It is unfortunate, but is has become fairly common for many financial institutions to have customers that are struggling to hang onto their homes. Financial institutions have acted by developing new programs in order to offer assistance to these consumers. Governmental officials have also put some new initiatives into place in order to improve the situation.
“Making Home Affordable” is one of the new initiatives that was recently implemented by the Obama Administration. The program is targeted at eligible homeowners offering them the opportunity to refinance their homes to more affordable and long-term loans. As part of this program, borrowers are expected not to exceed a 31% debt-to-income ratio. The plan is estimated to help approximately 7 to 9 million people stay in their homes.
Bank of America (BoA) has openly stated its pledge to offer as much assistance as possible to homeowners throughout this turbulent time. The institution even sees this as an opportune time to change home ownership in a positive way.
“As leaders, it’s when times are tough that we have the greatest chance to make an impact, “stated Barbara J. Desoer, President, Bank of America Home Loans. “Change is something we often fear, but we can use these difficult times to change homeownership for the better – if we stay focused on seizing the opportunity, rather than being frightened by the uncertainty.”
B of A has recently launched its new brand called Bank of America Home Loans, a combination of the prior B of A brand and newly acquired Countrywide brand. Countrywide has added solid technology and a superior sales force to B of A so that they can provide the best possible mix of services to new and existing homeowners. B of A representatives have also expressed their pleasure with the “Making Home Affordable” program and have willingly adapted the guidelines into their plan.
“As soon as the plan was announced, our team began working on implementation. We have made additional staff available to take borrowers information and make an early evaluation of eligibility,” said Desoer. “We met with thousands of customers and created tools that reflect the transparency they want in the home-buying process.”
The Making Home Affordable plan fits right in line with the Bank’s focus of being an innovative leader in creating programs to lend a hand to stressed homeowners. Desoer noted that as part of this effort, B of A has developed The Clarity Commitment ™ which is a one-page summary that presents all the terms of a loan in easy to understand language.
Another important B of A initiative is to provide $2.5 million in funding in support of the Alliance for Stabilizing our Communities, a national coalition assisting communities that have had the greatest foreclosure impact.
In today’s economy, it may appear that financial institutions are not lending; however, B of A stated that it had lent out greater than $45 billion in mortgages in the last quarter of 2008 and has been continuing to lend extensively in the first half of 2009. In addition, the bank has dedicated itself to offering loan modifications to as many 630,000 customers this year in order to help them keep their homes. In the first quarter of 2009, they had already completed 119,000 modifications.
Unfortunately the new strategy is also bringing about additional opportunity for fraudsters to take advantage of homeowners while they are down. However, the FTC and Treasury’s Financial Crimes Enforcement Network (FinCEN) are making every effort to stay on top of this issue and diffuse as much crime as possible. FinCEN has been alerting the financial community to the possible variations of corruption concerning mortgage modifications.
Additionally, HUD has been providing literature to its housing partners to keep them informed. This in turn will keep consumers aware of legitimate foreclosure help that is accessible to them should they need it. Solid coordination of efforts between federal and state governments as well as cooperation from financial institutions is essential in order to assist as many homeowners as possible. Homeowners need to be aware of the risks involved with “foreclosure rescue operators” who make false claims of assistance.
In response to the current housing situation, several financial institutions have been providing consumers with information regarding loan scams. For instance Chase Home Finance, Suntrust Mortgage, GMAC Mortgage, and American Home Mortgage Servicing have been including such information in their monthly statements as well as in their correspondence to homeowners at risk.
This is a good time for your financial institution to dig in with your customers and set them up with solid information to help them protect their finances and their home. By doing this you will gain customer loyalty and make sure that you are developing long term relationships.
It may not be a quick and easy process but many financial institutions along with governmental agencies are doing whatever they can make progress in the effort to turn the housing crisis around.
