From the FT.com:
Bank of America plans to shrink its $850bn portfolio of troubled home loans by about half over the next three years as it seeks to quicken the pace with which it resolves problems related to the housing crisis and its disastrous purchase of Countrywide Financial.
Terry Laughlin, who is spearheading BofA’s mortgage modification and foreclosure programs, told the Financial Times he had been given leeway to act quickly to tackle the growing number of bad loans that threaten to overwhelm the bank’s overall performance and tarnish the reputation of Brian Moynihan, its chief executive.
This year BofA hived off its problem loans into a “legacy” unit that Mr Laughlin runs, leaving the “good” mortgages in a separate division headed by Barbara Desoer.
A key part of Mr Laughlin’s strategy will be to shrink the portfolio of “bad” loans to about $450bn-$500bn during the next few years, as mortgages that originated with Countrywide and are no longer offered by BofA – including some with adjustable interest rates – are run off, modified or sold at discount prices.
BofA owns about $118bn of the problem loans outright. It services the rest, which means it collects payments from borrowers and initiates foreclosure proceedings.
About 60 per cent of the 4.2m borrowers were up to date with their payments. The rest were at least three months past due, Mr Laughlin said.
To better handle the high number of delinquencies, Mr Laughlin wants to streamline the modification process, under which borrowers are typically offered lower monthly payments for a period.
Mortgage holders will deal with a single bank employee and should receive a decision within 30 days, about one-third of the time it now takes to determine eligibility.