Change in attitude?
Today, Bank of America announced that it will introduce “principal forgiveness” which will look to reduce loan balances of qualifying distressed homeowners with adjustable rate mortgages or subprime loans in an effort to make their payments more affordable.
While smaller banks have already began taking this position, Bank of America is one of the first large banks to attempts this highly criticized loan modification option.
The Obama administration has been under fire this year for their highly ineffective Home Affordability Modification Program and rather than implement principal reduction, HAMP was simply extended.
With more homeowners becoming distressed and considering their limited options, banks currently offer a lengthened term or a change in interest rates, but this move to reduce principal is quite bold. Given BoA’s recent performance, we have to wonder if this is a PR move or if this might actually impact BoA loan holders?
Greg Cook
March 24, 2010 at 2:19 pm
Lani, I guess my response is I’ll believe it when I see it.
As a former employee (Countrywide) and BofA loan holder in Southern California with an option arm, I could be the “poster child” for this program. I also have an equity line with them.
It will be interesting to see how it all plays out.
Mark Brian
March 24, 2010 at 3:21 pm
I will believe this when I see it. I would think it is a PR move but hope I will be proven wrong.
Jessica Murr
March 24, 2010 at 8:02 pm
I’d love to see some REAL help for homeowners. I can’t tell you how many crappy things I’ve seen BoA do to people and families and it’s almost always some one who was a responsible person, didn’t buy a bad loan, didn’t refinance to the roof, they just lost their job, or got injured and couldn’t work, or had some other tragedy befall them and couldn’t keep up with their payments. It’s about time the people who honestly are innocent bystanders of this dilemma have some help.
Brad Officer - Jacksonville Short Sales
March 24, 2010 at 9:34 pm
Just talked with home owner who has Chase. They are offering her a principal reduction of 97% of fair market value, fixed rate at 4.25%. About a $100k+ drop in principal.
Thinking we will start seeing this more often.
James Mucci - Michigan Refinancing
March 24, 2010 at 9:44 pm
Yes I think that most of the big banks modifications are because they are pressured into doing it. The evidence comes in the fact that most are “trial” loan modifications, and very few permanent modifications.
So most likely this is just a big bank dong what they have to do so they can get regulations that benefit them in the future. Just look at the fact that their loan officers do not need to pass a criminal background check or get licensed, but any loan originators who work for a non depository lender must go pay, train, and pass a test, on a state and federal level.
Missy
March 24, 2010 at 11:23 pm
So do they have an operating agreement that the government will pay them the difference, like Indy Mac now One West?
Dunes
March 25, 2010 at 1:31 am
Think I’ll skip the how “Bold” BOA is party……https://www.hulu.com/watch/137462/abc-world-news-with-diane-sawyer-banks-and-the-battle-for-the-middle-class
Estimated 6 million home owners late on their mortgage payments and what’s that number of loan modifications completed again?
How many have already been foreclosed on?
Yeah let’s use the word “Bold” when discussing BOA or any Bank when it comes to loan modifications…..
Lani Rosales
March 25, 2010 at 1:41 am
Dunes, have you read Russell Shaw’s article about Bank of America? https://agentgenius.com/g-rants-insanity-more/realtors/bank-of-america-retard-division-for-short-sales/
Might be right up your alley.
Joe Loomer
March 25, 2010 at 6:19 am
I think it will be hilarous when (not if, WHEN) they modify the wrong homeowner’s loan! After all, they’ve foreclosed on the wrong house in at least three states already,
“Honey? Did you pay off half our mortgage?”
“No, Baby, why?”
“Well, our BoA statement and payment just got cut in half”
Ah, who am I kidding, poetic justice doesn’t work that way….
Navy Chief, Navy Pride
Dunes
March 26, 2010 at 12:24 am
Thanks for the tip Lanni…I actually read it when first posted.
AgentGenius has been a favorite of mine for info and learning the views of Agents/Pros on a variety of Topics for awhile now..
Wonder who’s behind this concept or created this place of interesting exchange and information…To bad we don’t know cause they deserve a “Well done” and another “Well done” for it’s growth and continued fairness in hearing/presenting all views for consideration.
Plus it’s news and resources that can assist Agents and Consumers is nicely selected and presented. (Still playin with the Transportation/Expenses maps 😉
Great site obviously for Agents to present their views and have interesting discussions, but my opinion is it is a great site for Consumers to learn about things in the Homebuying/Selling Process they may not have known or are not available on other sites plus become familiar with the opinions/thoughts of a group of very forthcoming willing to be honest Agents/Pros..Agree or disagree with them I admire their willingness to discuss pretty much any topic/issue openly for the Consumer to consider….
In my opinion for the Consumer it’s important that they have the option & access to consider all views dealing with a major Financial & Emotional commitment..
Now to be able to claim I intended to be on Topic…..How bout them Bank of America PR people? Soon they’ll be ranked right up there with the other Major PR legends from Trulia, Zillow, & Starbucks ; )…
Dunes
March 26, 2010 at 10:58 am
Just read this this morning in the Washington
Post..Will be announced on Friday by Obama..perhaps BOA wished to get some PR by announcing first to make it appear they wanted to help rather than going to be forced to help….”The measures have been in the works for weeks, but President Obama is finally to release the details days after his watershed victory on health-care legislation.”
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“Banks and other lenders would have to reduce the payments to no more than 31 percent of a borrower’s income, which would typically be the amount of unemployment insurance, for three to six months. In some cases, administration officials said, a lender could allow a borrower to skip payments altogether.
“The new push, which the White House is scheduled to announce Friday, takes direct aim at the major cause of the current wave of foreclosures: the spike in unemployment. While the initial mortgage crisis that erupted three years ago resulted from millions of risky home loans that went bad, more-recent defaults reflect the country’s economic downturn and the inability of jobless borrowers to keep paying”
“The administration’s new push also seeks to more aggressively help borrowers who owe more on their mortgages than their properties are worth, offering financial incentives for the first time to lenders to cut the loan balances of such distressed homeowners. Those who are still current on their mortgages could get the chance to refinance on better terms into loans backed by the Federal Housing Administration. ”
https://www.washingtonpost.com/wp-dyn/content/article/2010/03/25/AR2010032502426.html
Levent
January 28, 2011 at 3:46 am
My loan has been already modified by BOA according the Making Home Affortable plan…Can I still be qualified by Principal Reduction Program…Anyone has any idea? Thank you…