"Bank of America's (BofA) new program to reduce loan balances for a defined group of distressed homeowners highlights our nation's very serious foreclosure situation. Today, nearly 1 in 4 homeowners is struggling to stay in a home that's worth less than their mortgage. BofA's initiative responds to a widelyacknowledged reality: reducing a loan's principal balance is a crucial tool for stopping foreclosures and stabilizing the housing market. We urge BofA to implement their principal reduction program quickly and comprehensively.
This initiative is a very positive step, but more is needed to make a real difference. Specifically,
1) We urge all major lenders and loan servicers to follow BofA's lead immediately. To stop the millions of foreclosures still ahead, we need systematic, large-scale efforts by all major players in the lending industry.
2) Programs must make it easier for homeowners to access and participate. Too many people continue to report problems with lack of response and lost information.
3) We must be able to monitor and measure the success of all loan modifications, including those that involve principal reductions. Efforts to date have lacked transparency, and lenders need to back up their talk about loan modifications with real numbers and measurable results.
Finally, we commend the Attorney General's office in Massachusetts, which triggered this positive action through its investigation of abusive and unfair lending practices by Countrywide. The work of the AG's office is a great example of how states have taken the lead in fighting predatory lending practices and enforcing lending laws. If we are to have any real hope of preventing destructive lending in the future, states must maintain their authority to fight bad lending practices in their own back yards."
For more information: Kathleen Day at (202) 349-1871 or Kathleen.day@responsiblelending.org; Charlene Crowell at (919) 313-8523 or charlene.crowell@responsiblelending.org; Ginna Green at (510) 379-5513 or ginna.green@responsiblelending.org.