Bank Of America's Foreclosure Rescue Failure: Only 1 Out Of 1,600 Borrowers Have Received Permanent Modifications

On Monday, the Huffington Post's Shahien Nasiripour reported on the failure of President Obama's $75 billion foreclosure program, citing JPMorgan Chase's prediction that only 15 out of 100 homeowner applicants have or will likely receive a permanent loan modification.

So far, the actual numbers are worse -- much worse.

According to a new Treasury Department report, fewer than 5% of borrowers participating in the Home Affordable Modification Program have received permanent loan modifications.

And some of the biggest TARP recipients -- Bank of America and Citibank -- have especially paltry rates.

At Bank of America, only 98 out of 156,864 borrowers in the trial program had received permanent fixes. That's 1 out of every 1,600 borrowers.

At Citibank, only 271 out of 100,124 borrowers in the trial program received permanent loan modifications. That's 1 out of every 369 borrowers.

In comparison, other giant banks had much higher, though still minuscule, rates. Around 3 percent of JPMorgan Chase borrowers and nearly 4 percent of Wells Fargo borrowers had received permanent fixes. And about 14,000 additional Wells Fargo borrowers are expected to receive permanent modifications in the next few months, Wells Fargo's co-president Cara Heiden told the Wall Street Journal.

Bank of America chose to focus on the future rather than explain the low rate, telling the WSJ:

A Bank of America spokesman said the company had "the highest number of...active trial modifications" and expected to gain momentum in converting borrowers to permanent fixes in December.

On Wednesday, the bank announced that it had repaid the $45 billion in taxpayer funds it received through the TARP program. It has been widely speculated that the one of the main motivations for Bank of America's repayment was to escape government-imposed pay limitations.

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Comments

[johnsonmc2000]

12:56 PM on 12/12/2009

I am sorry but I don’t think they are handling any of this correctly. The programs should not be forced on the lenders in the way they are doing right now as the most deserving are not in receipt of the benefit and so many more moral, societal and economic issues are involved. It would really be better if they allowed the real estate market to sink to realistic and affordable levels, the banks and financial gamblers take the losses and then real people would be able to purchase property they could afford. They might even be able to dream of repying their loan and being able to live in their home indefinate­ly!

Not a short term popular idea but the right one in my mind. It would be good for everyone in the long run. But, the markets, banks and investors would have to take huge hits. We couldn’t have that, could we!!!!

[johnsonmc2000]

12:44 PM on 12/12/2009

The meddling and artificial support of home prices is mostly being done to allow the economy to absorb the deflation that needs to occur. To spread the Banks loses over a period that they can manage rather than bankrupt them - back to saving the banks!

Where is the voice speaking up for the 45% of people that do not own a home today? Where is the voice for the young couples with a dream of owning their own home but still can't afford as prices are too high? Prices need to fall until they have fallen to levels that are sustainabl­e with median incomes rather than levels that were obtained through the easy creation of credit. Yes, there will be pain and hardship in that process. We don't usually learn much the easy way!

With all the talk of the Lender’s responsibi­lity to modify distressed loans and the Government­’s need to act, maybe we are ignoring some of the consequenc­es of supporting real estate prices through the present modificati­on and forbearanc­e programs.

We hear talk of the loans that cannot be modified when people have been made un-employe­d. Maybe these loans are the only loansthat should receive temporary assistance as they are truly the only ones that are in a situation through less of their own making. The word being temporary; modifying a loan to 2% for the remaining life of a loan is a minefield of consequenc­es for all but the lucky, and, maybe not the right borrower.

[AbeMartin]

11:25 AM on 12/12/2009

BoA pumpin' up those earnings reports so they can pay Cheney-esq­ue bonuses to their favored employees. You da Man, Tim Geitner!

[lylo]

10:29 AM on 12/12/2009

Hilariousl­y, when my family tried to apply for assistance from our bank with our mortgage, we were turned down due to lack of income.
We don't have enough money to pay for our mortgage at it's current level, and therefore do not qualify to have it lowered.
Does that make any sense to anyone here?

[Scott Wilson]

01:16 PM on 12/12/2009

Of course it does. You can't squeeze blood from a stone.

[LUChq]

10:24 AM on 12/12/2009

The question is not what BoA is doing to you, but what are YOU doing to BoA?
On my end, I have moved my accounts of BoA and am on a mission to spread awareness to my friends and business colleagues­.
We have to wage a war against the evil and presumed empire. Make a promise to yourself to convert 5 people away from BoA to credit unions or a bit more ethical establishm­ent.

[Soulsurfer]

10:23 AM on 12/12/2009

Well of course they are! Adjusting mortgages to an affordable rate means that they will have to take less profit on the outrageous rates and terms they foisted on home buyers. They would rather have their finger nails pulled out than lose those projected earnings. Bankers don't have a social conscience­, never had, never will. Which is why they need to be heavily regulated, with the threat of jail time over their heads to make them play fairly.

[LUChq]

10:26 AM on 12/12/2009

Well said! Everyone should be following their senators and congressme­n in Washington and push them for regulation­.

[Margaretpoa]

09:54 AM on 12/12/2009

They're not "failing", they are succeeding at doing exactly what they want to do. BofA knows full well that property values will be up again so they'd rather sit on foreclosed homes for a quarter or two than to give up one dime of interest.

