Bank of America Bails out Countrywide Mortgage Loan Borrowers
Back in July, Bank of America acquired Countrywide — and a pile of debt and subprime mortgages about to go into foreclosure. However, thanks to a settlement reached, mortgage loan borrowers in all 50 states will receive the benefit of Bank of America’s stability and buying power. In a radical and aggressive mortgage loan modification program, BoA is slashing payments. CNN Money reports on those who will benefit from the program:
As part of the initiative, Bank of America will cut monthly housing payments, including mortgage, property taxes and insurance, to no more than 34% of gross income. The move is expected to help keep as many as 400,000 troubled borrowers in their homes.
The program targets holders of subprime adjustable rate mortgage (ARMs), subprime fixed rate loans and option ARMs, but prime and Alt-A borrowers, who did not document their income, will be eligible as well.
The Bank of America mortgage loan modification program is likely to help more people that many other programs. It is very generous (almost enough to make me wish I had a subprime Countrywide mortgage loan), and may actually do some good as far as keeping people in their homes. And, Bank of America is large enough and stable enough to absorb the losses. It is going to have to make a dividened cut and raise some capital, but BoA should survive.
However, the Bank of America plan has raised some ire, mainly amongst those who have been meeting their obligations. There is no help for those who have made sacrifices to keep making their payments, and for those who are struggling, but still manage to be financially responsible. As is so often the case in our economy, the struggling, disproportionately taxed middle class — the hard workers who try their best, the true engine of the economy — are often left out in the cold.
Tags: Bank of America, Countrywide, home mortgage loan, mortgage loan blog,
economy, mortgage payments, middle class
