Foreclosure
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• Mortgage Crisis? Act Now to Avoid Foreclosure
• Foreclosure Not Inevitable, Fast Action Needed
• Avoiding Foreclosure Takes More Than Hope

Bank of America says it will re-write the terms on at least $40 billion in mortgages that are in danger of default.

The company, which is seeking approval to close its merger with Countrywide Financial Corp., said the writedowns would occur over a two-year period and are aimed at stemming the ever-rising tide of foreclosures.

At the same time, a new government report shows a record number of residential properties are sitting empty because of rising foreclosures and declining sales.

"We believe the financial strength, security and stability of the combined company will allow us to enable people to buy homes and stay in homes, and to assist many of those affected by the current mortgage troubles," said Bank of America Global Consumer and Small Business Banking President Liam McGee during testimony at a Federal Reserve hearing in Los Angeles regarding the Countrywide transaction.In addition to foreclosure prevention efforts, the combined company will continue Bank of America's policy of permitting tenants to continue living in properties subject to foreclosure for 60 days after the completion of foreclosure proceedings.

If the tenant voluntarily leaves the property within 30 days of the completion of foreclosure proceedings, they will receive a $2,000 cash-for-keys payment to help defray moving expenses.

"We will continue to work with distressed borrowers to match the customer's repayment ability with the appropriate loss mitigation option, including loan modifications, forbearances, repayment plans, lower rates and principal reductions," McGee said. "We will not assess new late charges for customers in foreclosure and we will waive certain other associated fees, when permitted."

While bank of America hopes to prevent future foreclosures, past and present foreclosures have resulted in a record number of vacant homes in the U.S. The U.S. Census Bureau reports that in the first quarter of 2008, the percentage of previously owner-occupied homes rose to 2.9 percent.

It was the third quarter in a row the vacancy rate has risen. The number of vacant U.S. residential properties now stands at 18.6 million, according to the Census Bureau report.
San Diego’s city attorney said on Wednesday he filed a lawsuit against Bank of America and its Countrywide unit to prevent the mortgage lenders from foreclosing on homes in the city, which he aims to make a “foreclosure sanctuary.”

City Attorney Michael Aguirre plans to file similar lawsuits against Washington Mutual, Wells Fargo and Wachovia in an effort to make the lenders negotiate with mortgage borrowers facing foreclosure.

“We would like to see San Diego become a foreclosure sanctuary,” Mr. Aguirre said.

Housing markets across Southern California, including the city of San Diego and the county of the same name, are seeing steep increases in foreclosure rates because so many homes bought there earlier this decade involved subprime mortgages and other types of risky loans.

So far this year, 20,000 homes in San Diego County, with a population of 2.9 million, have been lost to foreclosure as borrowers fail to keep up with mortgage payments and some analysts forecast the number may rise to 40,000 by the end of the year.

“We haven’t seen the lawsuit and can’t comment,” Bank of America spokeswoman Shirley Norton told Reuters.

In a statement provided to Reuters by Ms. Norton, Bank of America said it had been reviewing in detail Countrywide’s operations since acquiring the lender earlier this month and the combined company would no longer sell subprime mortgages.

“We are working hard to combine our two companies and are confident we will be recognized as a leader in responsible lending practices,” the statement said.