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Bank of America Makes a Bold Move – Principal Forgiveness

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Change in attitude?

Bank of AmericaToday, Bank of America announced that it will introduce “principal forgiveness” which will look to reduce loan balances of qualifying distressed homeowners with adjustable rate mortgages or subprime loans in an effort to make their payments more affordable.

While smaller banks have already began taking this position, Bank of America is one of the first large banks to attempts this highly criticized loan modification option.

The Obama administration has been under fire this year for their highly ineffective Home Affordability Modification Program and rather than implement principal reduction, HAMP was simply extended.

With more homeowners becoming distressed and considering their limited options, banks currently offer a lengthened term or a change in interest rates, but this move to reduce principal is quite bold. Given BoA’s recent performance, we have to wonder if this is a PR move or if this might actually impact BoA loan holders?

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25 Comments

25 Comments

  1. Greg Cook

    March 24, 2010 at 2:19 pm

    Lani, I guess my response is I’ll believe it when I see it.
    As a former employee (Countrywide) and BofA loan holder in Southern California with an option arm, I could be the “poster child” for this program. I also have an equity line with them.
    It will be interesting to see how it all plays out.

  2. Mark Brian

    March 24, 2010 at 3:21 pm

    I will believe this when I see it. I would think it is a PR move but hope I will be proven wrong.

  3. Jessica Murr

    March 24, 2010 at 8:02 pm

    I’d love to see some REAL help for homeowners. I can’t tell you how many crappy things I’ve seen BoA do to people and families and it’s almost always some one who was a responsible person, didn’t buy a bad loan, didn’t refinance to the roof, they just lost their job, or got injured and couldn’t work, or had some other tragedy befall them and couldn’t keep up with their payments. It’s about time the people who honestly are innocent bystanders of this dilemma have some help.

  4. Brad Officer - Jacksonville Short Sales

    March 24, 2010 at 9:34 pm

    Just talked with home owner who has Chase. They are offering her a principal reduction of 97% of fair market value, fixed rate at 4.25%. About a $100k+ drop in principal.

    Thinking we will start seeing this more often.

  5. James Mucci - Michigan Refinancing

    March 24, 2010 at 9:44 pm

    Yes I think that most of the big banks modifications are because they are pressured into doing it. The evidence comes in the fact that most are “trial” loan modifications, and very few permanent modifications.

    So most likely this is just a big bank dong what they have to do so they can get regulations that benefit them in the future. Just look at the fact that their loan officers do not need to pass a criminal background check or get licensed, but any loan originators who work for a non depository lender must go pay, train, and pass a test, on a state and federal level.

  6. Missy

    March 24, 2010 at 11:23 pm

    So do they have an operating agreement that the government will pay them the difference, like Indy Mac now One West?

  7. Dunes

    March 25, 2010 at 1:31 am

    Think I’ll skip the how “Bold” BOA is party……https://www.hulu.com/watch/137462/abc-world-news-with-diane-sawyer-banks-and-the-battle-for-the-middle-class

    Estimated 6 million home owners late on their mortgage payments and what’s that number of loan modifications completed again?
    How many have already been foreclosed on?

    Yeah let’s use the word “Bold” when discussing BOA or any Bank when it comes to loan modifications…..

  8. Joe Loomer

    March 25, 2010 at 6:19 am

    I think it will be hilarous when (not if, WHEN) they modify the wrong homeowner’s loan! After all, they’ve foreclosed on the wrong house in at least three states already,

    “Honey? Did you pay off half our mortgage?”

    “No, Baby, why?”

    “Well, our BoA statement and payment just got cut in half”

    Ah, who am I kidding, poetic justice doesn’t work that way….

    Navy Chief, Navy Pride

  9. Dunes

    March 26, 2010 at 12:24 am

    Thanks for the tip Lanni…I actually read it when first posted.
    AgentGenius has been a favorite of mine for info and learning the views of Agents/Pros on a variety of Topics for awhile now..

    Wonder who’s behind this concept or created this place of interesting exchange and information…To bad we don’t know cause they deserve a “Well done” and another “Well done” for it’s growth and continued fairness in hearing/presenting all views for consideration.

    Plus it’s news and resources that can assist Agents and Consumers is nicely selected and presented. (Still playin with the Transportation/Expenses maps 😉

    Great site obviously for Agents to present their views and have interesting discussions, but my opinion is it is a great site for Consumers to learn about things in the Homebuying/Selling Process they may not have known or are not available on other sites plus become familiar with the opinions/thoughts of a group of very forthcoming willing to be honest Agents/Pros..Agree or disagree with them I admire their willingness to discuss pretty much any topic/issue openly for the Consumer to consider….

    In my opinion for the Consumer it’s important that they have the option & access to consider all views dealing with a major Financial & Emotional commitment..

    Now to be able to claim I intended to be on Topic…..How bout them Bank of America PR people? Soon they’ll be ranked right up there with the other Major PR legends from Trulia, Zillow, & Starbucks ; )…

  10. Dunes

    March 26, 2010 at 10:58 am

    Just read this this morning in the Washington
    Post..Will be announced on Friday by Obama..perhaps BOA wished to get some PR by announcing first to make it appear they wanted to help rather than going to be forced to help….”The measures have been in the works for weeks, but President Obama is finally to release the details days after his watershed victory on health-care legislation.”
    —————————————————————————————————————-
    “Banks and other lenders would have to reduce the payments to no more than 31 percent of a borrower’s income, which would typically be the amount of unemployment insurance, for three to six months. In some cases, administration officials said, a lender could allow a borrower to skip payments altogether.

    “The new push, which the White House is scheduled to announce Friday, takes direct aim at the major cause of the current wave of foreclosures: the spike in unemployment. While the initial mortgage crisis that erupted three years ago resulted from millions of risky home loans that went bad, more-recent defaults reflect the country’s economic downturn and the inability of jobless borrowers to keep paying”

    “The administration’s new push also seeks to more aggressively help borrowers who owe more on their mortgages than their properties are worth, offering financial incentives for the first time to lenders to cut the loan balances of such distressed homeowners. Those who are still current on their mortgages could get the chance to refinance on better terms into loans backed by the Federal Housing Administration. ”
    https://www.washingtonpost.com/wp-dyn/content/article/2010/03/25/AR2010032502426.html

  11. Levent

    January 28, 2011 at 3:46 am

    My loan has been already modified by BOA according the Making Home Affortable plan…Can I still be qualified by Principal Reduction Program…Anyone has any idea? Thank you…

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Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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zillow move

Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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