Bank of America and Wells Fargo, responding to criticism they are slow to help people keep their homes, told Congress they've accelerated...
Bank of America and Wells Fargo, responding to criticism they are slow to help people keep their homes, told Congress they’ve accelerated efforts to avoid foreclosures.
The top mortgage lenders reduced loan rates or arranged repayment plans to cut monthly payments, executives told the House Financial Services Committee on Friday in Washington, D.C.
Bank of America helped more than 117,000 homeowners avoid foreclosure from January through June, almost double the pace in the second half of 2007, said Michael Gross, a managing director at the lender.
“Bank of America remains committed to helping our customers avoid foreclosure whenever they have a desire to remain in the property and a reasonable source of income,” said Michael Gross, a managing director at the Charlotte, N.C.-based lender.
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U.S. bank regulators and lawmakers are prodding mortgage servicers to help more borrowers as foreclosure filings surge.
Bank of America and Wells Fargo are part of the Hope Now Alliance, launched last year at the request of Treasury Secretary Henry Paulson to reach more borrowers at risk of default.
Wells Fargo, which services one in eight U.S. mortgages, expanded its staff to more than 1,000, from 200 in 2005, to help borrowers, said Mary Coffin, executive vice president of Wells Fargo Home Mortgage.
San Francisco-based Wells Fargo contacted 94 percent of customers who are delinquent and helped 60 percent who agreed to work with the bank to avoid foreclosure, she said.
“Foreclosures are a measure of absolute last resort,” Coffin said.
Bank of America will modify at least $40 billion in troubled mortgages by the end of 2009 to help more than 250,000 borrowers keep their homes, Gross said.
Julia Gordon, policy counsel at the Center for Responsible Lending, said voluntary efforts so far “have not ramped up” fast enough to curb foreclosures.
“We have heard wildly different things about how much modification is going on,” said U.S. Rep. Brad Miller, D-N.C. “We have heard from industry that they are modifying like crazy. And we’ve heard from consumer advocates that they are hardly modifying at all.”
Committee Chairman Barney Frank, D-Mass., said there needs to be a sense of urgency.
“Yes, I’m glad you’re doing what you’re doing, but please don’t take any comfort from it because we’ve got problems,” he said.
Almost 1.7 million homeowners averted foreclosure through loan modifications from July 2007 to May 2008, Faith Schwartz, executive director of the Hope Now Alliance, said at the hearing.
Filings in the second quarter rose 121 percent to 739,714 from the year earlier, according to RealtyTrac of Irvine, Calif.