[Soulsurfer]

10:30 AM on 12/12/2009

I can't believe that the home market will return to the incredible prices of a few years ago. People need good paying jobs to take on a 500K mortgage, and those jobs are just not there. In the short term, property investors may drive a small recovery, and in some of the really wealthy and desirable markets (like here in the SF Bay area) will keep their values, the broad overall picture looks bleak for average wage earners with families. I could be wrong, but who is earning that kind of money these days? Not many.

[rabiddog6708]

09:50 AM on 12/12/2009

At Bank of America, only 98 out of 156,864 borrowers in the trial program had received permanent fixes. That's 1 out of every 1,600 borrowers.

At Citibank, only 271 out of 100,124 borrowers in the trial program received permanent loan modificati­ons. That's 1 out of every 369 borrowers.


A trillion dollars to bail out these cl0wns and they can't even throw some crumbs to the tax payers who saved them. But they can (and do) still give themselves huge bonuses for a "job well done."

[MadMoll]

09:34 AM on 12/12/2009

A.P. Gianinni, the Founder of Bank of America (Bank of Itlay), is spinning in his grave. During the Great Depression­, BofA was the only bank to not lay off employees. But then, the Giannini family is no longer aboard, and NationsBan­k,who now owns Bank of America couldn't give two cents about the homeowners

[Patriotallday]

09:09 AM on 12/12/2009

This is further proof the Obama administra­tion policies are a failure. GM & Chrysler are still heading for bankruptcy even after being "forgiven" about $30 billion of the bailout money supplied by taxpayers. The banks and Wall Street bailed themselves out first and reverted to handing out big bonuses to employees for doing such a wonderful job in driving their firms into the ground. Frank and Dodd forced the banks to make home loans to people that had no hope of making their payments, and now suggest taxypayers hand over more money to bail these people out. The numbers indicate the bankruptcy and foreclosur­e filings are on track to skyrocket in 2010. And having just returned from the same country in Asia I visited 26 months prior, I can confirm the currency exchange rate for our fiat dollar dropped by 23%. This administra­tion must stop the deficit spending and outrageiou­s runup of the national debt. ^^^^^If we took ALL of the profits, from ALL of top Fortune 500 companies to pay off the $100 trillion unfunded liabilitie­s it would take 146 years and does not include interest. Throw out ALL incumbent politician­s regardless of party affiliatio­n.

[Dogontired]

09:18 AM on 12/12/2009

While I agree the Obama administra­tion is not fully addressing the problems. The fact is this is the result of decades of GOP policies. Policies designed to ruin the middle class in-order to in-rich companies that treated folks who they did business with as marks and not customers.
To lay this at Obama's feet is only "further proof" that right wing extremist such as yourself are wacky on the junk. Please get clean & sober before you post in the future.

[PaulPuckett]

08:14 AM on 12/12/2009

Bank of America is simply adhering to the solutions offered by Washington­. All of the so-called homeowner rescue plans only help borrowers with first mortagages­. Those with second mortgages or equity lines of credit that have substantia­l balances will not qualify for help on these mortgages. That is one of the reasons that the bailouts are not working.

[zlohcuc]

02:15 AM on 12/12/2009

and every thing else if you don't count collecting undeserved stipends and screwing their customers.­..

[Carolab]

01:09 AM on 12/12/2009

The Problems with Mortgage Modificati­ons
By George W. Mantor

RISMEDIA, November 18, 2009—If you have applied for a mortgage modificati­on, I wish you luck. It seems so simple on the surface, but as many a frustrated homeowner has learned, the Cavalry isn’t coming and neither is your loan modificati­on.

If you got your loan during the boom, it was probably sold as part of a “securitiz­ed pool” and that is where our journey down the rabbit hole begins.

The largest obstacle to a modificati­on is the anticipati­on of the payout on the Credit Default Swaps. Because these are unregulate­d, some mortgages may have been insured for multiple times the actual loan amount.

Only a default, not a mortgage write down, will trigger the pay out on the swaps. So now you know why all that loan modificati­on paperwork gets lost all of the time.

The more modificati­ons banks do, the more requests they will get, so it is definitely in their best interest to make it as difficult as possible so as not to open the floodgates­. This could lead to investor backlash for not protecting the security interests of their fiduciarie­s.

Remember, they sold the note and got their money back.

What is now becoming apparent is that it isn’t in the best interest of the banks to voluntaril­y modify most mortgages.

Read more: http://ris­media.com/­2009-11-17­/the-probl­ems-with-m­ortgage-mo­dification­s/#ixzz0ZS­5Z9gTi

[Carolab]

01:12 AM on 12/12/2009

Professor Mantor also notes:

According to The Joint Economic Committee of Congress, the average loss to the lender is $50, 000 on mortgages actually foreclosed and resold. What isn’t clear is who they mean by “lender” as we know that the original lender sold the loan in tranches and we do not know who would be the party in interest.

One way to interpret that is that by foreclosin­g; the pretender lender actually stands to gain the selling price of the resold foreclosur­e, less $50,000. On a $200,000 sale that is a pretty good profit.

[whoknew---]

02:31 AM on 12/12/2009

I am so glad you're here letting folks know why this is happening.

Thanks---

[tomas0808]

11:47 PM on 12/11/2009

BOA are enemies of the people, plain and simple. We need to wage war on them by not doing business with them or any of the other scammers. Starve them out

[TheBMChief]

02:03 AM on 12/12/2009

I think we would have to hang outside their businesses and give customers an alternativ­e. They need to close up shop, and without what my ex owes them.

[dollbaby]

11:25 PM on 12/11/2009

while 1 out of every 1 bank customer was charged a fee for something every 10 minutes.