""Bank of America"":http://www.bankofamerica.com announced Tuesday that it is the first mortgage servicer to sign an agreement formally committing to participate in the second-lien component of the Home Affordable Modification Program (HAMP).[IMAGE]
The news follows a ""verbal commitment"" to the program made by CEO Brian Moynihan made during a meeting with Treasury Secretary Timothy F. Geithner earlier this month, the company said in a statement.
The Charlotte, North Carolina-based bank says it has systems in place to begin implementing the administration's ""Second Lien Modification Program (2MP)"":http://www.financialstability.gov/docs/042809SecondLienFactSheet.pdf as soon as the Treasury releases final program policies and guidelines. Federal officials first introduced 2MP last April, but since then most market observers have labeled the program as ""on hold.""
The Treasury has estimated that up to 50 percent of at-risk mortgages have second liens. The 2MP piece of the administration's multi-pronged mortgage relief program will require modifications that reduce the monthly[COLUMN_BREAK]
payments on qualifying home equity loans and lines of credit when a HAMP modification on the first mortgage is carried out.
The federal government is encouraging lenders and servicers to sign up for the second-lien program, William Apgar, HUD's senior adviser for mortgage finance, said Tuesday at a housing conference in Washington, according to _Bloomberg News_. Second liens are ""not an easy problem to solve,"" Apgar said.
""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,"" said Barbara Desoer, president of Bank of America Home Loans.
Desoer said inking the contract before the final program guidelines are released demonstrates ""Bank of America's strong overall commitment to homeownership retention and to the Making Home Affordable program.""
Bank of America is the nation's largest mortgage servicer, with a servicing portfolio of nearly 11 million first mortgages and 3 million second liens. Through its participation in 2MP, BofA says it will modify eligible second liens regardless of whether the first lien is serviced by Bank of America or another participating servicer.
""2MP will become a valuable addition to Bank of America's broad toolkit of potential solutions for customers facing financial difficulty and will increase our ability to help even more homeowners,"" Desoer said.
Using non-government programs, Bank of America says it modified more than 57,000 second liens to assist financially strapped homeowners over the last two years.