Bank of America Modifies Mortgages
Monday October 6, 2008
Bank of America announced a loan workout program today that will help former Countrywide borrowers who got into high-risk mortgages. Those who got mortgages between January 1, 2004 and December 31, 2007 may qualify for the program, which promises to cut their payments to affordable levels.
Bank of America will wave goodbye to $8.4 billion in revenue as a result, but executives say they expected and planned for it. The bank will waive prepayment penalties, cut interest rates, and reduce principal amounts to subprime borrowers. The move comes as part of a predatory lending suit brought by 11 states, but Bank of America will make the program available in all states.
Borrowers will be more likely to stay in their homes, and Bank of America won't have to go through the foreclosure process. This sounds like a win-win at this point - B of A wouldn't do very well if they tried to foreclose and sell the properties.
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Comments
Finally, a common sense move in all this chaos!
I wonder how the carnage we’re seeing these days would have been reduced if banks did this earlier and voluntarily.