Bank of America Corp. told 2,500 mortgage origination staffers this week that they would be reassigned to loan modification duty, two weeks after the bank promised Congress to provide better service to distressed borrowers who sought help in avoiding foreclosure.
The effort attempts to address a persistent complaint of borrowers caught in the 3-year-old foreclosure crisis: being bounced from bank employee to employee as they tried to work out a way to stay in their homes, often being told different things about their case in each conversation along the way.
Bank of America, the giant Charlotte, N.C., lender, became the largest servicer of home loans in 2008, when it acquired Calabasas-based Countrywide Financial Corp., the aggressive No. 1 mortgage lender. BofA came under fire last month at a Senate Banking Committee hearing into mortgage servicing, which is the business of billing, collecting payments and handling delinquencies and foreclosures on home loans.
BofA mortgage chief Barbara Desoer said at the hearing that she was instituting a new "case officer" system so customers need no longer explain their situation to a different employee on every call.
"We know this goes to the heart of many customer complaints that you have heard," Desoer said.
Wells Fargo & Co. and JPMorgan Chase & Co., the second- and third-largest home-loan servicers, also have said they would assign individual case managers to troubled borrowers, although Chase has yet to put a program into place, said Bruce Marks, chief executive of the nonprofit Neighborhood Assistance Corp. of America, which has helped homeowners negotiate more than 130,000 modifications.
"This is a big step in the right direction," Marks said of Bank of America's plan. "Give them credit — it arrives late, but they're stepping out front, saying there are problems to fix and walking the walk in fixing them."
Struggling to deal with troubled loans from Countrywide, Bank of America has repeatedly sought to cast itself as an industry leader in loan modifications. In late 2008, it settled investigations by state attorneys general in a deal it said could reduce borrower payments nationally by up to $8.7 billion. And last March the bank said it would reduce the principal on some particularly tricky loans by billions of dollars.
Yet, like other lenders, Bank of America has found itself criticized by consumer advocates and legislators for modifying too few loans and for mishandling its dealings with many troubled borrowers.
Desoer had told The Times late last year that BofA would move some loan origination workers to the modification side, since they were more familiar with the document gathering and analysis of personal finances that is key to finding how to make a loan affordable for the borrower while still costing the bank less than foreclosing.
But those efforts had involved moving only a few hundred workers at a time, a spokesman for the bank said.
The move of the 2,500, first reported Thursday by the trade publication Mortgage Daily and confirmed by Bank of America, involves workers at 10 bank facilities around the country, including a huge call center in Brea. The 2,500 represent a nearly 10% increase in the bank's loan-modification staff, the spokesman said.
Margot Saunders, a lawyer with the nonprofit National Consumer Law Center, said the shift to individual modification case workers "should have been done months or years ago."
But she said servicers had clung to an old model that had assumed loan modifications would be a specialty sideline of the process of billing and collecting payments.
"It was akin to making a car on an assembly line," she said. "They resisted going to a method in which a particular individual is responsible for the whole process.
"It is more expensive to do it that way," Saunders said. "In the end, though, because of the terrible quality they were getting on the assembly line, they weren't getting cars that held together, or even ran."