Thoughts & Comments
Loan Modifications Are Evil
A reader explains why

Thomas Brown  ( about me )
Posted 03/25/2010
bankstocks.com
tbrown@bankstocks.com

After news emerged yesterday that Bank of America will modify delinquent borrowers’ loans via forgiveness of principal, a reader forwarded me this open letter to CEO Bryan Moynihan. I agree with every word. --TKB

 

To: Bryan Moynihan,

CEO, Bank of America  

Dear Mr. Moynihan,

I awoke this morning to read that Bank of America intends to begin forgiving mortgage principal for delinquent borrowers. I am writing to inform you that I will never bank with your firm ever again.  

Principal forgiveness is an affront to every responsible, non-delinquent borrower in your book of assets. Not only is the federal reserve subsidizing the replenishment of your bank's capital by confiscating yield from savers/depositors so you can earn monstrous spreads on your loan book, but now you are rewarding those who bit off more than they could chew, while those who did not take on excess leverage, or who kept their income-to-debt ratios manageable, see no benefit, even as their home equity values have declined. Even worse, you are denying savers who sit in the cash market the opportunity to purchase inventory from the delinquent.

Capitalism should migrate assets from the weak to the strong, not the contrary. If you want to mitigate your loan losses, I suggest you advance an organized short-selling process to mitigate the expense of foreclosure, and to discover the fair market value of your delinquent assets. But for me, allowing those who are delinquent to now benefit from their financial excesses is a despicable solution that ignores the integrity and responsibility of those who actually finance the lion's share of your earnings: those who don't default.

Moral hazard be damned. Count me as one future cashflow stream you will never see again!  

Sincerely,

  

What do you think? Let me know!


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Woody in Reno Posted On 3/25/2010 12:17:01 PM

I'm awaiting the day I can send a Congratulations card to Ken Lewis for reaching his rightful place in life, that is when he gets to Lompoc!

Downonluckbutstillplugginaway Posted On 3/25/2010 12:40:31 PM

Dear Mr Brown, I am sure you have thought about those folks who when they purchased their home, still believed in the American dream and had the wherewithal to pursue it. Unfortunately banks, Wall St, politicians, over eager builders, etc, managed to shatter the dream for many by having them lose their jobs, see the value of their homes decimated and their overall financial condition go from ok to not so ok. So now we should let the fat cat swho caused the problems take their excess cash and buy someone's home from them at hopefully depressed levels so they can eventually resell at inflated prices and make even more money? Must be nice to be so high and mighty that you can condemn BofA and may the bad luck of those who you revile never fall upon you or your family. I'd hate to see you have to experience hard times.

Tom in Florida Posted On 3/25/2010 1:20:24 PM

Boo hoo Downonluckbutstillpluggingaway. More Liberal sob stories. The "evil" this and the "greedy" that is to blame - always! That song is getting old. Keep it to yourself.

Jerry Posted On 3/25/2010 1:25:16 PM

I couldn't agree more!!

Ohio Conservative Posted On 3/25/2010 1:25:44 PM

Downonluck's comment is typical left wing nonsense: attack the productive elements of society and blame them for other people's misfortunes and failures. Hopefully the days of Liberal cry babies are quickly coming to an end.

LaJuan Posted On 3/25/2010 1:32:25 PM

you can't please everyone, and my guess is this guy, though he is right, is in the minority.

AliciaB Posted On 3/25/2010 1:33:00 PM

It's as if Downonluckbutstillplugginaway believes that people who pay timely do not have any mishaps or misfortunes of their own to deal with. Everybody has their own issues and problems. Were does the Left come up with this delusional idea that only their constituents must confront tough circumstances.

D. Burch Posted On 3/25/2010 1:39:50 PM

Superbly written. I agree with every word.

Observer Posted On 3/25/2010 1:47:03 PM

He is right. But in a socialist country, things don't work that way.

mhm Posted On 3/25/2010 1:49:23 PM

Very well said letter writer. ... and Downonluckbutstillplugginaway, for God's sake would you please begin taking responsibility for your actions (not you alone, but you and all the other folks who believe handouts are a right and an entitlement).

mhm Posted On 3/25/2010 1:49:52 PM

Very well said letter writer. ... and Downonluckbutstillplugginaway, for God's sake would you please begin taking responsibility for your actions (not you alone, but you and all the other folks who believe handouts are a right and an entitlement).

