Mortgage Lenders Nationwide

One positive note to the Countrywide Financial. loan debacle it is that Bank of America now manages the Countrywide loan portfolio and is moving to restructure mortgages as part of an $8.4 billion settlement with three states.  With all the news of mortgage lenders working to help troubled borrowers keep up their payments and avoid foreclosure, very few homeowners in these high-cost, risky mortgages have benefited. Bank of America’s agreement with the attorneys general of California, Illinois and Florida isn’t a “we’ll see what we can do” settlement. It’s a must-do resolution of civil lawsuits that could affect 390,000 borrowers.

The B of A program would help homeowners through refinance mortgages into a government-backed FHA loan program, reduce interest rates on adjustable or fixed-rate mortgages or extend low introductory rates so that people aren’t forced into foreclosure because of a rate reset. The goal is to keep home loan payments to about 34 % of a homeowner’s monthly income. That’s reasonable and, we hope, realistic.  A Bank of America spokesman says the bank will roll out the foreclosure prevention program to all fifty states, beginning December 1st. An estimated 87,000 Maryland homeowners could potentially benefit, the spokesman said, and state Attorney General Douglas F. Gansler should push to get Maryland involved if a program review shows it would benefit state residents. 

As it is, there have been too few initiatives that have delivered real relief for homeowners facing home loan defaults. The state’s efforts, for example, have had limited impact despite increasing to twenty eight the number of housing organizations providing counseling services for refinance loans.  According to state figures, state-sponsored mortgage rate modification programs have led to sixty nine mortgage refinances with sixteen16 more pending. In the past eighteen months, at least 8,100 homeowners committed to refinance mortgages to get a better, more stable rate.
But the foreclosure picture here remains sobering. The Mortgage Bankers Association put the number of homes facing foreclosure just this spring at 18,000. Another 65,000 homeowners were late on their payments.  Promises to help homeowners avert foreclosure haven’t amounted to much. The attorneys general of California, Florida and Illinois used the power of the law to go after alleged predatory lending practices, and the $8 billion settlement is an impressive return.