- Joined Feb 22, 2008
As Florida continues to reel from foreclosures, some officials have had enough. Of Bank of America, that is.
Last week, Broward County's Board of Commissioners barred the bank from participating as one of five co-managers inan upcoming municipal bond sale. The bond will raise $208 million topay for the replacement of a section of the county courthouse indowntown Fort Lauderdale.
Why keep out brawny BofA?
The county commission wanted to send a message: Bank of America, theybelieve, is not playing nice with struggling homeowners who desperatelyneed mortgage loan modifications.
BofA has one of the poorest track records when it comes to processingand approving loan modifications through the Federal Home AffordableModification Program (not to mention its record of wrongly seizing people's homes).
The HAMP program features a three-month trial period for modification before making the modification permanent. Based on February data releasedby the federal government, BofA has 1,086,512 loans eligible formodification -- the highest number of eligible loans among the 24largest mortgage providers that are participating in the federalprogram.
Broward commissioners rightly took notice that Bank of America wasactively working on loan modifications for only only 240,550 loans, or24 percent -- one of lowest percentages among the big participatingbanks. Only 22,303 of the bank's loans have been permanently modified.
Propublica.org, which has been following the federal modification program,estimates that 12.4 percent of the homeowners that began BofA's trialmodification program have gone beyond the three-month trial period withno permanent relief.
Wells Fargo, in contrast, had the highest number of permanentmodifications, at nearly 25,000. In total, 37 percent of the bank'seligible borrowers have had their loans modified on either a trial orpermanent basis.
In total, Florida has 102,033 mortgage holders in the modificationprogram, yet only 21,111 of those have completed the modificationprocess.
Bank of America recently reported that it has beefed up its homeretention staff -- a unit created as part of a settlement with 11 stateattorneys general over the predatory lending practices of CountrywideFinancial Corp. -- to 15,000 in an effort to better help consumers whoare having difficulty making payments on their mortgages.
As a co-manager of a bond deal, the BofA could have earned $30,000 to$50,000 in fees. As lead manager, with responsibility for bringing inother banks to underwrite the county's bonds, it might earn between$150,000 and $200,000.
That kind of money is chump change to Bank of America, said Leo Guzman,head of Guzman & Co., a Miami-based investment banking firm.
The bank raked in $6.3 billion in net income last year. While weapplaud Broward County officials for taking a stand, you can betthey're not losing sleep over at BofA on a lost muni deal.