Bill Posted On 3/25/2010 1:53:45 PM

"Capitalism should migrate assets from the weak to the strong..." That's right, capitalism should be cold and heartless. Those with more financial savvy should screw everyone out of as much money as possible. What a poltroon! Do you understand how modern societies formed? Have any of you cowards ever read Hobbes "Leviathan?"

Can'tBelieveIt Posted On 3/25/2010 1:59:48 PM

Absolutely right! The word "affront" is too polite a word to use but it will do for public discussion. This forgiveness sows the seeds for abuse in the next cycles with a new crop of spendthrifts and speculators. As a Canadian who has invested in the US equity market for over 40 years, I find this attitude to be so alien in your capital markets that it causes one to now add it to the list of risks (right up there with currency) that needs to factored in when purchasing shares in your quality corporations.

unemployed banker Posted On 3/25/2010 2:24:32 PM

To "downonluckbutstilpluggingaway" - that's the right attitude, persevere through challenging times. To: Tom in Florida, Jerry and others- be very careful with your comments, they may come back to haunt you. You may find yourself under the bus, through no fault of your own. That being said, I'm an unemployed banker trying to get back in the industry, however, no one is cutting my mortgage balance or any other debt and I don't expect them to either. Sometimes you just have to push through tough times. I once heard, success is not what you achieve but what you overcome!

unemployed banker Posted On 3/25/2010 2:29:07 PM

To "downonluckbutstilpluggingaway" - that's the right attitude, persevere through challenging times. To: Tom in Florida, Jerry and others- be very careful with your comments, they may come back to haunt you. You may find yourself under the bus, through no fault of your own. That being said, I'm an unemployed banker trying to get back in the industry, however, no one is cutting my mortgage balance or any other debt and I don't expect them to either. Sometimes you just have to push through tough times. I once heard, success is not what you achieve but what you overcome!

pferd Posted On 3/25/2010 2:32:19 PM

i agree with the letter never missed a payment and they lowered my balances for no reason, to accommodate their own bad credit policy. i am going somewhere elses also

rsd57 Posted On 3/25/2010 2:33:43 PM

How do you all know Downonluckbutstillpluggingaway is a liberal? Do you know who pushed the "ownership society model" Hint: It was not Barney Frank and Nancy Pelosi!

hawk Posted On 3/25/2010 2:38:02 PM

I could not have said it better. However, all citizens should understand that this type of behavior is caused ultimately by the strong arm tactics of the US Government. The government caused the crisis because of its intervention in the mortgage markets via Fannie and Freddie, and then chose to ignore the warnings of Ohfeo, its own regulator. In addition it allowed banks to act like investment banks, and allowed investment banks to leverage 50 to 1. Now the government is trying to smooth everything over by screwing every financially responsible person in America. Well it makes sense because Obama's constituents are America's LOSERS. There is no moral hazard. These totalitarian tactics have been initiated to manage pain and win elections, the system be damned. The healthcare bill is yet another example of government strong arm tactics. Everyone one of them should drop d d.

Former B of A Employee Posted On 3/25/2010 2:38:32 PM

As far as I am concerned, they can do whatever they want. I am a former B of A employee. I saw on many occassions where they favored one customer over the other. Working in their Wealth Management Division, they would adjust their fees based on which clients screamed the loudest. They are getting enourmous political pressure. Modifying some loans beats the hell out of going under which is what should have happened. Brian Moynihan is just a cog in the wheel of the 'machine'. I met him once in a group meeting and did not find him to be particularly bright or inspiring. I don't think he has ever had an original idea. Keep in mind that Kenny Boy is the one to blame for much of this. To buy Countrywide, when the company was in my estimate worth zero, will go down as one of the worst purchases in Corporate history. The day the acqusition was announced I laughed. I am still laughing today.

