Bank of America Offers to Modify 100K Countrywide Mortgages
June 25, 2009 — Bank of America Corp. has offered to modify over 100,000 Countrywide sourced home loans over a four-month period. This is double the amount required under the settlement between California and other states against Countrywide Financial Corp. for accusations of predatory lending. Bank of America (BofA) acquired Countrywide in January of 2008.
To settle the state cases, BofA agreed in October to modify certain high-risk Countrywide loans with the goal of reducing payments on primary mortgages to 34% of the borrowers’ income. BofA was required to make 50,000 loan modification offers in a four month time period under an agreement between the bank and state officials. In that period, BofA made 100,300 modification offers and completed modifications to 50,147 loans.
Banks like BofA have a vested interest in keeping homeowners afloat and on time with their loan payments. Defaults and foreclosures have cost banks billions of dollars; and have been a major contributing factor in the U.S. economic meltdown as they sucked dry banks’ working capital.
Are Loan Modifications Enough to Save Strapped Home Owners?
Watching after their own financial risks, banks like BofA are stepping forward to help consumers restructure loans they cannot repay. While modifications will help many people regain financial balance, a Fitch Ratings study suggests that 55%-65% of reworked loans may end up 60 days delinquent within 12 months.
According to Diane Pendley, a managing director at Fitch, “Loan modifications hold clear value for many homeowners provided the modified payments are sustainable, but more often than not, reducing the home payments to an affordable level may not be enough to rescue borrowers who are overextended on other credit and expenses.”
The study also said borrowers who are current on their loans are angry that others who took on too much debt and missed payments are benefitting from lowered interest rates, extended repayment terms and other modifications.
In its current form, the BofA modification program only addresses loans that are at greatest risk. For consumers that are in a tough spot, but not in enough trouble to get help, this lack of help could encourage consumers to miss payments in order to qualify.
Protecting Consumers From Fraudulent Practices
For over 25 years, Brayton Purcell has advocated on behalf of our clients, protecting their legal rights from corporations putting their interests before the consumer. For homeowners faced with fraudulently processed mortgages that they cannot pay, loan modification is the best case scenario for the consumer’s financial well being. Contact us if you have questions concerning legal action against a lender for fraudulently processing a loan that you were not qualified for.