Bank of America Increases Number Helped by Foreclosure Program
Tuesday, September 8, 2009; 7:13 PM
Bank of America, the country's largest lender, said Tuesday that it more than doubled last month the number of people it has helped through a government foreclosure-prevention program.
Under the program, known as Making Home Affordable, lenders are paid by the government to lower the payments of distressed homeowners. But in its first progress report on the program last month, the Treasury Department said it found that less than 10 percent of delinquent borrowers eligible for the program had received help.
Large banks like Bank of America were lagging, according to the Treasury report, and they faced criticism from some Democratic lawmakers and consumer advocates prodding them to do more to help borrowers. The administration is scheduled to release updated figures Wednesday, and executives from Bank of America, Wells Fargo and J.P. Morgan Chase will face questions from a House subcommittee that is reviewing loan-modification efforts.
"We continue to make good progress in approving new trial modifications to keep families in their homes," said Tom Kelly, a spokesman for J.P. Morgan Chase. "We still have more work to do." By the end of July, J.P. Morgan Chase had modified loans under the program for 20 percent of its borrowers who had missed at least two payments.
Bank of America had modified 4 percent, or 27,985, of loans to its delinquent borrowers through the end of July. But in August, the bank modified an additional 40,000 borrowers under the program, bringing its total to about 68,000. "The momentum, we have felt, has really picked up," said Steve Bailey, Bank of America's home retention strategies and policy executive.
Another 135,000 borrowers have also been offered help under the program but have yet to complete the process, he said. Bank of America aims to complete 125,000 modifications by Nov. 1, when the administration has set an industry-wide goal for helping 500,000 borrowers, Bailey said. "We will continue to ramp up more offers to more customers as we go," he said.
Bank of America has also helped hundreds of thousands of borrowers outside the government program, Bailey said, and those efforts will continue.
Lenders have faced increasing pressure to ramp up aid to troubled borrowers as foreclosure rates continue to climb. Homeowners and housing counselors have complained that despite government prodding, lenders have remained difficult to reach and slow to distressed borrowers.
Some Democrats in Congress have threatened to revive legislation allowing bankruptcy judges to modify the mortgages of troubled borrowers, known as cramdowns, if lenders don't do more to prevent foreclosures.