Hoov Posted On 3/25/2010 2:40:01 PM

As a former report to him-at FBF-he amazes me everyday-as does the bank. Trust me I was loyal but now am searching for a new bank

Unreal Posted On 3/25/2010 2:53:43 PM

Wow, I think the writer stopped reading the original story after the first paragraph and missed some of the nuances of the program. The writer must also think that other banks wont do the same. He may tire of switching bank accounts so often in the name of not helping others. Woe be the bank that extends a hand to a small group of its own customers that have fallen on difficult times. It is truly ironic that the writer feels comfortable excoriating his bank for granting some debt relief, while the very bankers that underwrote the loans and drove the bubble and reaped enormous paydays (at lower tax rates thanks to good ole' GWB) escape his wrath, or apparently even his awareness. Talk about being rewarded for financial excesses! Give the little guys a break because so far they have been PUNISHED by the financial excesses of the last decade. It is true that capital should flow from the weak to the strong at a macro level, but we're talking about our neighbors and families and friends. From the tone of the letter, it sounds like the writer would be ok if his house was the only occuppied one on the block, while the others sat empty in foreclosure. Does he really believe that his pristine record of paying on time and managing his debt ratios will matter one bit in the end?

Unreal Posted On 3/25/2010 2:59:21 PM

Wow, I think the writer stopped reading the original story after the first paragraph and missed some of the nuances of the program. The writer must also think that other banks wont do the same. He may tire of switching bank accounts so often in the name of not helping others. Woe be the bank that extends a hand to a small group of its own customers that have fallen on difficult times. It is truly ironic that the writer feels comfortable excoriating his bank for granting some debt relief, while the very bankers that underwrote the loans and drove the bubble and reaped enormous paydays (at lower tax rates thanks to good ole' GWB) escape his wrath, or apparently even his awareness. Talk about being rewarded for financial excesses! Give the little guys a break because so far they have been PUNISHED by the financial excesses of the last decade. It is true that capital should flow from the weak to the strong at a macro level, but we're talking about our neighbors and families and friends. From the tone of the letter, it sounds like the writer would be ok if his house was the only occuppied one on the block, while the others sat empty in foreclosure. Does he really believe that his pristine record of paying on time and managing his debt ratios will matter one bit in the end?

KB Posted On 3/25/2010 2:59:35 PM

Many of the folks who got in trouble knew they should have had more money down and more reserves in the event of a loss of job , market changes, kids college bills etc. but NO, they took the risk thinking that the realestate hot air balloon was one that would never run out of air. Well it popped and to those that took too much risk they are now subject to the downside that comes along with that risk. Had the market kept running they would have benefited from the upside. To be fair they must be prepared to take the bad if it comes along, as well as the good. It's not a one way street. We all can feel bad for some of those folks but they made the decision to go out on a limb and they must be prepared to accept the risks that go along with it.

akreitman Posted On 3/25/2010 3:02:19 PM

The distruction of the underlying value of mortages is a reality for many homeowners, delinquent or not, It's foolish for a mortage holder to continue paying an underwater mortage and it's dishonest for a bank to hold such a mortage on their books at full value. Robert Shiller proposed writing down mortages to their actual market value and then sharing any appreciation from that value between the homeowner and the bank. Why hasn't anyone tried this?

OZ Posted On 3/25/2010 3:05:57 PM

I couldn't agree more - we worked our fingers to the bone in an effort to pay our mortgage off and have now successfully done so. Nothing irks me more to see people I know who bought more house than they could afford and then are forgiven a portion of their debt. Absolutely sickening!

Aw c'mon Posted On 3/25/2010 3:08:15 PM

I like the letter very much but I think Tom wrote it himself.

James Ellis Posted On 3/25/2010 3:09:57 PM

Amen Agreed 100%

sgr Posted On 3/25/2010 3:17:09 PM

And the media is happily playing along by actually glorifying "strategic defaults." When the crap did walking away from your legal obligations become acceptable in this country? Oh, it's not my fault. How could I have known that the contracts I signed, were, you know... like real and stuff? This must be part of the "everyone gets a trophy" generation's legacy.

CoolMrBlues Posted On 3/25/2010 3:19:27 PM

I could not agree more with the letter to Mr. Moynihan. Those who are responsible and continue to pay there mortgages are being penalized. I have neighbors who are electing not to pay their mortgage in order to take advantage of the modification process. Why is it that the lenders who put many people in into homes they could not afford or provided loans with terrible terms get to decide if they want to help people or not? That is like asking the fox to guard the hen house but don't eat the hens. The consumers were eaten first instead of being guarded and now we are asking the same fox(banks) to protect and help us after most of us are financially dead!

