In the midst of all the troubled mortgages and failing banks, Bank of America seems to be setting themselves apart from the competition. Earlier this week, BofA stated that they would provide more than $8 billion in loan modifications nationwide; with about $3.5 billion allocated for select residents of California.
Now, one can only hope that others banks would follow this move and respond just as kindly. But before you applaud BofA for this seemingly heartfelt gesture, keep in mind this move is due to a recent lawsuit settlement resulting from their takeover of Countrywide; and they are still continuing cases against Countrywide and CEO Angelo Mozilo.
For those of you in California wondering about the provisions, here’s a quick summary of the necessary qualifications:
- - Covers subprime and Option Arm Adjustable Rate Mortgages originated between January 1st 2004 to December 31st 2007
- - Eligible borrowers must either be 60 days late or face a serious mortgage rate adjustment
- - Some adjustable rate mortgage holders may qualify for an extension of their introductory rates
- - High interest rate mortgage holders may be eligible for rate reductions
- - Option Arm mortgage holders may be eligible for principal reductions
- - Some home owners will have their mortgages automatically adjusted, while others will receive notice of their eligibility
- - Other incentives include waived prepayment penalties, rates as low as 3.5%, and value adjustments according to today’s market values.
Is it Enough?
Now, $3.5 billion sounds like a great deal of money, and it is. But compared to what’s going on in California, it just isn’t enough to make any substantial changes. For the home owners who can qualify, I’m sure you will feel a definite and substantial change. But what we can all look forward to is the precedent that such a move will make. With recent help such as the FHAs Hope For Homeowners program, we’re starting to see more of these big entities take active participation to help address the problems we’re all facing. It’s something that will help in the long run and something home owners can look forward to.
Fore more information, here are some quick links for you to check out:
San Jose Mercury News - Bank of America Offers Assistance to California Mortgages
SFGate - BofA OKs Foreclosure Relief for Californians
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Do you think other banks will follow and start offering similar programs? Or is this simply to settle predatory lending lawsuits filed against Countrywide?
I think this move definitely sets a trend, but I don’t expect other banks to voluntarily follow BofA’s actions. There were a lot of predatory cases against Countrywide, and this move was definitely to clean up some of those mortgages. One thing though, hopefully it will bring more attention to loan modifications here in California; a much better option when compared to foreclosure.
Great post!
Thanks…
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