Bank of America begins mortgage refinancing

CHARLOTTE, N.C.
April 9, 2009 6:38am

Bank of America, which services one out of five mortgages in the United States, says it has started processing its first wave of mortgage refinance applications under the U.S. Treasury Department's "Making Home Affordable" program.

The initiative provides new refinance opportunities to homeowners who previously could not qualify.

"Combined with historically low interest rates, this program has generated significant interest from borrowers seeking the benefit of lower mortgage payments," says Barbara Desoer, president of Bank of America Mortgage, Home Equity and Insurance Services.

But the bank’s efforts are not expected to have much impact on the housing freefall in the Central Valley, the epicenter of the mortgage meltdown.

Here’s why:

The U.S. Treasury plan applies to homeowners with loans owned by Fannie Mae or Freddie Mac, who are current with their mortgage payments and whose home value is no more than 105 percent of the current mortgage.

Fannie Mae and Freddie Mac had not been major lenders in the region -- and home values in many parts of the Valley have plunged to 50 percent of their peaks.

In its first wave, Bank of America says it will be able to serve homeowners whose mortgages are serviced by Bank of America or Countrywide and who do not have mortgage insurance on their current loans. Additional borrowers will be included as systems become operational, the company says.