Tired of whining Posted On 3/25/2010 3:22:50 PM

Hey downonluck. Pull yourself together and quit playing the victim. We all tanked the economy together. Borrowers like you who were willing to pay any price and borrow on any terms while ignoring your ability to handle the debt are as guilty in all this as the builders and bankers and politicians. Bad luck? I think “bad decisions” might describe your plight more accurately. And as to Mr. Brown, from what I know, he has seen an enormous drop in the assets he manages, including his own holdings. However instead of blaming others or bad luck, he has sucked it up, cut back, worked five times as hard, walked away from no obligation, and is striving to recover as best he can. Follow his example and quit bitching.

CoolMrBlues Posted On 3/25/2010 3:26:24 PM

I could not agree more with the letter to Mr. Moynihan. Those who are responsible and continue to pay there mortgages are being penalized. I have neighbors who are electing not to pay their mortgage in order to take advantage of the modification process. Why is it that the lenders who put many people in into homes they could not afford or provided loans with terrible terms get to decide if they want to help people or not? That is like asking the fox to guard the hen house but don't eat the hens. The consumers were eaten first instead of being guarded and now we are asking the same fox(banks) to protect and help us after most of us are financially dead!

Still Unreal Posted On 3/25/2010 3:36:54 PM

OZ - unless you pay in cash, everyone buys more house than they can afford. So did you. You were lucky to own during a time of the one-way trend in home values. So you must be sickened by every single person in your neighborhood and town and city that has a loan and has seen the value of their house get knocked down by the crash. For somebody so smart, you probably should have sold your house a long time ago and started living your values in a country that doesn't live and die by credit.

Rhino Posted On 3/25/2010 3:37:44 PM

I wonder if BofA already reserved for the 45,000 loans and the principal reductions do not have an impact on future earnings. The borrowers must "earn" the reduction in principal with timely payments and it is not an immediate credit (per the WSJ) and the reductions are "earned" over a five year period. Although I do not agree with the actions of BofA, I think this is a desperate attempt to mitigate future losses. Borrowers not receiving consideration will resort to strategic defaults and lead to more foreclosures. The banks must adopt one policy and carry it forward with all borrowers, not just the idiots that elected to take the CW option ARM product (this was CW's most popular product other than a 30 Year Fixed). CW allowed this to become a easy vehicle for financing a home (or tapping the equity). UW criteria was lax and I am not surprised this ARM portfolio is such a mess. Both BofA and the borrowers must deal with the mess. More importantly consumers/businesses should support community banks, banks that declined to participate in the mortgage mess and banks that elected to not particpate in the TARP program. Big banks are making up for the losses with cheap money, low rates for our money and fees that would kill a rhino.

RKI Posted On 3/25/2010 3:38:28 PM

I AGREE!

DF Posted On 3/25/2010 3:49:30 PM

So I'm not the only one outraged over the process of rewarding the dysfunctional and penalizing the responsible. How about this for a "loan modification"; restructure the debt into a 40 year conventional mortgage and let the people stay in their homes. Lower their interest rate to a prevailing level and stretch out the payments. If they're going to get a break on making payments that they contractually agreed to make (and now can not) then they lose the benefit of reaping the rewards when the home appreciates. Cap the value of which they can sell the home in the open market. The current delinquent homeowner will probably not like the arrangement too much since it doesn't provide the trough of which they desire to feed from, but every non-deliquent homeowner who didn't bite off more than they can chew will welcome the alternative. The spread between their capped value and the open market value can be used to create more shareholder value (in a way approved by the regulators, not in a way the bank deems fit). At what point will I be rewarded (and not penalized) for being responsible with my money? I won't hold my breath.

Rich Posted On 3/25/2010 3:49:57 PM

Could not have said it any better! We seem to have done everything possible to take personal responsibility out of the equation. In the name of saving the world's financial health, we have chosen to side with and protect the same people who were irresponsible in their behavior and responsible for the problems. Since when did the American dream of owning a home come with a guarantee that if the buyer was stupid, they get bailed out!

