Bank of America is planning on proactively modifying 630,000 loans in the coming year.
Did you hear that?
A bank is going to be proactive in protecting it’s assets and providing relief at the same time. We all know the tremendous cost of foreclosure to banks. And who will do more to take care of a home than someone who has an ownership stake in it?
By being committed to keeping families in the homes instead of foreclosing Bank of America is cleaning up many of the ills that they have inherited with the Countrywide purchase.
This is welcome news and hopefully will be emulated across the banking industry.
To help homeowners avoid foreclosure, Bank of America and Countrywide modified approximately 230,000 home loans during 2008. This year the company embarked on a loan modification program projected to modify over US$100 billion in loans to help keep up to 630,000 borrowers in their homes. The centerpiece of the program is a proactive loan modification process to provide relief to eligible borrowers who are seriously delinquent or are likely to become seriously delinquent as a result of loan features, such as rate resets or payment recasts. In some instances, innovative new approaches will be employed to include automatic streamlined loan modifications across certain classes of borrowers. The program utilizes an affordability equation to qualify borrowers for loan modifications at a targeted first year mortgage debt to income ratio of 34 percent. via Press Release.