Bank of America Corp. is limiting the number of refinance applications it accepts over the phone, telling borrowers who do not have an existing relationship with the bank that they may have to wait 60 to 90 days before their loan application can be processed, a BofA spokesman said Wednesday.
Like other large banks, the third-largest mortgage lender has been inundated with refinance applications since mid-January. Bank of America is furiously hiring new staff to handle back-office fulfillment for the newest version of the government's Home Affordable Refinance Program (HARP), according to spokesman Terry Francisco.
"We are aggressively building additional capacity to handle both HARP volume and all customer volume," Francisco told ASR sister publication American Banker. "Only people who don't have a broad relationship with the bank and happen to call through our telephone channel," are being told to wait.
Francisco describes BofA's telephone reservation system as a "relief valve," which tells potential applicants on days when there are high volumes of calls that their applications can not be accepted at that time. The automated system informs callers that they will be contacted in 60 to 90 days, though the actual wait time may be shorter.
Existing BofA and Merrill Lynch customers who already have accounts with the bank or people without accounts who walk into a retail branch to apply for a refi have not been affected, Francisco says.
"On days in which we have a high amount of call volume, we take their name and phone number and call them back," Francisco said, adding that the bank tries to contact potential applicants before 60 days have passed.
HARP 2.0, announced by the Obama administration in October, allows underwater borrowers whose loans are owned by Fannie Mae and Freddie Mac to refinance regardless of their loan-to-value ratio. The program is expected to result in a huge refinancing wave since appraisal requirements and lender "representation and warranty" liabilities were waived by the Federal Housing Finance Agency (FHFA), which oversees Fannie and Freddie.
BofA began accepting refinance applications for HARP 2.0 on Jan. 17, which caused "a surge in volume," Francisco said. Only the largest banks, including Wells Fargo & Co. and JPMorgan Chase & Co., have started processing applications. Smaller lenders have to wait until mid-March before accepting applications because Fannie and Freddie are still making technology changes to their automated underwriting systems.
The refinance share of mortgage activity rose to 80.5% for the week ended Feb. 3, the Mortgage Bankers Association said Wednesday. Moreover, the average interest rate fell to 4.05% last week, the lowest rate in the history of the survey, the MBA said.
Last year, BofA laid off 3,500 employees, or roughly 10 % of its workforce, as part of a broad restructuring plan to preserve capital. It also converted many small fulfillment centers to new "customer assistance centers," which were designed to help borrowers who had trouble paying their mortgages obtain a loan modifications.
Now the bank is scrambling to get more fulfillment centers up and running, and is asking some of the employees it laid off to come back and help process refinance applications.
For example, 500 employees who were doing credit card collections at a Hunt Valley, Md., facility are being retrained to do fulfillment, Francisco said.
"There still is a strong need for helping people who are behind on their mortgage payments and who need help with modifications. …In situations where we could bring people [employees] back, we are reaching out to build up our fulfillment operations," he said.