Rhino Posted On 3/25/2010 3:56:10 PM

I wonder if BofA already reserved for the 45,000 loans and the principal reductions do not have an impact on future earnings. The borrowers must "earn" the reduction in principal with timely payments and it is not an immediate credit (per the WSJ) and the reductions are "earned" over a five year period. Although I do not agree with the actions of BofA, I think this is a desperate attempt to mitigate future losses. Borrowers not receiving consideration will resort to strategic defaults and lead to more foreclosures. The banks must adopt one policy and carry it forward with all borrowers, not just the idiots that elected to take the CW option ARM product (this was CW's most popular product other than a 30 Year Fixed). CW allowed this to become a easy vehicle for financing a home (or tapping the equity). UW criteria was lax and I am not surprised this ARM portfolio is such a mess. Both BofA and the borrowers must deal with the mess. More importantly consumers/businesses should support community banks, banks that declined to participate in the mortgage mess and banks that elected to not particpate in the TARP program. Big banks are making up for the losses with cheap money, low rates for our money and fees that would kill a rhino.

Mickey Posted On 3/25/2010 4:03:54 PM

Tom-While I agree with the principal(no pun intended) that you are advocating, namely responsibility, I see things a little bit different and am more accepting of this plan for a few reasons including: 1. The bank is currently receving nothing in the form of payment from the people that qualify for this program, 2. By initiating this program, you get these people paying "something" again. These borrowers need to continue to pay on their mortgages in order to obtain this principal forgiveness, 3. It prevents these properties from going back on the market as BOA's or forclosures which, in most cases continure to reduce equity of those responsible neighbors liek you and me. I don;t like it overall, but given the idea that the government could likely mandate more principal forgiveness plans over time, as they seem to think they can mandate anything and everything these days, it might be a good first step. Just my humble thoughts. -Mickey

dtown2222 Posted On 3/25/2010 4:06:11 PM

Guess what, bad things don't happen to just bad people. Good people, many not knowing any better, get caught in the trap of trusting others who are greedy and know how to play the game at the expense of others . This whole idea of a financial business model predicated on "I got mine, you get yours, the hell with everyone else" and preying on the weakest link is more destructive than any amount of principal forgiveness. For all you hard-nosed, non-compassionate commenters, when something unfair happens to you that was unanticipated because you believed what others were telling you, and you seek relief and compassion from others, I hope you don't have to deal with jerks like yourselves.

Bill Posted On 3/25/2010 4:07:37 PM

That was my thought. Rather than pay down my mortgage, I should have minimized my down payment and maxed out my equity line of credit. Silly me for trying to be debt free. This is what America is turning into - the hard working fiscally conservative subsidize the lazy and irresponsible. What a life. Any recommendations on countries I should consider moving to would be appreciated!

Bill Posted On 3/25/2010 4:09:10 PM

This is what our Obama goverment wants--those who did it right and lived a responsible financial life are clearly being screwed--no return on savings--while paying the mortgage and living within our means--the result, higher taxes to transfer to those who did it the wrong way---great "fairness"

galdc Posted On 3/25/2010 4:15:54 PM

Why not just throw them all out of their houses and have neighborhoods go totally to the pits. If forgiveness results in a better neighborhood environment, then existing homeowners who are not delinquent benefit by their values housing values being sustained or improved as well as their local and state tax base being stronger. While I can understand individuals' being upset by the move, we as a nation could all benefit by a more understanding banking environment and I think BoA officials should be congratulated on their effort to help some additional people.

DLB Posted On 3/25/2010 4:47:14 PM

Agree. This mess will end when assets have moved from the greedy and stupid to the prudent. Some may have put down 20% (or more) on a home and be in trouble due to job loss, but the vast majority were living beyond their means.

robind1st Posted On 3/25/2010 4:48:53 PM

I could not agree with you more. Thanks for printing this. I will make a copy and send it in as well. This tactic is beyond shameful; it is simply disgusting. Unfortunately, it speaks volumes about how the administration, congress and the TBTF banks view the ethics of an America which is rapidly going by the wayside.

banknewsletter.com Posted On 3/25/2010 5:22:45 PM

yes, the goverment is still to balme for saving BAC in the first place, or we won't even be talking about this!

