Bank of America Bailing Out Mortgage Holders.

[Coronita]

Got your attention, didn't I?:)

 

Well, I wouldn't call it a bailout…It's probably more of a PR stunt. Or stealing some customers away (hopefully the customers that make sense)….

I remember reading a comment a few weeks ago about "what bank in their right mind would want to help loan jumbos, especially in CA, blah blah blah blah blah", jumbos are going to disappear…Well, I guess BAC sees some opportunity here, or at least some PR stunt.

My only question is what exactly are the "special terms" that BAC is offering.

Disclosure: I own BAC shares 🙂

 

 

 

http://biz.yahoo.com/ap/070917/bank_of_america_refinancing.html?.v=1

 

Bank of America Offers Limited Time Special Pricing for Home

Loan Refinancing

CHARLOTTE, N.C. (AP) — Bank of America said Monday it will introduce special pricing for borrowers seeking to refinance their home loans with conforming 30-year and 15-year fixed rate loans and non-conforming 30-year fixed rate loans

The limited time offer runs through Nov. 30.

"Millions of borrowers are feeling the pressure of resetting adjustable rate mortgages, and we now invite them to examine the security of a Bank of America fixed-rate mortgage at attractive pricing," said Floyd Robinson, president of Bank of America's consumer real estate and insurance services group.

Fannie Mae estimates that roughly $1.1 trillion in single-family first-lien mortgages face a payment reset in 2007.

An estimated 2 million loans will reset over the next 18 months, raising fears about a wave of delinquencies as homeowners are unable to meet the new payments. Bush administration officials met with major mortgage servicing companies in September to urge them to extend as much assistance as possible to homeowners trying to refinance in order to avoid defaulting on their payment obligations.

After a five-year boom, sales of both new and existing homes fell sharply last year. The slump has gotten worse this year as lenders have tightened standards amid soaring foreclosures and late payments. Those problems began in the market for subprime loans, which are offered to borrowers with weak credit histories, but have now spread to other loan categories.

 

 

 

 

[Bugs]

Whatever the terms are, you can be sure BAC isn’t going to skimp on their underwriting or price the loans at a break-even. Given the poor quality of the ARMs they’d replace these loans will probably be an improvement, but only for those borrowers who have the equity and the income to qualify. Frankly, I’d be surprised if more than about 10% of the ARM borrowers are in that position. But 10% is still a pretty big number and BAC probably wants their share of that business.

[Coronita]

Bugs,

 

For my own benefit, I really don't want BAC to skimp 🙂 Quality customers that add to their bottom line only, please……

.Actually, from personal experience.. BAC i found was pretty stringent. I have a jumbo mortgage there..And they were pretty anal even back in 2004 when everyone else was pretty lax….In hindsight it probably was a good thing.

[(former)FormerSanDiegan]

I think this is a clever marketing ploy to boost BofA’s risk/reward ratio, while sending out positive vibes.
If they focus on refinancing people with sufficient assets they will have effectively moved many people out of their original purchase loan (non-recourse debt) into a refinance loan (recourse debt) and will have improved the risk profile of their debt (assuming they refinance some of their own customers).

Rest assured that they are not doing this out of the goodness of their hearts. However, it may be beneficial to some customers.

By the way, I also am a BofA stock holder. I started nibbling a month or so ago when the stock was below 49.

[Bugs]

I agree with both of you. BofA has never been known as a loose lender, so I don’t interpret their announcement as being indicative of diminishing standards.

The way I see it, if a dozen direct lenders go down because of diminished volume it just means more business for the survivors. The stronger lenders should thrive.

[lindismith]

I found this on CR’s blog.

http://www.bloomberg.com/apps/news?pid=20601087&sid=adciKLm4WGIo

Bank of America Sees `Meaningful Impact’ From Turmoil (Update2)

By Elizabeth Hester

Sept. 17 (Bloomberg) — Bank of America Corp., the second- biggest U.S. bank, said “unprecedented dislocations” in credit markets will have a “meaningful impact” on third-quarter results at its corporate and investment bank.

Trading and other areas of Bank of America’s capital markets and advisory services unit are “being adversely affected by all of these conditions,” Chief Financial Officer Joe Price told investors at a conference in San Francisco today. He cited stress on leveraged finance, subprime mortgages and in the commercial paper market as being especially severe.

“These are quite challenging financial times,” Price, 46, said. “I cannot remember when credit markets in particular have been as volatile and unpredictable as they have been for the last few months

Bank of America joins the growing list of banks and securities firms to warn that the fallout from rising defaults on subprime loans will hurt profit. Merrill Lynch & Co. said last week that “challenging” conditions in fixed-income markets required “fair value adjustments” to certain investments and financing commitments, and any losses will be reflected in third- quarter earnings.

Capital markets and advisory services provided $2.66 billion of Bank of America’s $20 billion of revenue in the second quarter, according to data compiled by Bloomberg. Price said that “in normal times” the unit generates about a third of profit in the company’s corporate and investment bank.

“These are not normal times,” he said.

Flat Profit

Analysts currently expect that Bank of America’s third- quarter profit will be flat compared with last year and earnings per share from continuing operations will rise 3 percent, according to the average estimates in a Bloomberg survey.

Bank of America dropped 44 cents, or less 1 percent, to $49.51 as of 4:16 p.m. in New York Stock Exchange composite trading. The stock was mostly unchanged in after-hours trading.

The company said it expects to close on its purchase of ABN Amro Holding NV’s LaSalle Bank within in a month, after receiving approval from the Federal Reserve last week.

[(former)FormerSanDiegan]

Flat Profit

Analysts currently expect that Bank of America’s third- quarter profit will be flat compared with last year and earnings per share from continuing operations will rise 3 percent, according to the average estimates in a Bloomberg survey.

I’d say that flat profits in the current environment is fantastic performance. Couple that with a 5+% dividend in a declining interest rate environment and you have what I would consider a good value.

[Zeitgeist]

“Bank of America Corp’s legal troubles worsened Tuesday after Nevada’s attorney general sued to undo a broad 2008 loan-modification settlement over predatory lending by its Countrywide unit.”

http://www.lvrj.com/business/state-seeks-to-void-loan-deal-with-bank-of-america-128716618.html

[Zeitgeist]

“Bank of America Corp’s legal troubles worsened Tuesday after Nevada’s attorney general sued to undo a broad 2008 loan-modification settlement over predatory lending by its Countrywide unit.”

http://www.lvrj.com/business/state-seeks-to-void-loan-deal-with-bank-of-america-128716618.html

[Zeitgeist]

“Bank of America Corp’s legal troubles worsened Tuesday after Nevada’s attorney general sued to undo a broad 2008 loan-modification settlement over predatory lending by its Countrywide unit.”

http://www.lvrj.com/business/state-seeks-to-void-loan-deal-with-bank-of-america-128716618.html

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