Bank of America's home retention efforts were highlighted in a testimony before the House Financial Services Committee on Tuesday December 8. Representing the bank, Credit Loss Mitigation Strategies Executive Jack Schakett underscored the bank's achievements in assisting distressed homeowners through loan modification and refinance efforts:
- Enrolling more than 160,000 customers in a trial modification through the Administration's Home Affordable Modification Program (HAMP) - leading the industry in the number of active trials and offers extended as of the most recent Treasury report.
- Helping another 450,000 Bank of America customers over the last two years through Bank of America's own proprietary loan modification programs.
- Leading the industry with more than 100,000 customers assisted through the Administration's Home Affordable Refinance Program (HARP).
Challenges Converting HAMP Trial Modifications to Permanent
A key component of the HAMP programs is a three month trial period. During the trial phase, customers prove they can successfully make their new payment and provide required documentation. Recent scrutiny has focused on the success servicers like Bank of America are having in making trial modifications permanent. Schakett said the bank fully shares the Treasury's commitment to convert successful trial modifications to permanent as quickly as possible. In addition to customers making three timely trial payments, the servicer must fully underwrite the permanent modification by obtaining all required documentation. This includes verifying income, occupancy status and tax returns. Schakett said the single biggest obstacle to a quick and successful conversion is obtaining all required financial information.
Schakett shared the bank's focus to encourage customers to complete their documentation before the end of their trial modification period. For these customers, the bank will have made about 10 reminder phone calls and sent,a t least twice, a summary of required documents with a postage paid express mail package through which customers can return their documents.
Schakett said there is a high rate of success converting the modification to a permanent one when customers have provided all the required financial information.
Schakett also discussed how HAMP could be improved to help more borrowers, explaining that Bank of America believes it is necessary to provide solutions for customer segments that fall outside HAMP's target reach, such unemployed. While Bank of America is working proactively to create programs for these borrowers, Schakett encouraged Treasury to take the lead on expanding HAMP and creating an industry standard to help more customers.
"Toward the goal to keep as many customers in their homes as possible, Bank of America will exhaust every available option," he said "We will continue to pursue initiatives that increase the number of customers receiving assistance, enhance the sustainability of the loans and improve the experience for customers throughout the process."
Emphasis on Improving the Customer Experience
- Bank of America has taken major steps to reach eligible homeowners and improve the level of service they receive, including:
- Expansion of default management staffing to 13,000 and reassignment of hundreds of mortgage loan officers to serve as case workers to assist customers in the conversion from trial to permanent modifications.
- Launch of a home loans assistance website for customers.
- Implementation of a door to door campaign to reach borrowers who have not responded to trial modification offers or provided necessary documentation.
- Participating in more than 200 community outreach events in 30 states.
- Sponsorship of the Alliance for Stabilizing Our Communities, the first national multicultural outreach and home retention collaboration with the National Council of La Raza, National Urban League and National Coalition for Asian Pacific American Community Development.
- Piloting the company's first Customer Assistance Center in Brea, CA providing face to face counseling on mortgage and home equity loans, credit card accounts and personal loans.
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