Bank of America is in agreement with a proposed settlement that was brought between investors and the bank, the country’s largest mortgage servicer. In order to deal with its many troubled mortgages, both parties have made an arrangement to engage many “sub servicers” which are small service companies that will expedite the process in determining whether people will qualify for home modifications. Although a very small percentage of modifications have been approved nationally through the HAMP program, Bank of America is in an attempt to expedite the qualifications who do qualify for modifications. In turn, this settlement will also expedite foreclosure for those who cannot afford to keep their homes. The basic litmus test for whether you qualify for a modification is that the home owner’s monthly mortgage payment does not exceed 31% of their monthly gross income and if the proposed modification is more than the 31% , the modification will not be approved. Bank of America along with other banks are experiencing a surge of defaults. The new proposals, the sub service role, are promising that they will provide an answer to modification applicants within 60 days of receiving the paperwork. These companies would receive a 1.5% unpaid principal balance fee for a successful permanent modification. So the days of many people remaining in their homes under the guides of getting a modification that will never happen are coming to an end. A lot of the loans that Bank of America has apparently were once acquired from the business takeover of Countrywide and many of those loans, according to the article, are doomed for failure.

Source: CNBC.com article reprinted by the New York Times on July 12th, 2011 Bank’s Deal Means More Will Lose Their Homes