Banks

BofA to Double Outreach Staff but Fixing Legacy Issues to Take 3 Years

Posted on Friday, March 18, 2011

Bank of America said Tuesday that it is stepping up efforts to help distressed homeowners before they fall into foreclosure, but company officials warned shareholders that same morning that BofA’s $1 trillion portfolio of problem assets — loans that are already delinquent and those risky home lending products that the company has taken off the shelf – will take three years to work through.
In 2011, Bank of America plans to double its borrower outreach staff, open new regional centers to directly assist local homeowners, and increase collaboration with nonprofit housing counselors. Already this year, Bank of America says it has increased its outreach to regions that have experienced the biggest impact from the downturn in the economy and housing market.
In February, the company opened homeowner assistance centers in Seattle and Chicago. It plans to open four new regional centers near Washington, Los Angeles, Orlando, and San Francisco in the next two months. The bank’s assistance centers hosted meetings with 12,000 financially distressed customers in 2010.
Bank of America has already participated in 26 community outreach events since January, in association with regional and national nonprofit partners such as HOPE Now and Neighborhood Assistance Corporation of America (NACA). The company has committed to participating in more than 15 NACA “Save the Dream” events this year.
In addition, the bank has launched a series of borrower outreach events exclusively for Bank of America Home Loans customers, completing events in Phoenix, Chicago, and Detroit already this year, meeting with more than 3,300 customers. Another 10 independent events are planned around the country in the first half of 2011.
Bank of America says it works with more than 2,000 nonprofit housing organizations across the country and is
active in training housing counseling groups on its modification programs and processes. A dedicated homeownership retention unit helps facilitate the modifications process for nonprofit groups.
The bank named Rebecca Mairone as national mortgage outreach executive to spearhead these initiatives going forward. Mairone will report directly to EVP Terry Laughlin, who leads the newly created legacy asset servicing division, formed last month when BofA split the responsibilities of servicing problem loans and performing loans into two separate business units.
While the company is beefing up efforts to keep home mortgages from slipping into the “problem” category, the large volume of loans that already fit into this group will take the company three years to unwind, according to Laughlin.
Speaking at Bank of America’s investor conference on Tuesday, Laughlin explained that his legacy servicing organization will focus on loss mitigation resolutions for the company’s distressed asset portfolio. All loan modifications, short sales, deeds-in-lieu, foreclosure proceedings, and REO dispositions, as well as settling investors’ loan repurchase claims, fall under Laughlin’s jurisdiction.
To illustrate the scope of the challenge ahead, Laughlin explained that Bank of America’s total servicing portfolio – performing and nonperforming assets – amounts to $2.1 trillion, or about 14 million loans.
Forty-eight percent – 6.7 million loans worth $1 trillion – will transfer to Laughlin’s legacy servicing division. The rest will remain under the Bank of America Home Loans umbrella, which servicers mortgage customers who remain current.
The legacy portfolio that falls to Laughlin includes all loans that are 60 or more days delinquent, as well as discontinued loans products such as subprime, Alt-A, Interest-Only, and Option-ARM loans, although a number of the mortgages in the discontinued bucket are performing, Laughlin says. The vast majority of the mortgages being transferred to the legacy servicing unit were originated between 2004 and 2008.
“We gonna get after this, we’re going to do it the right way, and we’re going to put it to bed over the next 36 months,” Laughlin told BofA shareholders. “We’re making good progress, and we’re already deploying strategies to more rapidly resolve these portfolios that balance borrower, mortgage investor, and shareholder interest.”
By: Carrie Bay DS News


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