Florida's Broward County Officials Take a Stand Against BofA
Last week, Broward County's Board of Commissioners barred the bank from participating as one of five co-managers in an upcoming municipal bond sale. The bond will raise $208 million to pay for the replacement of a section of the county courthouse in downtown Fort Lauderdale.
Why keep out brawny BofA?
The county commission wanted to send a message: Bank of America, they believe, is not playing nice with struggling homeowners who desperately need mortgage loan modifications.
BofA has one of the poorest track records when it comes to processing and approving loan modifications through the Federal Home Affordable Modification Program (not to mention its record of wrongly seizing people's homes).
The HAMP program features a three-month trial period for modification before making the modification permanent. Based on February data released by the federal government, BofA has 1,086,512 loans eligible for modification -- the highest number of eligible loans among the 24 largest mortgage providers that are participating in the federal program.
Broward commissioners rightly took notice that Bank of America was actively working on loan modifications for only only 240,550 loans, or 24 percent -- one of lowest percentages among the big participating banks. Only 22,303 of the bank's loans have been permanently modified.
Propublica.org, which has been following the federal modification program, estimates that 12.4 percent of the homeowners that began BofA's trial modification program have gone beyond the three-month trial period with no permanent relief.
Wells Fargo, in contrast, had the highest number of permanent modifications, at nearly 25,000. In total, 37 percent of the bank's eligible borrowers have had their loans modified on either a trial or permanent basis.
In total, Florida has 102,033 mortgage holders in the modification program, yet only 21,111 of those have completed the modification process.
Bank of America recently reported that it has beefed up its home retention staff -- a unit created as part of a settlement with 11 state attorneys general over the predatory lending practices of Countrywide Financial Corp. -- to 15,000 in an effort to better help consumers who are having difficulty making payments on their mortgages.
As a co-manager of a bond deal, the BofA could have earned $30,000 to $50,000 in fees. As lead manager, with responsibility for bringing in other banks to underwrite the county's bonds, it might earn between $150,000 and $200,000.
That kind of money is chump change to Bank of America, said Leo Guzman, head of Guzman & Co., a Miami-based investment banking firm.
The bank raked in $6.3 billion in net income last year. While we applaud Broward County officials for taking a stand, you can bet they're not losing sleep over at BofA on a lost muni deal.