Bank of America (NYSE:BAC) First to Officially Sign On To Home Affordable Second-Lien Modification Program

Bank of America (NYSE:BAC), which is the largest mortgage servicer in the United States, has become the first such company to sign on to the Home Affordable Second-Lien Modification Program (HAMP).

This is a formalization of what Bank of America CEO Brian Moynihan verbally agreed to last month when meeting with Treasury Secretary Timothy Geithner concerning the issue of whether the bank would participate in the second-lien portion of the HAMP program or not.

In a press release, Barbara Desoer, president of Bank of America Home Loans, said this: “For many homeowners facing severe financial difficulty, decreasing the payment on the first mortgage without a reduction in the payment on the second lien may not produce an affordable combined mortgage payment.

“We continue to work with elected officials and policymakers on sound approaches to helping struggling homeowners keep their homes in these difficult economic times. Signing this contract ahead of the release of the final program guidelines is a continued demonstration of Bank of America’s strong overall commitment to homeownership retention and to the Making Home Affordable program as the centerpiece of these efforts.”

Servicing close to 14 million loans, 3 million which are second liens, it will probably prompt some of their competitors to enter into the program as well, with Wells Fargo (NYSE:WFC) in particular, which is the second-largest mortgage servicer in America, the most important one to watch.

For Bank of America, they noted that they will work to modify second liens, as long as they’re eligible, no matter who has serviced the first lien on the mortgage.

The company notes in their press release that they are the leader in HAMP first-lean modifications, as they’re the only bank with over 200,000 customers in trial modifications. Being the largest mortgage servicer makes it easier for Bank of America, still, it’s an important accomplishment in light of so many people needing modifications in order to hold on to their homes.

At this time Bank of America and others are awaiting the details of what will be included as far as policies and guidelines from federal regulatory agencies. Once they become available they’ll be able to go forward with second-lien mortgage modifications at that time.

Using programs unrelated to the government, Bank of America has modified over 57,000 second-lien mortgages over the last couple of years to help homeowners.