Bank of America announced that it is the first mortgage servicer to sign an agreement formally committing to participation in the pending second-lien component of the federal government's Home Affordable Modification Program (HAMP). The formal action follows a verbal commitment to the program made by Bank of America's Chief Executive Officer Brian Moynihan during a meeting with Treasury Secretary Timothy Geithner earlier this month.
Bank of America has systems in place to begin implementing the Second Lien Modification Program (2MP) with the release of final program policies and guidelines by federal regulatory agencies, which is expected soon. 2MP will require modifications that reduce the monthly payments on qualifying home equity loans and lines of credit under certain conditions, including completion of a HAMP modification on the first mortgage on the property.
"For many homeowners facing severe financial difficulty, decreasing the payment on the first mortgage without a reduction in the payment on the second lien may not produce an affordable combined mortgage payment," said Barbara Desoer, president of Bank of America Home Loans. "We continue to work with elected officials and policymakers on sound approaches to helping struggling homeowners keep their homes in these difficult economic times. Signing this contract ahead of the release of the final program guidelines is a continued demonstration of Bank of America's strong overall commitment to homeownership retention and to the Making Home Affordable program as the centerpiece of these efforts."
As the nation's largest mortgage servicer -- nearly 14 million loans, including approximately 3 million second liens -- the bank's participation in 2MP is particularly noteworthy. Bank of America will modify eligible second liens regardless of whether the first lien is serviced by Bank of America or another participating servicer.
Bank of America is a leader in providing modification opportunities under the HAMP first-lien program. In fact, it is the only bank that has placed more than 200,000 customers into the program through trial modifications. The bank also was among the earliest to offer and close loans under the Home Affordable Refinancing Program, and has refinanced 130,000 mortgages through the enhanced loan-to-value and streamlined provisions of that part of the Making Home Affordable initiative.
"2MP will become a valuable addition to Bank of America's broad toolkit of potential solutions for customers facing financial difficulty and will increase our ability to help even more homeowners," said Desoer.
Using non-government programs, Bank of America modified more than 57,000 second liens to assist financially strapped homeowners over the last two years.
For more information, visit www.bankofamerica.com.