Professional Home Staging and Photography Blog: Mortgage giant BofA to lower principal for qualified HAMP borrowers

Mortgage giant BofA to lower principal for qualified HAMP borrowers

NW house, Las Vegas, NVThe housing market meltdown seems to be truly making life miserable for Bank of America. As things started unraveling in the residential real estate sector and pushed countless mortgage lenders to either bankruptcy or to the brink of one, BofA figured it'd buy one of them on the cheap and really grow even bigger just like that. It promptly acquired Countrywide and apparently got much more than it bargained for. The once dominant mortgage lender had plenty of bad paper in its books which then became BofA's headache. On top of that it may have had its own internal issues, but Countrywide certainly wasn't as clean as it seemed to be.

BofA has been snail-slow in approving short sales, argue numerous real estate agents, home sellers and buyers and anyone involved in these sometimes complex transactions. A lot of fingers are pointed at its incompetence, or calculated foot dragging. More of the same is evidently going on in its handling of HAMP, so much so that Washington state homeowners recently filed a lawsuit against it, claiming it "intentionally" and "systematically" frustrated their efforts to arrive at reasonable mortgage modifications to stop foreclosure. In addition, many states and Washington are pressuring it, and other lenders as well, to seriously and meaningfully help in foreclosure prevention. The heat is on.

Now it is coming up with a mortgage principal reduction program, obviously seeking to quell the rising furor over its inadequate actions. It'll be part of its NHRP, or National Homeownership Retention Program. Some of the basic criteria includes the borrower has to be HAMP qualified, certain subprime, pay-option and 2-year hybrid ARMs are eligible, the underlying mortgage is 120% over the property's current value and the loan needs to be at least 60 days delinquent. BofA likes to call it "earned principal forgiveness" and the word "earned" is the key here. The program works in stages over five years during which the mortgage borrower is expected to miss no payments and then can reduce the principal up to 30%. These are just some of the details how it works. According to the bank, it'll launch the program in May when it'll supposedly start contacting eligible homeowners to find out whether they'll make the grade.

Frankly, based on the information so far released the plan is quite complicated and the many requirements will greatly limit participation. Maybe it's more of the same, just labeled differently. BofA has taken constant flak for its lack of responsibility in helping mitigate the home loan foreclosure problem and this, if administered properly, could give it some breathing room. Only time will tell if it is serious this time about cleaning up its tarnished reputation.



Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst - syndicated mortgage, housing and property management blog
My cell: 702-499-1006

Comment balloon 6 commentsEsko Kiuru • March 24 2010 09:02PM


Esko - I think BofA is just looking to improve their image. I doubt we'll see very many principal reductions from them; they're still lagging in regular modifications.

Posted by John Mulkey, Housing Guru ( almost 9 years ago

They also unveiled a new program here where loan modification specialists are meeting face to face with borrowers IN their homes in the past couple of weeks.  That is, to me, stepping up to the plate also.

Hopefully this work (I remain pessimistic with BOA however) and hope it spreads like wildfire with other servicers.

Posted by Renée Donohue~Home Photography, Western Michigan Real Estate Photographer (Savvy Home Pix) almost 9 years ago


You might be right. Their track record isn't pretty.

Posted by Esko Kiuru almost 9 years ago


They have a lot of polishing up to do, maybe this is a start.

Posted by Esko Kiuru almost 9 years ago
I cannot tell a lie, that really hleped.
Posted by Makailah over 7 years ago
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Posted by lfrfglwfxln over 6 years ago