In her testimony before the House Financial Services Committee today, which assembled to find out where the bank is in regard to modifying mortgages in trouble, president of Bank of America Home Loans, Barbara Desoer, didn’t have real good news, underscoring the many problems related to helping borrowers stay in their homes.
The other major purpose of the meeting is to gather data which can than be used to adapt the existing loan modification programs to be more efficient and helpful. At least that’s the theory.
One of the comments made by Desoer in prepared statements was that “There has not been adequate success in getting enough customers to accept the offers and complete the documentation and trial period required to obtain a permanent modification.”
The assumption by lawmakers that people want to save their homes at any cost is largely one created and generated by the media to create some sensationalism. The fact is many people actually have no interest, or at least, aren’t willing to take the necessary steps to make it happen.
Part of it seems to be the usual red tape associated with partaking in the modification program, which is time consuming and confusing to some, which discourages people from participating in the programs.
That’s what Desoer is saying in a nice way above. On the banks side, they are doing everything possible within the parameters given them to make it happen, but borrowers simply aren’t responding to it at the levels they were expected to. This is frustrating the banks, who have, in most cases, attempted to legitimately make it happen.
Desoer said at the hearing that there are over 16,000 Bank of America employees working with borrowers to get their mortgages modified. She added the bank is at a “critical point” in the process, and the ongoing recession, regardless of reports to the contrary, is making it difficult for those who do want to use the program to make it work.
Continued depressed values of homes and ongoing unemployment were cited a key reasons for this, along with other weaknesses in the economy which affect borrowers.
It seems for those that really do want to modify their mortgages, they simply don’t see any way out, even if they are able to extend the time in their homes through changing to more favorable terms.
With that the case, most aren’t going to jump through the government hoops only to find out several months later that they’re right back to where they started from.
For Bank of America residential borrowers, Desoer said about 1.4 million or 10 percent of them are now 60 or more days behind on their mortgage payment, and the bank has already written down $10.4 billion over the last couple of years in relationship to mortgages.
According to Desoer, there must be changes in the program if they want to get more people to participate, and until that happens, there probably isn’t going to be any improvement for borrowers who really want to stay in their homes.