SPIKE Posted On 3/25/2010 5:25:46 PM

AGREE

TeeKee Posted On 3/25/2010 5:43:45 PM

The mortgage debacle, which by the way made a lot of money for main street realtors and merchants and nobody is throwing them under the bus like they should, has resulted in one of the most massive transfers of wealth in US history in both the public and private sector. In the public sector it is reflected in the cess pools that are Fannie Mae and Freddie Mac and the outstanding government debt and in the private sector it is in this kind of action like B of A is taking. When will "I am a moron and I deserve help" excuse stop being a valid reason for people to get free handouts. We need to stop teaching Darwin's survival of fittest in school because the idiots are sucking up resources they should not be getting which totally contradicts Darwin's theory so it must be false. And I guess we should be teaching Christian charity because that is the only way to rationalize rewarding irresponsible brain dead homo sapiens.

Kevin Hardin Posted On 3/25/2010 9:30:24 PM

Unfortunately you could not be more wrong about your observation. It is very sad that the capital markets is such a mystery to the very people that fund it through there hard earned dollars. This is not a BofA program designed to help anyone. It is a legal settlement that the AG from Massachusetts won. The settlement required that a specific population of loans that were subprime, Pay Option and 2/28 etc originated by Countrywide Home Loans and Full Spectrum prior to the acquisition of CW by BofA. Do you think BofA is real happy about it? How rediculous. Further, what the propose to do in they way of their "Earned Forgiveness" is no party nor is it a gift. It is still a HAMP structured loan modification with the exception that the forborne amount that is normally interest free in a loan mod will be forgiven if the homeowner remain current on their mortgage. Look people over 65% of these HAMP mods are re defaulting. Further, BofA is going to have to put forth $10B in cash to repurchase those loans out of the MBS;s they are a part of before they can even modify them. Another histroy lesson. Countrywide has already settled over a year and a half ago with the National Association of Attorneys General for $8 Billion in principal reductions. Did you forget that one? It was met with a $80 Billion lawsuit by the very investors who bought those securities (Greenwich Capital) to force CW/BofA to repurchase them prior to modification. Guess what, it never happened and neither will this one. Next step is for our Government to announce they are going to buy loans at par and BofA will be off the hook.

Hoofin Posted On 3/25/2010 10:16:25 PM

Since the government is in there for 35% of whatever the bank writes off, I have a hard time seeing why loan modifications are such an evil. The bank is doing this to prevent worse losses through foreclosure. Plus, the billions that are given away in "mortgage interest deductions" each year. (Why can't people pay their own mortgage, without trying to get money from the rest of us?) If more people are kept in their homes, it would support home prices and get the Recovery moving. I don't think the banks are restructuring the mortgages of the people who are too far gone. Just the ones who got caught at the tail end of the bubble.

dtown2222 Posted On 3/25/2010 11:21:52 PM

Guess what, bad things don't happen to just bad people. Good people, many not knowing any better, get caught in the trap of trusting others who are greedy and know how to play the game at the expense of others . This whole idea of a financial business model predicated on "I got mine, you get yours, the hell with everyone else" and preying on the weakest link is more destructive than any amount of principal forgiveness. For all you hard-nosed, non-compassionate commenters, when something unfair happens to you that was unanticipated because you believed what others were telling you, and you seek relief and compassion from others, I hope you don't have to deal with jerks like yourselves.

Rhino Posted On 3/26/2010 12:48:01 AM

I wonder if BofA already reserved for the 45,000 loans and the principal reductions do not have an impact on future earnings. The borrowers must "earn" the reduction in principal with timely payments and it is not an immediate credit (per the WSJ) and the reductions are "earned" over a five year period. Although I do not agree with the actions of BofA, I think this is a desperate attempt to mitigate future losses. Borrowers not receiving consideration will resort to strategic defaults and lead to more foreclosures. The banks must adopt one policy and carry it forward with all borrowers, not just the idiots that elected to take the CW option ARM product (this was CW's most popular product other than a 30 Year Fixed). CW allowed this to become a easy vehicle for financing a home (or tapping the equity). UW criteria was lax and I am not surprised this ARM portfolio is such a mess. Both BofA and the borrowers must deal with the mess. More importantly consumers/businesses should support community banks, banks that declined to participate in the mortgage mess and banks that elected to not particpate in the TARP program. Big banks are making up for the losses with cheap money, low rates for our money and fees that would kill a rhino.

What a bunch of winos Posted On 3/26/2010 12:53:04 AM

I mean whiners.

