Thursday, April 9, 2009

BofA/Countrywide Extend Foreclosure Moratorium For Some Borrowers

Housingwire reports BofA Begins Refinancing Under ‘Making Home Affordable’ Plan

Bank of America Corp. announced Thursday that it has started processing its first wave of mortgage refinance applications under the Administration’s new “Making Home Affordable” program, which provides refinance opportunities to homeowners who previously could not qualify.

“[T]his program has generated significant interest from borrowers seeking the benefit of lower mortgage payments,” said Barbara Desoer, president of Bank of America Mortgage, Home Equity and Insurance Services. “In just one month since announcing this program, nearly 200,000 homeowners have contacted us to determine their eligibility for refinancing.”

…Bank of America also said it’s in the process of implementing the Treasury Department’s “Home Affordable Modification” program for Bank of America and Countrywide customers. In the next two weeks, the company expects to begin offering trial modifications under the plan. Bank of America has extended its voluntary moratorium on the foreclosure of loans that may be eligible for the “Home Affordable Modification” program until April 30, 2009.

How effective are these modifications? Housingwire also reports HOPE NOW Reaches Out; Will Homeowners Catch On?

The Office of the Comptroller of the Currency and the Office of Thrift Supervision announced in their most recent joint quarterly mortgage performance report that 41 percent of loans modified in the second quarter had fallen at least 60 days behind payments after eight months. The specific reasons for re-default were not clear, the report said, but a separate trend in the data indicates the degree to which a mortgage is modified — or how much monthly payments are reduced — may have some bearing on affordability and, consequentially, a borrower’s ability to remain out of default.

“Overall for 2008, about 42 percent of modified loans resulted in reduced payments, 27 percent in unchanged payments, and 32 percent in increased payments,” the agencies reported. “The proportion that reduced payments increased significantly in the fourth quarter, to more than 50 percent of all modifications.”

Re-default rates among modifications that actually lowered monthly payments “were consistently lower,” according to the report. About 23 percent of modifications that eased payments by more than 10 percent re-defaulted six months later, compared with the 51 percent of unchanged modifications that re-defaulted after six months. Some 46 percent of modifications that led to an increased payment had re-defaulted six months later.