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BofA to modify 265,000 Countrywide loans

by Morgan on April 29, 2008

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Bank of America announced that it plans to work-out approximately $40 billion of loans in trouble at Countrywide as part of it’s acquisition of the failed mortgage lender. BofA estimates that the $40 billion will result in a little over a quarter-million homeowners keeping their homes instead of losing them to foreclosure.

From the Pacific Business News on the new BofA initiative:

In addition, BofA says it will continue its policy of allowing tenants living in properties facing foreclosure to remain on site for 60 days after the completion of foreclosure proceedings. They will receive $2,000 to defray moving expenses if they leave voluntarily within 30 days of the completion of foreclosure proceedings.

BofA (NYSE: BAC) says it plans to spend $1.5 trillion over the next 10 years in community-development efforts that focus on affordable housing, economic development and consumer and small-business lending. BofA is the second-largest bank in the Sacramento region, based on deposits, according to the Federal Deposit Insurance Corp.

You can read the full press release from Bank of America on the initiative here.

Last 3 posts by Morgan

Related posts:

  1. Countrywide shareholders to vote on BofA deal
  2. BofA backing off Countrywide deal?
  3. Countrywide Launches $16 Billion “Refi or Modify” Campaign for Subprime Borrowers
  4. BofA to purchase Countrywide? what about the mortgage brokers?
  5. Fed approves BofA, Countrywide purchase

  • Paul Hiller
    "We will continue to work with distressed borrowers to match the customer's repayment ability with the appropriate loss mitigation option, including loan modifications, forbearances, repayment plans, lower rates and principal reductions," McGee said. "

    Talk about burying the lead. The money shot here is the words at the end of McGees' sentence. Lower rates and "principal reductions".
    This is the first time I have seen a lender quoted using those words. If he is serious this is huge. The problem for nearly all the borrowers in trouble is the size of the debt, not the rate. If B of A gives people a short refi it will be a game changer.
  • Great find and great point Paul! I wonder if B of A will be elaborating on
    any of these options publicly. The first wind of a short refi would indeed
    put the finance world on it's head. Thanks for sharing!
  • ann
    The question I have is what types of loans are going to be modified? Teaser ARMS? MTA's? Also how do you modify? Based on True income when it was a liar loan? Principal Reductions in a declining market..does that mean that a year from now when the price goes down another 10% are those borrowers going to expect more? What about the average Joe next door, who isn't a "troubled" borrower and now has a principal balance of $300K..while his neighbor had 50K forgiven and now has principal balance of $250K?

    Seems to me there is no end in sight...
  • Paul Hiller
    Ann is right. When we go down that road there is no end in sight. That is why I was so shocked by what McGee said. The banks just went to all the trouble of killing the cramdowns that congress was proposing. Now B of A opens the door to doing them voluntarily. I am sorry that no one in the press has picked this up and pressed him on it. I expect he will backpedal.
  • I think a follow up article and some outreach to regular blownmortgage
    readers who are members of the press is in order tonight!
    morgan
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