Bank of America
Bank of America announced a new program slated to start in December of this year that will help as many as 400,000 homeowners dodge foreclosure and rising mortgage payments. The program will benefit Countrywide borrowers of Alt-A, adjustable rate, sub prime fixed rate and even prime mortgages; this announcement is part of an agreement with 11 states that sued Countrywide over predatory lending practices. The plan has a price tag of $8.4 billion, but Bank of America’s spokesman, Rick Simon, stated that a decision to do nothing and allow foreclosures will cost the company more.
As part of the program, Bank of America will contact borrowers directly to offer loan workouts; the objective is to work out mortgage payments of no more than 34% of the borrower’s gross income. Bank of America may freeze interest rates, lower interest rates or lower the principal loan amount depending on the borrower’s individual circumstances. In addition to this massive effort to help Countrywide Financial borrowers, Bank of America will also participate in the Hope for Homeowners program.
The company acquired Countrywide Financial for $4.1 billion in stock in July of 2008.
Countrywide Financial
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It is good to see that they are taking a proactive approach. It is ironic that they have to spend $8.4 billion because of a company prchased for $4.1 billion.
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Thanks, this is a great article.
“Rick Simon, stated that a decision to do nothing and allow foreclosures will cost the company more.”
I’m glad to see someone with some financial sense about them. This type of program should have been implemented months ago, before thousands lost their homes.
I think it is a sound business decision for them…nothing more. Better to collect some of a debt that potential nothing for months on end. Too bad it took so long for a major bank to figure out that it is good for business to be a little more understanding.
Charless last blog post..Builder Closeouts in Tuscany
Good to see that they are trying to solve some problems. Yeah and I agree with the above that its better to collect some instead of nothing.
Any idea what kind of terms are being offered?
From what I understand everything depends on a lot of different things. Their goal is to keep the homeowner in the home so it could be a great low rate of ? or they may forgive some of the principal. They are going to work with each homeowner according to the homeowner’s needs and what they can afford. Their goal is to get their payment to be no more than 34% of their income so if a 3% rate can do that.. I think that is what would be done.
The bank is actually helping people for a change? Sounds great, but I wonder what the catch is? Thanks for the post.
It’s good to hear news like this, Bank of America is giving a positive step that will benefit thousands of home owners.
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It is surprising but pleasing to see an institution actually work for consumers. Citi announced today that they weren’t buying the $50M jet – only after heavy media pressure over their situation.
Hopefully Bank of America is an example to other banks that are struggling to survive in these tough economic times.
Hope that everyone could go through this period of tough time, I know it is very difficult for the banks right now.
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Sounds good to me. Too bad the state of the economy has to come to a grinding halt before they decided to implement this EMERGENCY action.
How many people have been able to participate in the Hope For Homeowners Program? I have seen very little participation so far.