Exactly why they are scrambling to help out people who bought more home than they can afford is a head scratcher. Well, it's good PR. And it will avoid forcing the bank to foreclose on more homes.

Read more on Bank of America Aims To Modify Mortgages For 125,000…

The banks received $70 billion from taxpayers. Politicians have taken them to task for not modifying enough loans. The banks just reported big profits.

The Obama administration set a target of 500,000 homeowners helped by its HARP program by Oct. 1. It does not look likely to happen.

Read more on Politicians Jawbone Bank of America, Wells Fargo…

I'm reading this new book by economist Thomas Sowell — The Housing Boom and Bust.

From 2000 to 2005, the average home price in the United States increased by one-third. Millions of Americans began using their homes as ATMs, getting credit lines from numerous banks to pay off their other debts (whose interest was not tax deductible, only mortgage interest payments are deductible). Then in 2007, it all crashed.

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Check out the book on Amazon.com.

Economist Thomas Sowell appeared on Dennis Prager's radio show May 27:

Tom: If the results weren't so serious, all this would make a great Gilbert & Sullivan musical, with all the mutually contradictory statements by the politicians…

Read more on Thomas Sowell's New Book: The Housing Boom and Bust…

From the San Jose Mercury News:

Bank of America's new program to enable some homeowners to modify existing Countrywide mortgages may help people stay in their homes — but also could shove borrowers into a new cycle of loan failures, analysts said Monday.
The bank agreed to settle claims brought by state attorneys general in connection with risky loans Countrywide had originated. The loan-restructuring program would apply to borrowers who obtained subprime loans with adjustable or fixed rates, or who got adjustable-rate mortgages with multiple payment options.
Bank of America bought Countrywide on July 1.
The loan restructuring could apply to about 120,000 borrowers in California, Frahm said. Bank of America will begin sending offers to borrowers Dec. 1.
In more than a few instances, O'Toole said, Countrywide's restructured loans featured payments based on super-low interest rates of 2 percent, with payments rising over time. Bank of America should restructure the loans so that the payments are high enough to pay down the principal on the mortgages, O'Toole said.
Under some scenarios, a restructured Countrywide loan could be transformed to a mortgage with an interest rate as low as 2.5 percent during the initial years of the new loan, Bank of America spokesman Frahm said.

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NEW YORK (AP) — Bank of America Corp. on Monday reported third-quarter results earlier than planned, revealing a wider-than-expected profit drop and plans to boost capital by selling $10 billion stock and halving its dividend.
Like most other major financial institutions, Bank of America has been hit by significant losses in mortgages, credit cards and other souring debt. To raise capital, Bank of America said it plans to sell $10 billion of common stock. Bank of America said Monday it made a $6.45 billion provision for credit losses — up from $5.83 billion in the second quarter and from $2.03 billion in the third quarter last year — after seeing massive deterioration in unsecured consumer loans, credit cards and residential mortgages.
Net charge-offs rose to $1.24 billion, representing a net charge-off rate of 6.14 percent.
Bank of America has been regarded as one of the stronger players on the U.S. banking landscape, thanks in large part to its overall size and massive base of deposits. Lewis made the decision even as his company continued to absorb the troubled mortgage lender Countrywide — a major reason behind Bank of America's poor third-quarter results.

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From Seattle:

"Since acquiring Countrywide in July, we have committed significant resources and developed innovative programs to help as many Countrywide customers as possible stay in their homes."
The new program will help people who got Countrywide subprime or pay-option adjustable-rate mortgages in 2004 through 2007 and are seriously delinquent or likely to become so because of loan features such as rate and payment changes. In Washington, 42 percent of Countrywide's subprime hybrid adjustable-rate mortgages (which have fixed initial rates), 11 percent of pay-option adjustable loans and 24 percent of fixed-rate subprime loans are delinquent.
The settlement resolves allegations that Countrywide used unfair and deceptive tactics to sell loans, and often put borrowers into unfair and unaffordable mortgages.
Bank of America also will pay $150 million nationwide to help people who already have lost their homes to foreclosure, although states could use up to half of this for foreclosure-prevention programs.

Read more on Bank of America Settlement Good News For 400,000 Home Owners…

CALABASAS, Calif., Oct 06, 2008 /PRNewswire via COMTEX/ — Bank of America today announced the creation of a proactive home retention program that will systematically modify troubled mortgages with up to $8.4 billion in interest rate and principal reductions for nearly 400,000 Countrywide Financial Corporation customers nationwide.

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From the USA Today:

Bank of America took over Countrywide in July, and Monday's announcement will settle claims by attorneys general in 11 states. Bank of America has agreed to modify loans for homeowners holding sub-prime loans and option adjustable-rate mortgages with Countrywide.
Attorneys general in states including West Virginia, California, Connecticut and Illinois had argued that Countrywide deceived borrowers by misrepresenting loan terms, loan payment increases, and the borrowers' ability to afford loans.
• Loan modifications will be made for eligible borrowers who are seriously delinquent due to loan features such as resets in adjustable rates. • Eligible homeowners will not be charged loan modification fees, and prepayment penalties will be waived for those with sub prime and pay-option loans that Countrywide or its affiliates own.
The cost of restructuring the loans is within the range of losses Bank of America estimated when acquiring Countrywide.

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From the Chicago Tribune:

LANSING, Mich. – Michigan is among 11 states participating in a settlement in which Bank of America will modify tens of thousands of loans to keep people from losing their homes.

Read more on Bank of America Makes A Deal Over Bad Home Loans…