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Mr. Allen Jones -  - 13th Annual Economic Summit
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Mr. Allen Jones - - 13th Annual Economic Summit

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Presentation by Mr. Allen Jones at the 13th Annual Economic Summit hosted by NVAR at George Mason University on Wednesday, September 23, 2009.

Presentation by Mr. Allen Jones at the 13th Annual Economic Summit hosted by NVAR at George Mason University on Wednesday, September 23, 2009.

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Mr. Allen Jones - - 13th Annual Economic Summit Presentation Transcript

  • 1. Northern Virginia Association of Realtors George Mason University September 23, 2009 9:00am – 10:30am
  • 2. Agenda
    • Bank of America Breadth
    • Simplicity & Transparency in the Lending Process, Today’s Announcements
    • Short Sales
    • Bank of America’s Strategic Programs Portal
    • Future of Consumer Lending
    • For More Information
    • Appendix
    • HAMP Performance
    • Watch Items
  • 3. Bank of America Breadth
    • One of the world’s largest financial institutions
      • 53 million consumer and small business relationships
      • 6,100+ retail banking offices
      • Nearly 18,500 ATMs and award-winning online banking with 29 million active users
      • 282,000+ employees
    • Industry rankings among U.S. banking companies (1)
      • #1 in earnings at $5.2 billion
      • #1 in equity at $255 billion
      • #1 in assets at $2.254 trillion
    (1) For 1H09 or at 6/30/09
  • 4. Bank of America Breadth
    • Open for Business: Lending & Investments
    • 2009 Year-to-date through June 30, 2009 (1)
      • Extended $394+ billion in total credit
      • Funded $196 billion in first mortgage loan products and increased our mortgage lending capacity
      • Funded $40 billion in low- to moderate-income mortgages
      • Funded $8 billion in small business & $149 billion in commercial non-real estate loans
      • Network of 8,000 mortgage loan sales professionals
      • Maintain a servicing portfolio of over $2 trillion, representing 14.1 million loans and a market share of 19.2%
    (1) For 1H09 or at 6/30/09
  • 5. Simplicity and Transparency in the Lending Process
    • Today’s Announcements
    • BankAmericard® Basic™ Visa® Card
      • Customers pay one basic rate for all types of transactions
        • Purchases, balance transfers and cash advances
      • Rate tied to U.S. Prime Rate and will not change over life of the account
        • U.S. Prime Rate + margin of 14%, rate only changes if Prime Rate changes
      • No over-the-limit fee; Over-the-limit transactions are denied
      • Easy, single page disclosure document explains terms & conditions
      • One flat fee of $39 charged for late payments
      • Will be available online starting in October
    • Clarity Commitment™
      • Simple, one-page summary of the borrower’s loan terms & closing costs
        • Provided for all refinance, purchase and modified loans
        • More than 500,000 customers have received Clarity Commitments since April
      • Important payment terms are highlighted
      • Given at beginning of loan process & again at closing
      • Interactive Home Loan Guide walks borrowers through the home loan process
        • Aims to change conversation from “how much house can I buy” to “how much house can I afford”
  • 6. Short Sales Overview
    • Uniformity under Making Homes Affordable
    • First goal is to determine if loan mod or other home retention solution is available
    • Taken steps to improve our service relative to increased demand
    • We have 2 initiatives in pilot or planning to provide for faster decisions and less fall-out by setting pre-approved reserve prices on homes
    • Recently deployed new technology
      • Automated decision model
      • Streamlining processes
      • Improving communications with real estate agents
      • New internet portal that provides real-time information for agents & accepts documentation to expedite the short sale process
  • 7. Short Sale Considerations
    • If no other home retention solution exists, a short sale may provide advantages to borrower, servicer, investor – a last resort to FCL
    • Borrower advantages
      • Allows borrowers to make dignified exit, avoiding foreclosure & eviction
      • Typically less negative on a credit report vs. foreclosure
    • Servicer & investor advantages
      • May mitigate loss by avoiding costs, holding expenses, depreciation, and marketing the REO (BAC in VA at 8/31/09)
    • Community advantages
      • Borrower stays in the home & keeps up property until new purchaser arrives
    • Disadvantages
      • Borrower: potential tax liability; possibility of promissory note or other out of pocket costs at closing
      • All parties: time consuming, high-risk transaction
        • Avg. time is 50 days, but can be 90+ days if investor approval necessary
  • 8. Short Sales & Setting Expectations
    • Traditionally process doesn’t begin until offer is received
    • Each potential sale is reviewed on a case by case basis
    • In most cases, documentation of the borrower’s financial hardship and financial information must be supplied and reviewed by servicer
    • Appraisal done to determine current value – typically allow 10 days
    • Offer must reasonably meet current value
    • Buyer must financially qualify
    • Validation that it’s an arms-length transaction
    • Generally investor has to approve offer
    • MI insurance on the loan may require additional approvals
    • All lien holders on the property must approve the transaction
    • 60% - 70% fallout rate after approval driven by:
      • Low-ball offers or buyers “shopping” for best deal
      • Lengthy time involved and buyer withdrawing offer
  • 9. Future of Consumer Lending
    • Simplicity:
    • The Bank of America brand promise
      • We will always be a responsible lender
      • We will help create successful homeowners
      • Demystify the home buying process
      • Support sustainable homeownership
      • Lead by our clear and transparent standards in home lending
      • Bringing Opportunity Home
    • Transparency:
    • Voice of the Customer: More than 90% of customers in recent surveys said a clear explanation of the loan terms & condition was as essential as low fees & great service
  • 10. Bank of America’s Strategic Programs Portal
  • 11.
    • Allen H. Jones
      • [email_address]
      • National Default Management Policy Executive
      • Annandale, Virginia Office
    • Bank of America mortgage loan officer
    • Bank of America Home Loans Clarity Center
        • http://homeloans.bankofamerica.com/home
    For More Information
        • Bank of America, N.A., Member FDIC   Equal Housing Lender © 2009 Bank of America Corporation. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice.
  • 12. Appendix
  • 13. Default Management – HAMP Details
    • Centerpiece of our home retention efforts
    • Increased offers extended under HAMP to nearly 141,000 at 9/14/09
    • Nearly tripled customers in active trial modifications in under 2 mo.’s
      • 28,000 through 7/31/09
      • 81,000+ at 9/14/09
    • Foreclosure sale placed on hold for HAMP-eligible borrowers
      • Fewer than 3% of the 14 million loans in our servicing port face foreclosure
    • Devoted substantial systems, training & resources to home retention
    • Focus areas:
      • Make process more customer friendly
      • Improve customer documentation efficiency
      • Improve customer communication throughout process
  • 14. Watch Items
    • First Time Homebuyer Tax Credit
      • Applies to purchases that close after 4/8/09 and before 12/1/09
      • Credit expanded to $8,000 for purchases made in 2009 before Dec 1 st
      • Applies only to homes used as a taxpayer’s principal residence
      • Reduces a taxpayer’s tax bill or increases his/her refund, dollar for dollar
      • Is fully refundable, meaning the credit will be paid out to eligible taxpayers even if they owe no tax or the credit is more than the tax owed
      • Certain restrictions & eligibility apply
    • Future of Fannie Mae and Freddie Mac
    • Unemployment
    • Challenges Facing Industry in 2010