B of A's Mortgage Chief: We're at a 'Crossroads' on Foreclosures
Bank of America, the nation's largest servicer of home mortgages, said in prepared testimony Tuesday that the company is at a "crossroads" between loan modification efforts "and the reality of foreclosure" with 14% of its home mortgage customers in some stage of delinquency.
"The majority of initial volume and backlog of customers seeking solutions have been evaluated for available programs," said B of A mortgage chief Barbara Desoer. "We're reaching a peak where some customers will be dealing with the reality that despite the myriad of programs and our best efforts, foreclosure is unavoidable."
She noted that the servicer is "constrained by our duties to investors," adding that of the nearly 14 million loans in its servicing portfolio, just 23% are owned by the bank with the balance under the control of investors in the secondary market. (Fannie Mae and Freddie Mac, she said own 60% of these loans.)
"Many investors limit Bank of America’s discretion to take certain actions," she said. "When working with delinquent customers, we aim to achieve an outcome that meets customer and investor interests, consistent with whatever contractual obligations we have to the investor."
Testifying before the Senate Banking Committee, Desoer said 86% of its mortgage customers are current, making their mortgage payments each month.
"Others are unfortunately in distress," she said in written testimony. "Helping these customers remain in their homes where possible is a top priority for Bank of America – as evidenced by our 700,000 completed loan modifications since 2008."
According to figures compiled by National Mortgage News and the Quarterly Data Report, B of A is the nation's largest servicer of residential loans with close to $2.2 trillion in receivables and a market share of nearly 22%.
However, most of its problem mortgages were inherited from Countrywide Financial Corp., which it bought in August 2008.