RBG Posted On 3/26/2010 6:33:27 AM

OK, free market advocates. Calm down. If these transactions are NPV positive for Bank of America, what's wrong with that? It creates value for the shareholders, and that is what they should be doing. Of course, it would be nice if BofA (or, in this case, Countrywide) had never made these loans in the first place, but that is something that can't be changed. Now, if BofA is doing this solely to appease the attorneys general who pressed the lawsuits against Countrywide, and these forgiveness programs are not NPV positive, then we have a different story. But that is a very old story, one that the letter writer does not address: politicians using a few extreme cases to force a large bank to take sole responsibility for what was a stupid decision by both lender and borrower.

Superman07 Posted On 3/26/2010 6:57:24 AM

Downonluck, perhaps many of these individuals should not have cashed out the equity and artificially upgraded their standard of life foolishly. If they bought a home they could afford with a prime mortgage they should be OK. There are programs that don't resort to freeloading. If their was collusion in the buying process they should seek counsel and take it up with a judge, Everyone I know that had a reasonable loan and fell on hard times has had zero issues resolving solutions with their banks. On the grand stage the top end of the food chain is suspect however keep blame in all areas that are relevant. My mothers bank actually voluntarily modified her mortgage based upon a quick screening over the phone when my father passed away. Life is pretty easy to master when you don't live beyond your means. Don't take from me when you choose to be a self centered idiot. I don't care if it is a bank, or a segment of the population. I don't want to be taxed for the excess of others.

Fed Up  Posted On 3/26/2010 7:18:34 AM

I moved my account from BofA yesterday. I fall into the currently saving for a home camp, and words can not describe how completely disgusted I am with the direction this country is heading.

Peter Posted On 3/26/2010 9:26:08 AM

It is likely this PR affront to all good Bof A borrowers is the result of none too subtle policies of the current administration looking for a way, any way to avoid responsibility for their "lending" malfeasance of the last few years. Yet another "can kicked down the street"

rodolfo Posted On 3/26/2010 10:59:52 AM

Excellent!!!

Shanon Chase  Posted On 3/26/2010 12:06:06 PM

Well said, and we awake this morning to announcements of a NEW modification program for those who are current but "underwater".

Shanon Chase  Posted On 3/26/2010 12:39:00 PM

Well said, and today we awake to find out a new modification program will be announced for those CURRENT on their mortgages but "under water".

Deb in Delaware  Posted On 3/26/2010 4:50:11 PM

We need criteria that warrants assistance for those who have worked hard and fell on bad times like loss of spouse, Loss of Job when they have exhausted all savings and resourses. Chronic illness that eats up every bit of savings. I have seen the whole picture working for banks then in outreach and now in Real estate for many years. We have created many monsters by inflecting many programs that just keep taking care of the able. We do need accountability but we also need to understand there are many individuals that have done everything right and they do need the help of the community including businesses and individuals. We need to use much caution. It can be done My Father had a 3rd grade education worked 3 jobs raised 5 children studied, taught himself to read learn and is a self taught engineer, the top in his profession and never never took a single penny of goverment assistance. What happen to those individuals? They are rare!

Il_Duro Posted On 3/26/2010 9:30:43 PM

Private wealth is under assault by our non-representative representatives in Washington, DC, and in many a state capital as well. The ideology and the agenda is socialist and the transfer of wealth is not simply being accomplished with asset redistribution by by the redistribution of liabilities as well. While the author of the letter makes valid points, to which I can relate because BAC services my mortgage (which it provided the immediately sold) and holds my deposits as well, there is one he has misses completely which, as a BAC shareholder, I do not. The principal on the mortgages being forgiven is shareholders equity. As unhappy as I might feel about that, the CEO's decision might make good economic and political sense. Banks often lose half the value of their mortgages on foreclosure and conventional mortgage restructurings often only defer the inevitable for one to three years at which time the mortgagor and the mortgagee are forced to revisit the very business they left unfinished. Furthermore, do we know how many of the mortgages that will enjoy principal reductions are serviced by BAC versus being held by the bank? I am not sure we know what to speak for nor are we in a position to assess the political currency that will result from the CEO's initiative. Finally, it is a practical reality that we have to let the right people make what may prove to be some wrong decisions in the ordinary course. Mr. Moynihan, like so many other people fighting the good fight are being vilified in the current economic and political environment for doing nothing wrong and for doing anything right and, for my part, I do not subscribe to witch hunts. In a couple of years your letter writer will likely be unhappy that he is not a shareholder of BAC which will make him proud..

