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Bank of America Homeownership Centers Not Really Reid's Idea?

By
Mortgage and Lending with Alterra Home Loans

A couple of months ago my wife heard an ad on talk radio about the Bank of America Home Ownership Centers that Senator Reid worked with Brian Moynihan (President and CEO of B of A) to establish.  I worked for Bank of America from March of 2009 through October of 2009 and had heard they were in the process of setting these centers up in the states that were hardest hit by the economy and housing downturn - Florida, California, Arizona and Nevada.  When we met with the B of A representative regarding a potential loan modification, she confirmed that Senator Reid had nothing to do with the establishment of these centers - I'm not a fan of Harry Reid or any of the lawmakers on Capitol Hill since they continue to pass incredibly bad laws that limit consumer's choices and make the transaction and process of buying / financing a home more confusing and difficult for the consumer while also trying to drastically limit the pay a loan officer can receive.  It now becomes apparent that Senator Reid is also a liar in addition to being a bad policy maker since he is trying to take credit for something that is not his.

Some recent laws that have been enacted that have adversely affected the consumer are the HVCC (appraisals), the GFE 2010 (all mortgage transactions) and the financial reform act (limits the loan officers' pay and according to the President of Chase, it will cost Chase about $500,000,000+ per year - and these costs will be passed on to the consumer; how does this help the consumer?) to name a few.  We need lawmakers on Capitol Hill who are honest and ethical and who either actually understand the real estate and mortgage industries or will consult with people on the front lines to help pass good laws that will benefit everyone.  The laws mentioned above along with some others that have been passed recently all attack the loan officer as if that position was the absolute only evil in this mess.  I stipulate that most of the bad loan officers are no longer in the business and these penalties that the government is imposing through these laws are only hurting the good loan officers that remain.  The lawmakers need to stop serving their special interests and start serving their constituents by consulting with loan officers, escrow and title officers and Realtors to enact laws that really do improve the system and serve the consumer.  But I digress...

What my wife and I found out regarding the Bank of America Homeownership Centers is that they are completely unwilling to reduce the principal balance of the loan.  They may reduce your interest rate and they may increase your loan term.  When we got home from that meeting, my wife called an attorney that a friend recommended who has had success with getting principal reductions and the attorney told my wife that no lender is forgiving any principal at this point.  Based on the statistics I've seen, I think that negative equity is the biggest factor for people walking away from their homes among people who are able to make the payment - why else would you walk away if you can make the payment?  I also think that if people who lost their jobs or had a significant reduction in income weren't so upside down, they may fight a little harder to keep their home.  The odd thing is that if lenders don't reduce the principal now, they may be forced to reduce the principal later via a foreclosure or short sale.  In the case of a foreclosure, they have the added expenses of attorney's fees, carrying costs and possible repairs.  In short, the banks are still all fouled up and the consumers / homeowners still don't have any real significant relief.  I haven't even touched upon the subject of how short sales and foreclosures will affect a person's credit - that's another blog post.

Posted by

D. Jed Wunderli

Certified Mortgage Planner

Alterra Home Loans

702-812-1214

Comments (2)

Dennis Herman
Crossroads Real Estate LLC - Howards Grove, WI
Dennis Herman

We don't need new laws, we need JOBS with a good income.  Try to find a job paying more than 8-10 dollars per hour.  Over 40 years old, forget the job market.  Health insurance companies are allowed to tell companies to hire only younger workers.  In Real Esatte we call that descrimination.  Health insurance companies call it doing business. 

 

Remember 5 years ago?  You had to be a year behind in payments before the bank began the foreclosure process.  Now it is 3 months and they are standing on the court house steps waiting for the doors to open to file.

Aug 17, 2010 03:07 AM
Jed Wunderli
Alterra Home Loans - Las Vegas, NV

Dennis - you are absolutely right - we do need more jobs and preferably good ones.  My comment on the laws stems from how much worse the lawmakers have made it for consumers and those in the industry under the guise of trying to protect the consumer.  Over the last three years, the government has helped banks and Wall Street firms with bailouts and even returned them to profitability (maybe not based on their traditional model of how they are supposed to make money) but the laws they have enacted have hampered a buyer's / borrower's ability to get financing for a home (as does joblessness) and make it much more difficult for us to do our jobs.  To be sure, a lot of work needs to be done.

Aug 17, 2010 03:16 AM