BofA Modifies 70,000 under HAMP

In an effort to address the ongoing foreclosure crisis of the nation, Bank of America Corp. (BAC - Analyst Report) said on Tuesday that it has completed more than 70,000 mortgage modifications under the federal government's Home Affordable Modification Program (HAMP) since the beginning of January 2010 through May 2010.

During May, the largest U.S. bank converted more than 16,000 borrowers from trial to permanent modifications.

The participating banks receive incentive payments under the mortgage modification program for altering the interest rates and payments for distressed homeowners. Following a trial modification for three months, qualifying homeowners’ mortgage burdens are entitled to permanently reduce. As a result, the monthly payments of the distressed borrowers will be lower.

Overall, BofA has modified 630,000 mortgages through variety programs since January 2008.

According to Treasury, since March 2009, about 1.2 million homeowners have enrolled in the government's $75 billion loan assistance program, out of which about 25% had received permanent loan modifications as of April.

Earlier this month, BofA opened its first outreach center in Henderson to extend a helping hand toward struggling Nevada mortgage customers who are facing trouble making their mortgage payments and seeking foreclosure prevention assistance.

This is the first of the three outreach centers that BofA plans to open to serve distressed Nevada mortgage customers. BofA expects to open the other two centers in Las Vegas and Reno by the end of this month.

Following the acquisition of Countrywide Financial Corporation in July 2008, BofA services about one in three mortgage loans in Nevada. Though this acquisition is meeting BofA’s expected goals and the company expects decent cost synergies from this transaction in the near future, this state was hit hard by the economic turmoil. As a result, Chief Executive Officer, Brian Moynihan decided to provide expanded customer assistance to Nevada.

Also, since the acquisition of Countrywide, BofA has been more successful in modifying mortgages.

Although companies such as Wells Fargo & Co. (WFC - Analyst Report), Citigroup Inc. (C - Analyst Report), JPMorgan Chase & Co. (JPM - Analyst Report), USB Bancorp (USB - Analyst Report) and Ocwen Financial Corporation (OCN - Analyst Report), to name a few, are also engaged in HAMP and other modification programs to prevent foreclosures, BofA is believed to be proactively reaching out to its customers to address their loan problems through all the possible existing and viable alternatives.

At a time when the pace of economic recovery is slow, BofA is exploring all options to prevent a foreclosure. Though foreclosure prevention does not benefit the company’s financials to a great extent, it hopes to restore investor and customer confidence through this initiative.

The market turmoil was more harmful to BofA than its peers except Citigroup. However, BofA concluded its biggest acquisitions in this period. Following Countrywide, the company acquired Merrill Lynch almost during the height of the financial crisis last year.

Though there remain concerns related to BofA’s inconsistent credit quality and net interest yield compression, we anticipate continued synergies from its large scale operations and balance sheet restructuring.

Finally, as the company has settled the litigation issues over its Merrill Lynch acquisition and is in the process of resolving charges against Countrywide, there remains limited room for regulatory and legal pressure.

Read the full analyst report on BAC

Read the full analyst report on WFC

Read the full analyst report on C

Read the full analyst report on JPM

Read the full analyst report on USB

Read the full analyst report on OCN