Bank Of America Selling Off Mortgages

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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.

About theglawfirm1

Gantenbein Law Firm is a Denver, Colorado Tax Law Firm, servicing all of Colorado. Gantenbein Law Firm also specializes in Colorado Real Estate Law, Colorado Foreclosure Defense, Wills & Trusts, and Business Law.
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2 Responses to Bank Of America Selling Off Mortgages

  1. al says:

    I don’t disagree at all with your position vis a vis BOA’s commission of fraud upon it’s mortgage customers facing foreclosure.
    However, I would like to alert you and your readers to the OPPOSITE situation whereby they FAIL to protect the integrity of neighborhoods by REFUSING TO TAKE OTHERWISE LEGITIMATE FORECLOSURE ACTION THEREBY PROTECTING NEIGHBORING PROPERTY OWNERS AND THEIR OWN SHAREHOLDERS!
    The following is the essence of any email (names/locale removed) sent to BOA “customer relations” folks identified in this wiki post:
    “The reason for this email is to express the consummate frustration that we have been experiencing for one year now as a result of your bank’s consistent refusal to proceed with an entirely warranted and justified foreclosure of a home. We just completed a call to the law firm representing your bank after noticing that this property suddenly disappeared from their list of properties to be auctioned.

    Noticing that these debtors had returned to this property in July 2012, after leaving it a year earlier, we called both the local police, searched county records, and obtained whatever information available regarding this property’s status.

    It is clear that the buyers of this home fell delinquent in their mortgage payments sometime in 2010 and, in 2011, left the home completely. Having owned our home for 12 years as a part-time resident who visits often, we noted the increasingly poor condition of this home and its unkempt yard. Clearly, these are residents who cannot, or will not, respect either their legal/financial obligations or the integrity of the neighboring properties.

    These residents returned in the heat of the summer of 2012 without ensuring that the premises had running water or air conditioning. If not for our efforts with local and state officials where we advocated that they cite this home as uninhabitable, the returning residents would not have paid an outstanding water bill and provided running water to the home. They were using pool water, which had not been filtered/treated for at least a year, to flush their toilets. Because of a serious mosquito problem in the area, the Town had to treat the community with pesticides. We were concerned that the untreated pool was a potential health hazard for West Nile virus and alerted the county accordingly.

    We became aware that BOA secured the winterization of this home in 2011 after the default of these property owners on their mortgage. This action must have been taken to protect what the BOA viewed as their legal ownership of these premises. Why then, after the property was vacated by the property owners of record, does BOA continue to treat the occupants as the legal owners?
    We are also aware of BOA’s forgiveness of the second, or subordinate, loan that it made to this property owner in the amount of approximately $100,000. As the total amount loaned to these delinquent debtors totaled roughly the sales price, we estimate that at least $500,000.00 remains due BOA. Considering the interest that has accumulated in the ensuing three years, we imagine that a good deal more is left owing.

    Due to the significant fall in home values, and especially in light of the deplorable condition in which this home now finds itself, its market value would approximate one half of the outstanding loan amount.

    It is clear to us, now more familiar with the “main breadwinners” work record that he appears to have great difficulty finding work and lost his job with the BOA shortly after purchasing this home. His attempts to support a family of five on whatever limited employment is available to him in this remote, seasonal area seem inadequate.

    BOA’s hopes of ever securing any responsible payment of the amounts owed it are slim, if they exist at all; and this latest report we received of an attempt to “work out” the loan is ludicrous, if not exceptionally and personally damaging to us as neighbors in this unfortunate situation.

    Additionally, the eldest daughter in this family is in frequent trouble with local law enforcement and is, in fact, in court today answering two drug-related charges.

    It is clearly false economy for the BOA to believe that the correct remedy for this problem is to wait for an epiphany that will turn these debtors into responsible borrowers or good neighbors. A better approach would be to conduct the auction of this property as scheduled and allow a competent borrower to purchase and rehabilitate the same. We certainly feel that BOA stockholders would appreciate this latter approach as well.
    It is perplexing, too, why some hard-working individuals trying to care for and support their homes in this and other communities and who truly suffered hardships for which they were not responsible, were displaced from their homes by BOA in short periods of time and without the same opportunities granted these homeowners. We’re sure these BOA customers would appreciate an explanation for the disparate treatment evidenced here.”

    • theglawfirm1 says:

      I understand your concerns. BofA is never really concerned about securing a responsible payment on the loan; the fact is that they make more money on a non- performing loan than a current loan. The foreclosure industry standard and practices hurt all of us, whether or not we are current on our mortgage. This is NOT about a homeowner who can or can not afford to make payments. This is about a lender profiting off of a system that has allowed them to falsify documents, fix interest rates and otherwise manipulate a system to increase profits. Their actions hurt all of us and the longer that the Bank delays the foreclosure, the more money they make. It is simple math: More time equals more late fees, servicing fees, interest, and costs! The loan modification and default management systems are set up to fail because it is profitable to fail.

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