Bank of America Aims To Modify Mortgages For 125,000

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.

The U.S. Treasury departments says Bank of America is far behind its competitors when it comes to modifying mortgages.

B of A is struggling with staff shortages and the avalanche of paperwork the new program requires.

B of A sent many homeowners a letter saying they did not qualify for the new program when in fact they did.

The Washington Post reports:

Under the Making Home Affordable program, lenders are paid with taxpayer funds to reduce borrowers' mortgage payments by lowering their interest rates, for example, or by extending the terms of their loans

A progress report released last week by the Treasury Department showed that only 11 percent (about 95,000) of Bank of America's delinquent borrowers who were potentially eligible for the program had been given a loan modification. That compares with 27 percent, or 117,000, for J.P. Morgan Chase, and 33 percent, or 68,000, at Citigroup, the Treasury reported. The figure for Saxon Mortgage Services, which is owned by Morgan Stanley, is 41 percent, or 32,000.

"We're sure working hard," Ken Scheller, senior vice president for home retention at Bank of America, said when asked about his company's low ranking. "We don't want to be down there." He added that the bank had modified 215,000 mortgages outside the federal program this year, including some under the terms of a settlement reached with state attorneys general related to subprime loans issued by Countrywide Financial, which Bank of America bought last year.