Bank Vows to Slow Foreclosures
One of the world’s largest financial institutions, Bank of America, announced this weekend that it has settled the massive litigation brought by eleven states against it’s Countrywide loan portfolio.
The bank purchased Countrywide’s loans over the summer subject to the claims for predatory lending practices.
Many experts have viewed such lending practices and the resulting eruption of foreclosures as the catalyst for the current financial ‘bailout’ plan just approved by Congress and signed into law last week.
The bank has promised to spend as much as $8.4 billion dollars for what it deems a “home retention” program, with the goal of slowing or preventing as many foreclosures as possible of the remaining Countrywide loans which could include nearly half a million customers.
Loan restructuring will begin in December, 2008, and may include lower interest rates and payment restructuring designed to keep monthly payments at 34% of income.
The bank will also consider reductions of principal on Pay Option ARM’s to help recoup equity.
For those homeowners who will inevitably face foreclosure, Bank of America is offering what they describe as “financial assistance with the transition from home ownership,” although the specifics of that program were not announced.
Financial experts indicate that JPMorgan and Washington Mutual are considering similar forbearance plans as a way to stop the bleeding caused by the massive numbers of foreclosures nationwide.
Please share your thoughts with us. Is this the model the Treasury Department should follow as it attempts to heal the markets?
How will these changes affect the rental market where you live?
Please comment below, and check back to see what other landlords have said.
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