Bank of America is the first mortgage servicer to sign an agreement formally committing to participation in the pending second-lien component of the federal government's Home Affordable Modification Program (HAMP).
The formal action follows a verbal commitment to the program made by Bank of America's Chief Executive Officer Brian Moynihan during a meeting with Treasury Secretary Timothy Geithner earlier this month.
BofA has systems in place to begin implementing the Second Lien Modification Program (2MP) with the release of final program policies and guidelines by federal regulatory agencies, which is expected soon.
The system will require modifications that reduce the monthly payments on qualifying home equity loans and lines of credit under certain conditions, including completion of a HAMP modification on the first mortgage on the property.
"For many homeowners facing severe financial difficulty, decreasing the payment on the first mortgage without a reduction in the payment on the second lien may not produce an affordable combined mortgage payment," said Barbara Desoer, president of Bank of America Home Loans.
Bank of America will modify eligible second liens regardless of whether the first lien is serviced by Bank of America or another participating servicer.