Bank of America dropping wholesale mortgages

American Press, Oct. 25, 2007

CHARLOTTE, N.C. - In addition to scaling back its investment banking operations, Bank of America Corp. is exiting the wholesale mortgage business and eliminating about 700 jobs, bank officials said Thursday.
The nation’s second-largest bank will stop offering home mortgages through brokers at the end of the year to focus on direct-to-consumer lending through its banking centers and loan officers. The move also eliminates the jobs in the bank’s consumer real estate unit.
The bank shared details of the decision with The Associated Press before its public announcement scheduled for Friday.

The cuts are part of a 3,000-job reduction engineered by Chief Executive Ken Lewis after the nation’s second-largest bank reported a huge decline in third-quarter earnings.
“When Ken talks about a top-to-bottom review in five days time, you can’t make that happen. These cuts were in the works, and expect more,” said Tony Plath, an associate professor of finance at the University of North Carolina at Charlotte. “Don’t underestimate the depth of Lewis’ disappointment in earnings. This guy is pissed.”
Bank of America confirmed on Thursday that its co-head of equities, Peter Forlenza, had left the bank. Forlenza, who joined the bank in August 2002, left on his own accord, Bank of America spokeswoman Melissa Kitlowski said.

Equifax to start file freezes Oct. 31

By PÉRALTE C. PAULThe Atlanta Journal-ConstitutionPublished on: 10/25/07
Consumers nationwide who want to freeze their Equifax credit reports from unauthorized access will have that option starting Oct. 31, the Atlanta-based credit reporting company said Wednesday.
Like TransUnion and Experian, its two main rivals that have made similar moves in recent weeks, Equifax will charge $10 each time a consumer wishes to have his or her credit file frozen or unfrozen. TransUnion began to allow the file freeze option Oct. 15. Experian's takes effect Nov. 1.

Equifax, which charges $4.95 to $12.95 for a credit monitoring service, will add $2 to the monthly fee to those subscribers who want to add the file-freeze option.
The moves come after several years of consumer advocates lobbying state governments and Congress to give consumers that option to combat identity theft.
Identity theft, which costs victims and businesses about $50 billion a year, occurs when someone obtains loans or conducts other transactions using someone else's personal information.
Consumer advocates have long contended that if credit reports — which contain a person's Social Security number, most recent home addresses, employment and creditors — were frozen, a lender could be alerted to possible fraud.

FHA could back refinanced loans for borrowers delinquent on payments

WASHINGTON - Looking to help homeowners avoid foreclosure, the Democratic-controlled House on Tuesday moved toward expanding federal backing of mortgages well beyond limits favored by the Bush administration.
The House bill would allow the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, to back refinanced loans for tens of thousands of borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial "teaser" levels.
"The American dream is in peril for many families in this country as foreclosures rise and dreams shatter," Rep. Betty Sutton, a Democrat from Ohio, a state particularly hard-hit by the default wave, declared in House debate on the measure.

She called the legislation, which backers say could help an estimated 250,000 families, "a bold step forward on what is going to be a long road to fix this broken system."

FDIC to mortgage servicers: Freeze ARM rates

By Jeanne Sahadi, CNNMoney.com senior writer
October 5 2007: 5:03 PM EDT
NEW YORK (CNNMoney.com) -- The heat on U.S. mortgage lenders and servicers was turned up a few degrees this week when the country's chief bank regulator publicly proposed that they permanently freeze interest rates on subprime adjustable-rate mortgages (ARMs) for many homeowners.
"Keep it at the starter rate. Convert it into a fixed rate. Make it permanent. And get on with it," Federal Deposit Insurance Corp. Chairman Sheila Bair said in prepared remarks at an investor's conference.

ARMs often have a low introductory interest rate for two or three years and then reset to much higher levels.
Roughly 1.3 million subprime ARMs are due for a rate reset between now and the end of 2008, according to data from First American Loan Performance.
Bair proposed that servicers convert only those ARMs that haven't reset yet and only for borrowers who are current in their payments and occupy their homes. Loans taken out by speculators who don't live in the homes they bought would not qualify for the automatic conversion.

Ways to avoid Foreclosure

Here are some options your lender may offer you if you miss a payment and want to avoid foreclosure:
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Repayment plan: If you suffer a short-term financial setback (expensive car repairs, a medical emergency), your lender may provide some breathing room by agreeing to let you pay off your missed payment in two installments over the next two months.
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Loan modification: Mortgage servicers can adjust the terms of your loan -- most often by lengthening the amortization schedule, lowering the interest rate or rolling the delinquent amount into the loan and reamortizing the new balance -- to help you bring the loan current.
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Short sale: The lender allows you to sell the house for less than the outstanding loan amount, takes the proceeds and forgives any remaining debt.
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Short refinance: The lender forgives some of your debt and refinances the rest into a new loan.
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Refinance with a "hard money" loan: You won't like the high rates and fees of a hard money loan -- one from a private lender -- but it may buy you time to sell your home and avoid foreclosure.