Today Bank of America announced it has approved 21,000 permanent loan modifications through the federal Home Affordable Modification Program. This marks a significant increase in the number of loan modifications approved by the bank, as they only had approved 3,200 as of January 2010.
The major reason for this increase in permanent modification approval is that the HAMP program changed its guidelines so that banks did not receive incentives for loan modifications until they were made permanent. Previous to this, incentives were doled out for placing borrowers into the trial modification period, which is a 3 month period of reduced mortgage payments with no guarantee of a permanent modification even if all payments are made on time.
According to the Treasury, Bank of America has about one million loans that would qualify under HAMP guidelines, although BofA says it only has about 600,000. To date, Bank of America says it has completed half a million loan modifications through its own programs, but who knows if the new loan terms were significant enough for the borrowers to remain in their homes.
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