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Bank of America announced to 2,500 of its workers in they were being reassigned to loan modifications. This increase in staff for BofA’s loan modifications section comes two weeks after the national bank promised Congress they would improve the service they offered to struggling borrowers facing foreclosure. BofA came under scrutiny by the Senate Banking Committee hearing into mortgage servicing.
Servicing is a term that describes the billing, collecting of payments and managing of delinquencies and foreclosures for investors in mortgage-based securities.
Bank of America has received a lot of criticism for the way it deals with customers facing foreclosure. At the Congress hearing, chief of BofA, Barbara Desoer, announced the company would create a new system to deal with loan modification cases. The new system will assign case managers to loan modifications so that homeowners do not have to jump from one loan modification agent to another and explain their situation over and over again. The idea is this will speed up the process and reduce the number of lost documents and unnecessary delays.
Bank of America is the largest mortgage servicer in the United States since they bought out Countrywide Financial Corp., the previous number 1 mortgage lender.
Up to now, Bank of America has helped over 130,000 modify their loan to reduce their mortgage payments to an affordable level. The two other American banking giants, Chase and WellsFargo have also announced they will assign specific case managers for loan modifications, although Chase has still the implement the program.
Barbara Desoer explained in the Senate hearing the program would deal with one of the main problems borrowers complain about: having to explain their situation to a different employee each time they called and having to deal with changing and often conflicting instructions for loan modification officers.
According to BofA, they are using workers from their mortgage origination departments because they are already familiar with the processing and analysis of documents required to asses loan modification applications. This is a significant increase in the staff dedicated to loan modifications, a more than 10 percent increase in a single week.
The problem until now is that loan modifications remained a “specialty” operation of billing and collecting of payments departments. These departments had neither the manpower (or womanpower) or resources to deal with the flood of loan modifications that started in late 2007.
This change in strategy will hopefully give more borrowers the chance of reducing their monthly payments and avoid foreclosure.
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