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Committed to Modify $40 Billion of Loans

Mr. Gross is managing director for loan administration and loss mitigation at Bank of America. His viewpoint is an excerpt from his recent congressional testimony before the House Financial Services Committee.

Let me start by saying that our goal is to modify and workout at least $40 billion in mortgages by the end of 2009, and keep all those families in their homes.

I also want to congratulate the chairman and this committee on the vital housing legislation that the House approved on Wednesday. This legislation will be important to the long-term viability of home financing and the short-term stability of the housing market. We believe it will help both homeowners and potential homeowners alike.

We know that consumers who are experiencing financial challenges, but who ultimately have the ability to repay their loans, often need our help to stay in their homes. We are ready to help them. We do so because no one benefits from a foreclosed home. At the core of our combined operations are the substantial commitments we made to use responsible mortgage lending practices and to engage in aggressive loss mitigation efforts to help borrowers avoid foreclosures and remain in their homes. Bank of America is devoting substantial resources to modifying and working out loans for borrowers who are facing default and possible foreclosure.

We are continuing many effective home retention practices already in place, improving and supplementing these practices where we can, including robust processes for identifying and contacting at-risk customers in need of assistance, special strategies for subprime borrowers holding hybrid adjustable rate mortgages, and refinancing loan modification and other restructuring tools that make the borrower's debt affordable. We will continue to work with investors, the GSEs, regulators and community partners to identify ways to improve our ability to reach customers with affordable home retention solutions. We are devoting substantial human and financial resources to these important tasks. As previously noted, through focused effort and determination, by the end of 2009 Bank of America believes we can successfully modify or workout at least $40 billion in troubled mortgage loans - helping over a quarter million customers remain in their homes.

We are tailoring our workout strategies to a borrower's particular circumstance. Once we have been able to make customer contact, we work with distressed borrowers to match the customer's repayment ability with the appropriate option - using tools such as loan modifications, forbearances and repayment plans, lower rates and other loss mitigation methods.

We are not assessing new late charges for customers in foreclosure and, in certain circumstances we are waiving prepayment fees.

In response to the needs of our customers, we have added more staff and improved the experience, quality and training of the professionals dedicated to loss mitigation. Over the past year, the combined home retention staffs have more than doubled, and the company has committed to maintaining no less than 3,900 home retention staff to assist borrowers, for at least one year from the date of the merger. I want to emphasize that is a floor and we currently have 4,700 home retention staff and will maintain staff to ensure that we are able to me our customers' needs.

We are continuing to be proactive in contacting customers with adjustable-rate mortgages who are facing a significant rate reset to provide assistance before a problem hits. We are continuing to educate borrowers about risks, and the options available to them. Importantly, we will be tireless in our efforts to develop reasonable workout solutions for distressed borrowers who want to stay in their homes.

We clearly recognize that there is still much more to be done. Today's market conditions challenge us both to expand our existing home retention efforts as well as to develop new approaches, which will mitigate losses for investors. This is a critically important balancing act that must be done right if we as an industry are going to preserve the flow of mortgage credit to support housing, and at the same time protect communities and neighborhoods from avoidable foreclosures.

Bank of America remains committed to helping our customers avoid foreclosure whenever they have a reasonable source of income and a desire to remain in the property.

A key component of successful loss mitigation initiatives undertaken by national servicers includes partnerships with financial counseling advocates and community-based organizations such as NeighborWorks, ACORN, NACA and the Homeownership Preservation Foundation. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/