The Author Posted On 3/27/2010 7:55:05 PM

I wrote this piece...and am impressed by how many people actually agree with the premise... One additional point to make... The Govt. Rhetoric tends to pity the "responsible homeowner" (whatever that means... but fails to think of first time buyers who are waiting for market c;learing [prices or investors who are willing to buy houses to rent... I also wonder...if a responsible homeowner took out a second...or financed with an Option ARM...and used this surplus funding/cashflow to buy SUVs, TV sets, finance college degrees, etc....should we pity them for being "underwater" on their homes...when...if you measure their dynamics with a wider lenses...clearly...they have not been penalized at all...because of this deficit spending will have turned out to be for free... IMHO...if you can't pay your mortgage...you should lose title to your home...and become a renter... by the way...if more pepole who lose their homes flodd into the rental market...they will help put a floor under house prices because they will drive rental prices higher, Income Yields higher...and therefore stabilize Housing... this is the way it should work...

ST Posted On 3/28/2010 8:45:56 AM

Bank of America bought out Countrywide. Countrywide is being sued for giving out mortgages that lenders couldn't afford to pay back. Let the bank who bought out Countrywide bail out these folks instead of the government.

Jon in Texas Posted On 3/30/2010 12:27:05 PM

Could not agree more. Savers are being punished in favor of the irresponsible. There is a very efficient mechanism, set forth in contract law, for the foreclosure or short sales of homes. The foreclosed borrower often had little or no downpayment in the home to begin with. Losses borne by the banks on foreclosures are simply a transfer of wealth from bank shareholders to borrowers, who lived beyond their means.

TOM Posted On 3/30/2010 5:27:29 PM

Tom, You are right on track again. Apparrently they hoped to get some brownie points from DC. Thanks

John Wright Posted On 4/21/2010 12:04:09 AM

WHERE IS MY LOAN MODIFICATION BANK OF AMERICA? If it walks like a piggy, talks like a piggy, by golly it’s a PIGGY! BofA and it’s CEO Brian Moynihan reminds me of that song by John Lennon and George Harrison titled "Piggies" I invite you to listen to this song on youtube and see if it appropriately fits. http://www.youtube.com/watch?v=NTmeHM-Hojg&feature=related Have you seen the little piggies Crawling in the dirt And for all the little piggies Life is getting worse Always having dirt to play around in. Have you seen the bigger piggies In their starched white shirts You will find the bigger piggies Stirring up the dirt Always have clean shirts to play around in. In their ties with all their backing They don't care what goes on around In their eyes there's something lacking What they need's a damn good whacking. Everywhere there's lots of piggies Living piggy lives You can see them out for dinner With their piggy wives Clutching forks and knives to eat their bacon. John Wright vs. Bank of America Lawsuit at: http://news.yahoo.com/s/prweb/20100323/bs_prweb/prweb3766544_1 When I filed my lawsuit against Bank of America, myself and United Law Group thought of the many others out there in the same situation. It was then that we decided to educate the public on what these piggy banks are doing, as well as unite us all together as one voice. Please help me turn this David vs. Goliath modification process, into a Goliath vs. Goliath. Please stand with me and United Law Group and send an email to Bank of America that states that we will no longer tolerate their potentially illegal, fraudulent, irregular and abusive business methods. Divided we might have fell America, but united we must stand! Please send your email directly to Bank of America and include the following: 1. Your name 2. Your complaint concerning your experience with Bank of America. 3. Please end your email “I support John Wright vs. Bo

fintel Posted On 4/21/2010 5:56:23 AM

We all know that there are plenty of problems with authorizing bankruptcy courts to make loan modifications to mortgages. It's favored as a way of keeping people in their homes and--fingers crossed--perhaps reducing the costs across the economy and financial sector from mass foreclosures. As we've pointed out, however, the adjustments will have widespread secondary effects, making otherwise good mortgage backed securities riskier, encouraging bankruptcy and making future mortgages more difficult to obtain. http://www.fintel.us/
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