Bank of America is on the run – this behemoth bank is continuing to withdraw from its previous goals of expanding operations in the home mortgage market.
In my November 19, 2012 article “Is Bank of America “Offloading” Loans to SLS”? I stated for the past two years Bank of America has been selling (offloading) and trying to recover losses related to their acquisition of Countrywide in 2008. Bank of America thought buying Countrywide would make them the premier housing lender. Acquiring Countrywide became one of the worst buyouts of all time. Bank of America later sold the troubled Countrywide home mortgages to the government (Fannie Mae). Fannie Mae suffered huge losses and filed lawsuits again Bank of America.
Last week, Bank of America sold off about 20 percent of its loan servicing in order to comply with an agreement to pay Fannie Mae more than $11 billion to settle the bad mortgages.
Bank of America has agreed to offload the servicing rights on two million loans totaling $306 billion. Nationstar Mortgage Holdings and Newcastle Investment Corporation have already bought those servicing rights. Newcastle currently collects payments from borrowers.
Bank of America now holds around 4% of the mortgages nationwide instead of the 20% it held in 2009. Today, the largest mortgage holders are Wells Fargo (30% of the market) and JPMorgan Chase (10% of the market). Bank of America is still facing claims from federal prosecutors and investors that will amount to billions of dollars more than what they’ve already paid out.
As part of Bank of America’s agreement with the government-owned Fannie Mae, Bank of America will pay around $3.6 billion to make restitution for faulty mortgages and $6.5 billion to buy back mortgages that were in jeopardy of default.
The message Bank of America is sending throughout the banking community is they are only willing to make mortgage loans to an elite, small group of people.
There are still numerous problems plaguing the mortgage industry. With fewer mortgage lenders, there are fewer banks competing and analysts predict higher interest rates this year. Complaints of backlogs and bad paperwork continue to be filed against lenders. Even borrowers with strong credit ratings are having difficulties with the lenders. Their complaints suggest the banks are still struggling to be competent and aren’t following the higher standards set during the financial crisis.
Keith A. Gantenbein, Jr. is a Colorado foreclosure defense attorney located in Denver and servicing all of Colorado. His foreclosure defense practice includes foreclosure prevention, foreclosure assistance, loan modifications, short sales, and all other foreclosure defense legal assistance. He also handles bankruptcies, mortgage negotiations, lender liability, real estate, civil litigation, contracts and landlord/tenant. If you think you will be facing foreclosure, or are in the foreclosure process, or have had a wrongful foreclosure, contact Keith Gantenbein at (303) 618-2122 for a one-hour consultation where he will discuss your situation and go over all your options with you.