B of A to Forgive Some Borrowers Some Debt, Sometimes
- Mar 25, 2010
March 25, 2010
By Dees Stribling, Contributing Editor
Has Bank of America decided to play nice with underwater Bank of America mortgage holders? Would such a thing even be possible? Maybe so. The Massachusetts Attorney General recently said that it was preparing to sue the bank if it didn’t.
The bank now says that it will begin forgiving some borrowers some of their mortgage debt. Specifically, homeowners who got their mortgages through the now-gone and not-lamented Countrywide Financial, best known of the bubble-era mortgage makers, which Bank of American bought in 2008. Also, the borrowers need to owe more than 120 percent of the value of the home, be 60 days late already, and show financial hardship.
The plan doesn’t involve reducing principal outright. Instead, borrowers “earn” the reduction in stages over a period of five years by paying their new, lower monthly payments consistently. If the value of their house happens to go up enough such that they have equity, the bank could halt the reduction after the third year.
NMHC’s DeWitt Asks Congress Not to Ignore Multifamily Industry
National Multi Housing Council secretary Bob DeWitt testified before the House Financial Service Committee this week regarding the future of Fannie Mae and Freddie Mac, especially their future in multifamily finance. DeWitt, who is also vice chairman and CEO of GID Investment Advisers L.L.C., wants them to have such a future; he stressed that the apartment business needs government support, particularly in the form of the liquidity provided by Fannie and Freddie.
Besides keeping the industry liquid, DeWitt continued, any new or revised secondary market system must explicitly recognize the capital needs of the apartment sector, since they its needs are apt to get lost in the glare of single-family housing finance. He did not call for a new federal secondary market entity, but rather continued government support to leverage private capital.
“This is important because the nation is increasingly relying on apartments as fundamental changes in our society are changing the types of housing we need to build,” DeWitt said. “Housing expert Professor Arthur Nelson of the University of Utah projects that half of all housing built over the next 10 years will need to be rental housing to meet the dramatically changing landscape of demand.”
New Home Blues
New home sales dropped 2.2 percent in February to an annualized rate of 308,000, according to the U.S. Department of Commerce on Wednesday. It was the third month in a row that new home sales declined, and represented a 13 percent year-over-year decline.
There was one region where new home buying was actually up last month, however: the West, by 21 percent. By contrast, sales were down 20 percent in the Northeast, 18 percent in the Midwest and 4.6 percent in the South.
Wall Street registered a down day on Wednesday, with the Dow Jones Industrial Average losing 52.68 points, or 0.48 percent. The S&P 500 dropped 0.55 percent and the Nasdaq declined 0.68 percent.