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Bank of America (BofA) has come up with a plan to bail out foreclosure victims in the Phoenix area. Last summer BofA bought Countrywide, the nation’s largest subprime lender. Recently BofA has suspended foreclosure notices which have been pending against approximately 2,000 homeowners in the Phoenix area. More relief is expected soon. This move by BofA will lead to a cut in mortgage payments by homeowners.
BofA has entered into settlement agreements with the Attorney General (Arizona) Terry Goddard’s office. This agreement is expected to reduce the increasing number of foreclosures in the local housing market.
Last month, BofA asked the attorney generals of Arizona, Texas, Ohio, Iowa and Washington to halt legal action against Countrywide. In return, BofA offered to modify loans for defaulting homeowners. According to Goddard, this action is based on “alleged use of deceptive practices” by mortgage lenders. BofA will work with buyers who took loans uptil the end of 2007. Their mortagage payments will be made more affordable so that they don’t fall victim to foreclosure. The foreclosures will be put on temporary hold by BofA. The home-retention programme will be ready by the beginning of December. Under this programme, approximately 13,000 homeowners in Arizona will be eligible for loan modification which will be based on the affordability of the home-owner. Adjustable and negative amortization loans can be exchanged for fixed-rate mortgages under this scheme of modification.
According to Information Market, a firm dealing in real-estate research, the number of pending foreclosures in the area was 29,000 in early October. This figure has come down by about 2,000 due to BofA’s action and is expected to come down further.
Other big mortgage firms are being asked to follow BofA’s example. They have been asked to do this voluntarily. But at the some time, investigations are being carried out into fraud by some of these mortgage firms.
JP Morgan Chase announced a modification of mortgages throughout the nation. The value of these mortgages will be upto $110 million. This will help about 400,000 homeowners who are facing foreclosure.
Mortgage firms working in cooperation buyers is being seen as a far better solution than foreclosures. The basis of this cooperation will be what the homeowner can afford to pay in terms of mortgage repayment. This cooperation will lead to a win-win situation for mortgage firms, for homeowners, and for the economic condition of society with property prices stabilizing.
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[...] live up to the expectations of the customers. Credit card interest rates were allowed to run amok. Mortgages were fashioned to go straight into the arms of foreclosures. Lenders repeatedly showed how callous [...]