Realty Check

BofA On Proposed Changes In The Housing Bailout Program

I am posting a response to yesterday's Treasury announcementabout pushing lenders/servicers to make more trial modifications permanent under the government's housing bailout program (Home Affordable Modification).

This is from Bank of America , which thanks to its acquisition of Countrywide, has the largest number of troubled loans eligible for modification.

We applaud Treasury’s continued efforts to ensure the success of these important programs and Bank of America shares the commitment to prevent foreclosure wherever possible. While Treasury considers various program enhancements to ensure the successful conversion of trial modification participants into permanent loan modifications, Bank of America is focused on assisting our customers who may not understand that without providing all documents required under the government program, they are at risk of missing this opportunity to secure a long-term affordable mortgage payment.

Once again this week, Bank of America will notify more than 50,000 of our own customers who have made their trial period payments that we have not yet received all required documents. We are making clear what remaining documents are required and that if they do not supply the documentation required by Treasury they are at risk of falling out of the HAMP. By the time our trial modification participants reach their HAMP expiration date, Bank of America will have made about ten reminder phone calls and sent – at least twice -- a summary of required documents and a postage-paid express mail package through which they can return their documents. We have also employed representatives of Bank of America in key markets to attempt face to face outreach to customers who have failed to send in required documents.

Dan Frahm, Bank of America Spokesman

As I wrote yesterday, the Treasury blames the banks, the banks blame the borrowers, and the truth lies somewhere in the middle. This modification process has supposedly been streamlined, and the paperwork is supposedly far more simple than it has ever been. What concerns me is that while we're all busy talking about paperwork, we're not talking about the real issue, which may be that many borrowers simply can't afford any modification on the overpriced home they bought, and/or many don't want one.

Questions?  Comments?