BofA given wrist-slap for failing to modify mortgages
Lending new dimension to the term "too big to fail," Bank of America has been let off the hook yet again by the feds, who agreed to absolve it of any liability for failing to provide foreclosure alternatives to 57,000 delinquent government-insured mortgage holders.
An unreleased agreement between the Department of Housing and Urban Development and BofA signed July 11 and obtained last week by American Banker requires the bank to waive a minimum of $10 million in unpaid mortgage payments and review the delinquent mortgages for possible loan modifications, short sales or other foreclosure remedies.
Ten million? That's a whopping $175 per sucker-punched homeowner. Show of hands: Who believes that's going to convince BofA to modify a loan?
And what was its fine for blowing off these 57,000 delinquent homeowners?
You guessed it: $0.
That'll teach 'em to mess with you, HUD!
The agreement merely requires BofA to do what it should already have done by law under the terms of its Federal Housing Authority mortgage loans, which is to offer loan mitigation options to borrowers who fall less than 12 months behind on their payments.
It also requires servicers to hold a face-to-face meeting with borrowers who are 60 days delinquent, a formality that also was widely ignored.
It didn't take the mortgage bigs long to figure out that if they just slow the train and remain their unresponsive selves, struggling FHA borrowers would soon fall more than a year behind and thus drift out of loan mod territory.
Under this agreement, they're technically supposed to give the 57,000 a do-over.
In May, BofA agreed to pay $20 million for improperly foreclosing on just 160 homes owned by members of the military. Apparently the lesson they took from that slap on the wrist is that they overpaid.
You knew taxpayers would wind up on the hook for part of this fiasco, right? Beyond all those FHA loans that no doubt will remain unmodified, I mean.
Sure enough: As part of the deal, HUD agreed to pay any mortgage insurance claims and waive any pending administrative actions against BofA and its officers for its lax loan servicing.
After all, we wouldn't want BofA to think we're serious about following the rules.
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