Bank of America (NYSE: BAC) Loan Mods on the Rise

Loan Modification is a serious buzz term in the recent months. Leading the charge on this is the former Countrywide, now a division of Bank of America (NYSE: BAC). As one of the nation’s largest issuer of mortgages, they also stand the most to lose in foreclosures and write-offs. As such, the firm has taken significant steps in recent months to try and turn the tide.

 

Customer outreach centers are popping up around the country, and the bank is actively reaching out to distressed customers and proposing modifications. Today, the firm announced that is has already completed more than 72,000 permanent mortgage modifications under the federal government’s foreclosure-prevention program. In addition to the federal program, the company said it has provided 88,000 mortgage solutions to financially strapped borrowers, including 17,000 last month.

Since January 2008 when the program began, Bank of America said it has provided more than 650,000 modifications to troubled homeowners through all its programs. Nationwide, approximately 1.3 million homeowners have enrolled in the Obama administration’s $75 billion loan assistance program since March 2009. According to the Treasury Department, 390,000 homeowners, or 30 percent of those who started the program, have received permanent loan modifications and are making payments on time. However, over 500,000 homeowners, or more than 40 percent of those enrolled, have dropped out of the program.

In order to right the ship at B of A, loan losses must get under control. All signs are pointing in this direction, though another dip in the housing market could prove a significant blow. A key element to the earnings disclosures of the major banks this past week has been a decrease in the amount of bad loans – more modifications may continue that trend in the coming quarters, further improving results.