BoA First to Modify Seconds Under HAMP Initiative

The Obama Administration is finally making headway in its effort to get Bank of America and other large servicers to modify second liens when they modify first mortgages. Bank of America said it is the first to sign an agreement with the Treasury Department to participate in a second lien modification program (2MP), which will become a component of the government's Home Affordable Modification Program. Treasury is expected to issue guidelines for 2MP shortly. "For many homeowners facing severe financial difficulty, decreasing the payment on the first mortgage without a reduction in the payment of the second lien may not produce an affordable combined mortgage payment," said Barbara Desoer, president of Bank of America Home Loans. The 2MP program is designed to address cases where the bank services the first mortgage and owns the second lien. Since last summer Treasury has been working with BoA and several large banks on a second lien modification initiative. Four banks with $441 billion in second liens also service 55% of all first mortgages, according to some estimates.