Bank of America Home Loans has begun providing its exclusive "Clarity Commitment(TM)" to customers entering permanent mortgage modifications under the government's Home Affordable Modification Program (HAMP). The Clarity Commitment, an easy to understand, one page summary of key terms, will be offered with loan modifications made under any non-government program in the coming weeks.
Responding to consumers seeking simplified explanations of credit products, Bank of America introduced the Clarity Commitment for customers taking out new first mortgages in April, leading the industry in providing clarity, simplicity and transparency to customers. The bank later extended the concept to home equity loans and reverse mortgages, and recently launched a Clarity Commitment for credit card customers.
"Our Clarity Commitment for new mortgages has been very well received as a demonstration of our dedication to responsible lending and the creation of successful homeowners," said Rebecca Mairone, national servicing executive for Bank of America Home loans. "Modified mortgages may have considerably different terms than the original contract. As our customers transition to their new affordable payment, it is important that they have this simple and concise explanation of the terms of their modified loan."
The Clarity Commitment for loan modifications summarizes:
- The new principal balance and all charges included in it.
- The Interest rate
- The total monthly payment at the outset of the loan and, if applicable, at each point that the rate and payment will adjust through the life of the loan.
- The initial amount of any escrow payment included for such things as taxes and insurance, with an explanation that these charges may change during the life of the loan.
- On eligible HAMP modifications, the incentive payments homeowners may earn toward reducing their principal balance if they make timely payments over the first five years.
Homeowners participating in HAMP will receive a Clarity Commitment statement with their modification documents. Their modification package is sent after they successfully complete a trial payment period. Those who are being offered assistance under other programs will receive the Clarity Commitment with the documents to be signed for their modification.
Bank of America services 14 million residential mortgages, more than any other financial institution. Since January 2008, the bank's commitment to keeping more than 160,000 trial modifications through HAMP and more than 450,000 completed modifications through non-government programs and individualized solutions.
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