Bank Of America Executive Acknowledges Poor Service In Mortgage Mod Program

Bank of America on Wednesday announced details of a plan to partially forgive debts of homeowners who owe more than their homes are worth -- and a bank executive expressed disappointment in the company's efforts to put customers in mortgage modifications via the government's Home Affordable Modification Program.

"We certainly know that as we rolled out the modification process we have not handled our customers to the standards Bank of America is accustomed to," said Jack Schakett, a Bank of America credit loss mitigation executive during a conference call. A reporter had asked about homeowners' tales of lost paperwork and frustration when applying for loan modifications.

Bank of America has put 11 percent of HAMP-eligible borrowers delinquent for 60 days or longer into "permanent" five-year modifications -- the lowest rate of the four biggest banks participating in the program. (JPMorgan Chase has granted permanent mods to 16 percent of eligible 60-day delinquent borrowers. Citibank: 18 percent. Wells Fargo: 20 percent.)

Schakett said the bank has been staffing up and currently employs 16,000 people in the distressed home ownership area. Bank of America put more HAMP homeowners into permanent mods in April than in any previous month.

"We continue to train and retrain to try to improve our process and we've done a lot of things to try to make sure we don't lose documents anymore," he said. "We do think the experience is getting better and better, but again, it's still not the level we would hope it to be because we still have more customer complaints than we believe are acceptable."

As part of its anti-foreclosure efforts, Bank of America announced Wednesday it would forbear and ultimately forgive principal for deeply underwater borrowers whose home values have plunged below the amount they owe the bank. Such homeowners are among the most likely to strategically default -- stiff the bank and stop paying the mortgage, even if they can afford it.

HAMP's goal is to mitigate the foreclosure crisis by reducing eligible borrowers' monthly payments to 31 percent of their monthly income, usually through cutting the interest rate and extending the term of the loan, and only in rare cases by reducing principal. Bank of America's National Homeownership Retention Program will help get HAMP-eligible homeowners to 31 percent by first forbearing principal and ultimately forgiving it if homeowners remain in good standing on their payments.

Schakett used an example of a homeowner who owed $250,000 on a home worth $200,000. The bank would take $50,000 off the mortgage and put it in an interest-free forbearance account. If the homeowner keeps up with his payments on the $200,000, the bank will forgive 20 percent of the forbearance account for each of the next three years, and for an additional two years if the homeowner remains underwater.

Bank of America said it has 43,000 customers in HAMP trial plans who are eligible for principal cuts. Schakett said the Treasury Department would announce a three-year principal forgiveness program under HAMP later on Wednesday. Bank of America customers would be evaluated for one program or the other on a customer-by-customer basis. "We worked with Treasury to try to come up with a situation that's best for our customers and also meets our investor needs."

Comments

[globual]

08:23 AM on 06/09/2010

This is a way to take equity from the borrower by deflating the home price at the end when you should be selling. They then can collected interest. No wait, they can sell the right to collect interest on 250K. By putting 50K aside, they state that the home prices today should still be "worth" 250K when it does not. Its the same shell game going on for years, trying to be a little acceptable because the alternative is depression and famine of the entire society.

Heres the point - The banks have already lost the bucks as they have no right to collect the money - lost forms, problem dating, problem assignment etc., These banks need to take the money IN FULL off the balance sheet now.

Keeping prices high - It's similar to giving coupon credits to first time home buyers and we know who's going to get these - the illegals. It inflates our price structure and our taxes. I buy a candy bar for a dollar ten years ago, it was a dollar and tax was a percent of the dollar .08c. today the same candy bar is two dollars, and tax is same percent, but I'm now paying .16c for the same candy bar.

Separately, I also saw HUD accepting Unemployment as Income to borrow a mortgage against as a qualifier.

[KevinBlake]

04:56 PM on 06/08/2010

acknowledging poor service? HA! how about acknowledging that you train employees to ignore customers, lose paperwork, claim papers have been sent/received only to find out they never were, and supply false extensions and employee numbers! THAT is something Bank Of America should start admitting!
I lost all my respect for this crap-shoot a long time ago. Now, after I spent months and month fighting with them to attempt a modification, I gave up and hired a company I saw featured on NBC news & AOL's housingwatch. IF ANYONE IS QUESTIONING THE HAMP SYSTEM, CHECK OUT freehampreport.com cause they did an amazing job for me and saved my home and got me a permanently reduced modification from my old $1640/month to $1185/month!! It's almost 500$ less. I couldn't be happier and Now I don't have to leave my house.
I can't thank freehampreport.com enough.

[Sita001]

10:22 PM on 06/03/2010

And when you don't qualify for a mod, the let you short sell where it is like sending you to gulag hell as a seller, buyer or realtor. What area of business is BofA good at providing customer service?

[nativelasvegan]

03:54 PM on 06/03/2010

Jack Shackett announced in an interview in his leer jet they are not going to help homeowners, but will continue to blame them for missing paperwork. We will put them on trial programs we have no intention of making permanent, and our profits will soar.

