as it seemed to be.
BofA has been snail-slow in approving short sales, argue numerous real estate agents, home sellers and buyers and anyone involved in these sometimes complex transactions. A lot of fingers are pointed at its incompetence, or calculated foot dragging. More of the same is evidently going on in its handling of HAMP, so much so that Washington state homeowners recently filed a lawsuit against it, claiming it "intentionally" and "systematically" frustrated their efforts to arrive at reasonable mortgage modifications to stop foreclosure. In addition, many states and Washington are pressuring it, and other lenders as well, to seriously and meaningfully help in foreclosure prevention. The heat is on.
Now it is coming up with a mortgage principal reduction program, obviously seeking to quell the rising furor over its inadequate actions. It'll be part of its NHRP, or National Homeownership Retention Program. Some of the basic criteria includes the borrower has to be HAMP qualified, certain subprime, pay-option and 2-year hybrid ARMs are eligible, the underlying mortgage is 120% over the property's current value and the loan needs to be at least 60 days delinquent. BofA likes to call it "earned principal forgiveness" and the word "earned" is the key here. The program works in stages over five years during which the mortgage borrower is expected to miss no payments and then can reduce the principal up to 30%. These are just some of the details how it works. According to the bank, it'll launch the program in May when it'll supposedly start contacting eligible homeowners to find out whether they'll make the grade.
Frankly, based on the information so far released the plan is quite complicated and the many requirements will greatly limit participation. Maybe it's more of the same, just labeled differently. BofA has taken constant flak for its lack of responsibility in helping mitigate the home loan foreclosure problem and this, if administered properly, could give it some breathing room. Only time will tell if it is serious this time about cleaning up its tarnished reputation.
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Provided by:
Esko Kiuru
Mortgage, real estate and apartment industry analyst
www.BluefoxToday.com - syndicated mortgage, housing and property management blog
eskokiuru@gmail.com
My cell: 702-499-1006
In small steps real estate talk in Southern Nevada - with communities like Summerlin, Mountains Edge, Charleston Heights, Spanish Trail, Henderson and Anthem - is turning to recovery looming on the horizon. 2009 statistics showed that it does have a pulse as investors descended in droves on the scene to gobble up property for rentals in the lower half of the market. First-time home buyers were also active, enjoying low mortgage rates, nice tax benefits and attractive prices.
Mortgage lenders and servicers have been reluctantly doing loan modifications mainly by paring back interest rates and stretching terms, thereby managing to reduce borrowers' monthly payments to some degree. But obviously that strategy is not working as well as many had hoped for. Restructured home loans keep defaulting at an alarming rate.
