Posts Tagged ‘bank of america’

Bank Of America Lagging Behind In HAMP Modifications

Recent data released by the government reveal that Bank of America, for all its touting as a loan modification leader,  is the least responsive to beleaguered homeowners in need of mortgage assistance.

The numbers show that Bank of America has offered only 24% of homeowners whose HAMP modifications were cancelled alternative modifications while the big eight servicers have offered 44.5 % of this group alternative modifications. Further, where trial modifications have been denied, the big eight have offered 33% of these folks alternative modifications while Bank of America has offered only 11% of this group alternative modifications.

As for HAMP modifications, fifty percent of Bank of America’s trial modifications are still ongoing after six months even though the government specifically has ordered the banks to either convert the trials to permanent modifications or cancel them in three months. Only 26% of all Bank of America’s trial modifications have been converted to permanent ones.

Bank of America talks a good game and releases its own figures just prior to the time when the government releases its numbers. While Bank of America does have the greatest number of permanent modifications, this figure is misleading since it has the largest number of eligible loans out of any other servicer.

Bank Of America’s Latest Checking Account Is Free If You Never Go Into A Branch

The banks hate the new regulations being put on them by the financial reforms enacted over the last few years. They hate them because they turn off the spigot of easy fee income that the fat cat bankers have come to expect as their due.

According to this article by Dan Caplinger, Bank of America will begin offering a new checking account that is completely free, with no minimum balances or other charges, so long as the customer NEVER visits a branch office. Should the customer visit a branch, for any reason whatsoever, the account would convert to one that charges a monthly fee of $8.95 per month.

Caplinger opines that the reason that banks are making these kinds of changes to their account offerings is because

Banks have been on the defensive for quite a while now, and the new legislation on debit cards and financial reform certainly isn’t going to help. Having changed from investment banks to bank holding companies less than two years ago, Goldman Sachs  and Morgan Stanley will now have to separate out their derivatives trading units. While that may not affect you much, it’s a big deal to the big banks.

New restrictions on debit card fees will also have an impact. Although Citigroup  reported that limits on debit-card-related fees likely wouldn’t have a big impact on profits because it doesn’t have a huge retail banking business, B of A said it could cost $2.3 billion annually.

As another major player in the debit card business, JPMorgan Chase () could also see substantial lost profits. Yet JPMorgan CEO Jamie Dimon summed up the general attitude toward the regulations: "If you’re a restaurant and you can’t charge for the soda, you’re going to charge more for the burger. Over time, it will all be repriced into the business." In other words, once you think you’ve plugged one leak in the framework of fee income for banks, new ones will pop up to take its place.

It is the same old excuse trotted out by the big banks and the big bank  lovers out there that you just can’t regulate them or else they will just find other ways to make money from fees. Please! How about offering a real service, for a change, and charging for that? Wouldn’t that be a good way to make more money?

Here’s an idea and maybe one of the banks will take me up on it: how about charging a monthly fee for a suite of bank services like access to financial advisor whose job it is to help the customer understand where his or her money is going and how to best manage it? Oh, wait a minute, that would be more expensive to implement than just dinging people with overdraft fees. D’oh!

More Lawsuits Filed Against Lenders For Breach of Contract Under HAMP: Don’t Mess With Texas

It looks like more and more lawsuits are popping across the country from angry homeowners regarding the failures of bank servicers to properly handle loan modifications under HAMP. I’ve written about the suit filed in Massachusetts here.

The latest lawsuit was filed in the state of Texas by The Texas Housing Justice League and 15 homeowners against Bank of America and its subsidiary, BAC Home Loan Servicing LP.  This lawsuit, like the others, alleges, in part,  that the HAMP trial modification agreement is a contract which Bank of America and BAC violated by not timely modifying the loans once the plaintiffs had performed their parts under the loan modification agreement.  In some cases, the plaintiffs’ homes were foreclosed upon even while they were in an active trial modification and making payments.

The complaint lists a litany of grievances common to most homeowners who have attempted to get their loans modified: lost paperwork, servicer demands for same information numerous times, inconsistent information given by bank employees, and a difficulty in reaching someone in charge to get answers.

Like the other lawsuits, most important points of contention that the courts will have to decide are as follows:

1: Does the agreement between non-GSE servicers and the Treasury  to participate in HAMP constitute a legal and binding contract? If so, then the servicers are legally obligated to follow each and every program guideline, including but not limited to not foreclosing on properties that are in active HAMP trials. 

Granted, even if the courts decide that the HAMP participation agreement is a legally binding contract, the Treasury, and not the homeowners would have to sue for non-performance. 

2: Does the HAMP trial modification agreement between the servicer and the homeowner constitute a legal and binding contract? If so, then the servicer has a duty to the homeowner to perform its part of the contract, that is to modify the loan, so long as the homeowner has completed his or her part, that is made the payments and sent in the requested documentation.

How the court rules on the second question is more important for homeowners seeking modifications. Favorable rulings will invite more lawsuits from other states, and could possibly move the courts to act similarly in other jurisdictions.

Bank of America Launches Its Earned Principle Reduction Program Under HAMP

Bank of America has started its program to reduce principle balances on some of the loans it services as part of  it’s participation in HAMP. 

The way it will work is that Bank of America would use principle reduction, ahead of interest rate reductions and term extensions, in order to bring the borrowers’ payments to 31% of their verified income.  The amount of principle reduced will be foreborn in an non-interest bearing account, and as the homeowner makes timely payments on his modified mortgage, he will earn forgiveness of the forebeared principle.

As of this writing, loans that are eligible for this earned principle reduction program are Pay-Option ARMs and two year hybrid ARMs originated by Countrywide before January 2009. The amount owed must exceed 20% of the property value and the mortgage must be 60 days or more delinquent.

Treasury has announced that it will implement a similar idea for HAMP later this year so that it may benefit a wider range of homeowners.

Bank Of America’s Modification Efforts To Include Principal Reduction

stop foreclosure The nation’s largest mortgage lender, Bank of America announced this week that it would start including principal reduction for some homeowners.  Bank of America customers could receive up to a 30% reduction in their mortgage loan balances. 

Most principal reductions will be confined to Country Wide loans where the loan balance exceeds the home’s value by 120%, where the loan is 60 days or more delinquent and where the borrower can show hardship. 

This move dovetails with the changes to the HAMP program announced by the Obama administration today to include incentives for principal reductions and assistance for unemployed borrowers.  Details about the changes to HAMP can be found here.

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