twitter linkedin
facebook google+
Search:

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News

 

Mortgage News

HOT Topics

production

servicing

compliance

legal

fraud

secondary

jobs

appraisal

site map

www.loan-academy.com/

Loan Modification News
Loan modification activity, reports and legislation.



BoA Steps Up Principal Reductions

Modification program expanded

March 24, 2010

By MortgageDaily.com staff


In its ongoing campaign to stem foreclosures, Bank of America Corp. is becoming more aggressive with principal balance reductions on loan modifications.

The Charlotte, N.C.-based company said in a news release today that it will consider forgiving principal on loan modifications for some of its loans before cutting the interest rate.

The expanded program, modeled after one negotiated with the Commonwealth of Massachusetts for borrowers in that state, is designed to increase the acceptance rate of modification offers while protecting investors.

Eligible borrowers include those who are qualified under the Home Affordable Modification Program, at least 60 days delinquent and in a "severe" negative-equity position. The program is targeted at subprime mortgages, pay-option loans and certain two-year hybrid adjustable-rate mortgages originated by Countrywide Home Loans.

In a phone call with reporters, Bank of America Home Loans President Barbara Desoer noted that those programs were all discontinued when BoA acquired Countrywide in 2008.

The loan-to-value would need to be above 120 percent.

"In our experience with Home Affordable Modification Program and National Homeownership Retention Program modifications, Bank of America has found that many homeowners who owe considerably more on their mortgages than their homes are worth are reluctant to accept a solution that addresses only the amount of the payment without an accompanying reduction in the balance due on the loan," Desoer explained in the statement.

The enhancements include an interest-free forbearance of the principal that can be forgiven over a five-year period at 20 percent a year. The maximum amount forgiven will be 30 percent, and that would require that the LTV doesn't fall below 100 percent. Forgiveness requires timely repayments.

One BoA spokesman noted in the call that the LTV will only be reduced until the debt ratio falls to 31 percent, adding that "if we have to stop at 105, if that's the level, to actually achieve the 31 percent affordability, then we will stop at 105."

The statement indicated, however, that forgiveness during the fourth and fifth years will depend on the property value at that time, and in no case will it bring the LTV below 100 percent. Appreciation could eliminate forgiveness in years four and five.

The plan also calls for forgiveness of accrued negative amortization and a reduction in principal down to 95 percent LTV on HAMP modifications.

BoA said it would "ignore the existence of any second liens" on the held-for-investment portfolio loans. But on third-party loans, no principal reduction will be done if a second mortgage is outstanding.

The enhancements are expected to be in place by May. Eligible borrowers will be contacted by the bank. The expanded options are expected to be offered on around 45,000 loans -- reducing principal by an estimated $3 billion.

Desoer said that the company has started or completed 760,000 trial and permanent modifications since acquiring Countywide Financial Corp. Around 500,000 of the modifications were done using BoA's proprietary modification program, while approximately 240,000 HAMP modifications have been started and more than 27,000 permanent HAMP modifications have been completed.

next story

back to current headlines


SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders