Showing resistance for the first time against government pressure to write off tens of billions worth of mortgage debt, Bank of America executives said on Tuesday that the idea was unworkable and warned that it would be unfair to borrowers who had managed to stay current on their loans.
“There’s a core problem that if you start to help certain people and don’t help other people, it’s going to be very hard to explain the difference,” said Brian T. Moynihan, the chief executive of Bank of America. “Our duty is to have a fair modification process.”
All 50 state attorneys general, as well as a host of federal agencies, are pushing for a settlement over investigations into foreclosure abuses by major mortgage servicers that could cost the industry $20 billion or more. Much of that money would be earmarked to reduce principal owed by homeowners facing foreclosure.
But picking just who to help is among the thorniest questions facing government regulators, as well as the banks themselves. Even the most outspoken attorney general on the issue, Tom Miller of Iowa, acknowledged on Monday that too generous a program might encourage homeowners to walk away from properties where the value of the loan exceeded how much the underlying property was worth.
Indeed, industry experts estimate that nearly a trillion dollars worth of mortgage debt is “underwater,” a result of house prices having fallen since the original loans were made. Federal officials hope a settlement with the servicers will help individual borrowers and provide a cushion for the weak housing market.
Officials of Bank of America, the nation’s biggest mortgage servicer, argue that any effort to help troubled borrowers should not penalize borrowers who are underwater but have managed to make their monthly payments.
“There may be as much as $1 trillion worth of mortgages that are underwater,” said Terry Laughlin, the Bank of America executive whose unit, Legacy Asset Servicing, handles mortgages that are delinquent or in default. “What do you do for those borrowers that have a job but have negative equity and have paid on time and honored their obligations?”
“This is an unsolvable question,” he said. “It’s a very slippery slope.”
The comments by Mr. Moynihan and Mr. Laughlin came at a daylong meeting with investors and analysts in New York, the first of its kind for Bank of America since 2007.
Despite fierce criticism by regulators and political leaders that its efforts to help troubled borrowers have fallen short, Bank of America executives insist that the number of successful modifications the bank has completed is >>> Read More
The Carman Law Firm will tell you that most loan modifications (even ours) DO NOT have principal reductions. A bad loan modification is not any better than a bad mortgage. Many times the lender's first offer is not their best offer. Not every home can be saved and many homes are so far upside down that they should not be saved, but instead liquidated so that you can start living your life.
If you are in foreclosure, our professional, quite frank, and objective advice can be received in a free, no obligation initial consultation. As this blog posting clearly indicates, we perform a full analysis of the cases filed against our clients. We listen to our clients' objectives, advising our clients as to their options and create a plan to achieve the clients' goals. We then go to work implementing the plan.
Our office has and continues to defend homeowners across the state of Florida from Miami to Vero Beach, in Collier and Lee County on the west coast, and in Orange and Seminole County.
Call the Carman Law Firm
at
(561) 392-7031
or toll-free at 1-800-763-0775. You can also email us at
info@carmanlegal.com, get answers you need and schedule an informative and free comprehensive consultation on how the Carman Law Firm can help you.
As a side-note, I continue to hear from potential clients and their Realtors that Bank of America does not waive deficiencies. Unless there are unusual circumstances, our cases have all closed with a full waiver of deficiency. It is important that our clients be able to sleep comfortably after the completion of their short sale or deed -in -lieu.