Bank of America Gets Serious About Bad Mortgage Clean Up
The announcement of a veteran mortgage expert to head the Legacy Asset Servicing unit to take care of bad mortgages and foreclosures has lent strength to Bank of America’s ongoing battle in this area. Terry Laughlin, who amply demonstrated his expertise in his earlier stint with OneWest Bank, will head this new division and hopefully find more success in keeping the bank’s subprime mortgages within control.
Ever since it acquired Countrywide Financial Corp. in 2008, Bank of America has been hard pressed to contain the damages the new company brought into the fold in the form of bad mortgages. Already, BofA has invested billions in settling claims in this respect. Recent months witnessed a 50 million dollar spending towards the legal costs for Angelo R Mozilo, erstwhile Chairman and CEO of Countrywide.
Needless to say, investors have been apprehensive about how these costs will impact the bottom line of BofA. Many fear that as more bills continue to pile up in the coming months the bank may start to show some cracks.
Statistics show that there is good reason for such fears. In September 2010, Wells Fargo reports showed that upwards of 13% of the mortgages attributable to Countrywide payments were either late or foreclosure proceedings had already been initiated on them. BofA has also failed to make the best use of loan modifications under the Making Homes Affordable program introduced by Obama to shore up housing.
BofA’s focus in coming months will be on expanding its base in mortgage and related areas. This objective will be carried out by continuing its home mortgage credit programs, extending modification of mortgages for financially distressed homeowners and by resolving issues pertaining to legacy mortgages.
The bank has announced that Barbara Desoer will continue at the helm of the BofA home loans division. The Countrywide mortgages are currently encompassed within this division. The home loans initiatives will continue to be spearheaded by Desoer who will oversee operations pertaining to the 12 million mortgage accounts that are current with BofA. The focus on retaining the loyalty of its 50 million household mortgage customers will also be top priority for Desour. Laughlin will be primarily concerned with pulling BofA out of the subprime mortgage swamp that the Countrywide acquisition has thrust the bank into.
The Legacy Asset Servicing unit is the seventh of the major divisions of the bank. With the creation of this separate unit to handle bad home loans, BofA has become the first of the top ranked U.S. banks to take this step. It remains to be seen if other financial institutions will follow the lead in their battle to keep bad mortgages under control.