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Bank of America Signs A Pact For
$10 Million With HUD Over Faulty
Loss Mitigation
$10 Million With HUD Over Faulty
Loss Mitigation
Bank of America has settled with The Department of Housing and Urban
Development for $10 million. This releases the company from liability regarding
litigation for failing to adequately provide foreclosure alternatives to 57,000
delinquent government insured mortgages.
Under the settlement Bank of America has agreed to waive $10 million in unpaid
mortgage payments and fees. B of A will also work with the 57,000 delinquent
homeowners to either reach a loan modification or a short sale. The deal calls for
the bank to do whatever is possible to help homeowners remain in their homes.
The settlement now allows Bank of America to go ahead and foreclose on
borrowers who failed to make payments even after a modification program, and
also to foreclose on houses that were left vacant by the owners.
The agreement is unique in that no error or blame is admitted by the Bank of
America and HUD decide to forego monetary damages. HUD pushed for the bank
to implement steps that should have already been in place under the terms of the
FHA guaranteed loans program. If the steps are followed foreclosures and
insurance claims will be minimized.
This is the first case involving HUD where a loan servicer failed to offer loss
mitigation to borrowers and there was a financial settlement. HUD is still free to
pursue Bank of America for other unrelated servicing failures.
Under HUD's standard terms a homeowner has to be less than 12 months
delinquent before he can qualify for a loan modification. The $10 million settlement
will be used to pay the arrears of borrowers and bring them under the 12 month
threshold. This way they can qualify for a loan modification or some other foreclosure
alternative.
Development for $10 million. This releases the company from liability regarding
litigation for failing to adequately provide foreclosure alternatives to 57,000
delinquent government insured mortgages.
Under the settlement Bank of America has agreed to waive $10 million in unpaid
mortgage payments and fees. B of A will also work with the 57,000 delinquent
homeowners to either reach a loan modification or a short sale. The deal calls for
the bank to do whatever is possible to help homeowners remain in their homes.
The settlement now allows Bank of America to go ahead and foreclose on
borrowers who failed to make payments even after a modification program, and
also to foreclose on houses that were left vacant by the owners.
The agreement is unique in that no error or blame is admitted by the Bank of
America and HUD decide to forego monetary damages. HUD pushed for the bank
to implement steps that should have already been in place under the terms of the
FHA guaranteed loans program. If the steps are followed foreclosures and
insurance claims will be minimized.
This is the first case involving HUD where a loan servicer failed to offer loss
mitigation to borrowers and there was a financial settlement. HUD is still free to
pursue Bank of America for other unrelated servicing failures.
Under HUD's standard terms a homeowner has to be less than 12 months
delinquent before he can qualify for a loan modification. The $10 million settlement
will be used to pay the arrears of borrowers and bring them under the 12 month
threshold. This way they can qualify for a loan modification or some other foreclosure
alternative.
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