When we put a homeowner on a trial program, we are able to report that to the Treasury. That makes us look good. Remember, we make more money when we foreclose.

If we give you a permanent modification, we won't sign it. You think it is permanent, but after you make payments to us, we'll keep them in a "suspense" account. And charge you up the rear for late fees and junk fees. After we suck as much money out of you as we can, we'll tell your the mod is not valid because we didn't sign it. If you don't pay all past due amounts, we'll start foreclosure.

Stop reading the stories at beingmiddleclass dot org and shamethebanks.org -- they are not real. Those homeowners have nothing better to do that whine about not paying their mortgage.

As far as us writing down principal. Forget about it. We will use the same tactics above.

So once again, sorry folks, but you are not important to us. The most important thing is our bottom line.

We own Wall Street AND the government.

Keep putting your money into BOA so we can continue our ungodly profits.

[realitytrumpsbull]

02:55 AM on 06/03/2010

The moral of THIS story is that renting is a better way to go, period.

[bertjuneau]

10:10 AM on 06/03/2010

For some it is, yes. But for those with financial disipline - ownership is the long-term best idea. Our culture has devolved to where we don't want to do anything the hard way. Doing things prudently is harder. Put 20% down, have 1 year of reserves to service the loan.....

[marysanzia]

12:48 AM on 06/03/2010

Mortgage Loan Modification is the only solution to save your home and stop foreclosure. Some 650,000 troubled borrowers have been put into trial loan modifications under the president's foreclosure rescue plan, the Treasury Department said Tuesday. That number represents only 20% of eligible homeowners. Mortgage Home Modification Program is the solution to save your house and stop foreclosure process Use this free tool to see if you qualify for loan modification
http://bit.ly/bCkrEu

[nativelasvegan]

03:54 PM on 06/03/2010

You're joking, right?

[wrightlawsuit]

12:21 AM on 06/03/2010

Why should we believe them now? What about all the people who lost their homes because they did not have their stuff together.

Evidence of Brian Moynihan, Bank of America Racketeering Filed with Law Enforcement, US Congress -Read link to story at piggybankblog.com

WHERE IS OUR LOAN MODIFICATION BANK OF AMERICA!?

If it walks like a piggy, talks like a piggy, by golly it’s a PIGGY!

Have you seen the little piggies
Crawling in the dirt
And for all the little piggies
Life is getting worse
Always having dirt to play around in.

Have you seen the bigger piggies
In their starched white shirts
You will find the bigger piggies
Stirring up the dirt
Always have clean shirts to play around in.

In their ties with all their backing
They don't care what goes on around
In their eyes there's something lacking
What they need's a damn good whacking.

Everywhere there's lots of piggies
Living piggy lives
You can see them out for dinner
With their piggy wives
Clutching forks and knives to eat their bacon.

Divided we might have fell America. UNITED WE MUST STAND!

John Wright
piggybankblog.com

[bertjuneau]

10:12 AM on 06/03/2010

You act as if this is a god-given right. *rolls eyes* What about the homeowners who bought what they could afford and acted prudently? What reward do they get? They don't get write-downs on their principal.

The entire concept is flawed - it rewards bad behavior and ill made decisions.

[nativelasvegan]

03:57 PM on 06/03/2010

You're right. Damn homeowners.
How dare them ask for predatory loans.
How dare them allow for the deregulation of the financial industry.
How dare them let the housing market get completely out of control so much so that housing values are dropping and continue to drop.
How dare them act so imprudent by assuming buying a house was a good idea.
How dare them expect write offs when they are 100% responsible for the securitization of loans, the selling of derivatives and the creating of pooling and servicing agreements.

Damn homeowners.

[Renoira]

11:28 PM on 06/21/2010

http://www.reuters.com/article/idUSTRE6563DT20100607

Quoted from the above article:
Sen. Charles Schumer, a New York Democrat and a member of the panel working out final wording on a comprehensive overhaul of Wall Street, called the FTC settlement "a major breakthrough that closes one of the ugliest chapters of the entire subprime mortgage crisis."

"Anyone who believes the blame for the housing crisis rests with borrowers should read this settlement and learn just how shameless these lenders were during these years," Schumer said.

When the bank makes all the rules and holds all the powers of negotiations. When the y set up trust laws that cannot be brought down, when they set the rules of engagement and choose to raise interest rates after they have informed the consumer what "they" can and cannot afford and then raise their rates anyway. I would say that they are guilty of bad behavior.

[AZAFVET]

08:04 PM on 06/02/2010

Stay in your foreclosed home and use the money for your business. http://www.nytimes.com/2010/06/01/business/01nopay.html

[Torrentlover]

07:59 PM on 06/02/2010

To think that if we the taxpayers had not bailed these welfare queens out, the more efficient financial institutions left standing would have been by far more effective at providing better service.

US Capitalism - 2007 - RIP

[Bert Juneau]

08:06 PM on 06/02/2010

We should have let them fail - B of A wouldn't have been one of them. They bailed out the government quite a few times - buying up troubled banks so the FDIC wouldn't have to pay out the losses. They bought Merrill because the Treasury begged them to bail Merrill out. It was probably the worst decision Ken Lewis made. But did they do subprime, liar loans and the like, nope they were old school.

[AZAFVET]

07:43 PM on 06/02/2010

I'm so glad I dumped BofA and moved to a Credit Union

[eladora]

07:34 PM on 06/02/2010

Bank of America has been too busy cutting credit lines for good customers, shipping more jobs overseas --and investing in other countries. That plus destroying documents that would put many of them in jail .
Bank of America needs to change its name. They should not be allowed to have America in their name. They shame the word.

[Bert Juneau]

07:44 PM on 06/02/2010

If you save your money - you don't have to depend on credit.

[Torrentlover]

07:55 PM on 06/02/2010

If you pay taxes - a chunk will go to the banks.

[jrbotti]

02:21 PM on 06/22/2010

Lest we forget, not everyone has the luxury of adequate disposable income to allow for the complete avoidance of credit. I know NOONE that can afford a home purchased with cash. Guess I need more friends with trust funds, full-time employment or corporate CEO salaries!

[Torrentlover]

07:34 PM on 06/02/2010

...But they are still going to hold on to those houses they seased.

[Bert Juneau]

07:41 PM on 06/02/2010

They will sell them at auction - that's the law in foreclosures. Buy one - oh wait - have you saved any money?

[Torrentlover]

07:54 PM on 06/02/2010

Pity a big chunk of my taxes went to the banks to keep them solvent. You know taxes - when you earn money you need to put some aside for the government. Have you ever earned enough money to pay taxes?

[misspoptart]

06:54 PM on 06/02/2010

Yeah? And BP acknowledges responsibility for the oil disaster...so what!

[bertjuneau]

06:46 PM on 06/02/2010

All of this mess could have been avoided if we had used the most powerful word in the english language - "NO."

Banks forgot how to say no - they didn't care if the loans went bad - that was the investor's problems.

Homebuyers forgot how to say "no - that house is too expensive." They gave into their vanity and wanted to be in the "homeowner's club" as the market raged on to incredible heights....

The government forgot how to say "no - we're not going to let you make these kinds of loans - these loans are crazy."

While everyone was getting what they wanted - banks and lenders making more money off securitizing loans than on interest earnings - homeowners being allowed to borrow as much as they wanted and getting more house than they needed - and the government officials - who are still getting what they want - money from Wall Street.

I believe all should suffer from thier poor decisions.

Homeowners should lose their home if they can't pay their loan as they agreed.

Banks and lenders should take losses for making foolish loans.

"Oh it's your fault for not saving me from myself." Blah blah blah

Lenders and borrowers made stupid choices - both should suffer dearly, lest they do it all over again.

[AZAFVET]

07:50 PM on 06/02/2010

Lenders were hoping to quickly package and sell loans as "Investments" around the world . The toxic loan programs were not the fault of the buyer, how can you refuse a 0% loan on a property that you were told would continue to gain in value at the same rate the market had been gaining for months. It was all a ruse set up by the Banksters and Wall Street billionaires to move more money from the lower income to the top incomes. The American Taxpayers are the stupid ones if we don't hit the streets to demand real bank reform so this cannot happen again!

[Bert Juneau]

07:54 PM on 06/02/2010

"The toxic loan programs were not the fault of the buyer, how can you refuse a 0% loan on a property that you were told would continue to gain in value at the same rate the market had been gaining for months."

It's your fault for believing that foolishness. Go to a used car lot - someone will tell a 1976 Buick will run for another 50 years. Believe it if you want to - a fool and his money are soon parted.

To answer your question - like this "I think the real estate market is highly inflated, we've seen appreciation in real estate that has never taken place - ever - in history. I think I'll keep my money in my pocket - thanks but no thanks."

[trollingfortruth]

06:04 PM on 06/02/2010

What a loathsome bank! I'm looking to refi somewhere else. I just have to make sure I don't get hooked in by a bank that will turn around and sell my mortgage to who else? Bank of America. These nitwits call me almost every month about 4 days prior to my mortgage due date to tell me my account is delinquent and this is a collection call!
So we go around and around, get a couple of managers involved, they finally realize their stupid mistakes, profuse apologies, and then some new doofus calls next month and the dance continues....Crikey!!

[bertjuneau]

06:29 PM on 06/02/2010

Your mortgage is likely sold before it's approved. Most banks lock your loan with Fannie or Freddie on day one. Most people don't know, there are two components to your loan. One is the loan, and that is usually sold immediately. The second is the servicing contract, and some banks retain them - other sell them. Your lender has the right to sell both parts of your loan to whomever they wish.

Very very very very few loans are done with depositor's money anymore, almost all are "secondary market" mortgages. While some may be against this whole idea, it's allowed you and I to borrow money very very cheaply.

Without secondary market mortgages, money would be much more expensive. Our local banks are doing "portfolio loans" that cannot be sold on the secondary market at 8 to 10% these days, and that is the rate you'd be paying if your mortgage was done "in house" with depositor's funds.