The venerable Bank of America recently sent letters to 60,000 struggling homeowners with the caveat-ridden generous offer of slicing an average $150,000 off their loans; the response was - silence. It seems the total and utter 'borrower fatigue', as Bloomberg puts it [6], that leaves homeowners relying on the very same banks that committed loan servicing abuses to avert foreclosures. Yet another program, that BofA specifically accounts for almost half of the fines of, ends up helping far fewer people than intended. Simply put, borrowers have lost faith in the process and in response to BofA's question, "we are working very hard to determine why response rates are lower than expectations", the incredulous response is "there’s incredible dysfunction in the way they set up their systems to handle this, and when mistakes happen, which is constant, they have very little ability to correct them. If Bank of America is complaining about borrower fatigue, they can look to themselves for the reason."
From BBG [6]:
“The number of customers responding is lower than we expected, given the significant assistance available,” Frahm said in an interview. “We are working very hard to determine why response rates are lower than expectations.”
Bank of America, the second-biggest U.S. lender by assets, will offer principal reductions to more than 200,000 clients by August, Frahm said. Other steps include cash incentives to sell a delinquent borrower’s home for less than the amount owed and a pilot program to turn owners into renters, he said.
Homeowners are exhausted from fighting foreclosure and may think offers to cut loans by one-third aren’t legitimate, Ron Sturzenegger, head of the lender’s Legacy Assets Servicing unit, said last month at a conference in Denver.
'Modifier' complaint forums are replete with examples of rejection due to 'bank mistakes' and 'botched customer interactions' and "it’s been nothing but a horrible experience with Bank of America." leaving poor old "confident of meeting their obligations" BofA with all this money (due to come off its balance sheet) but as the Center for Responsible Lending noted "The whole nature of the settlement was ‘We had a broken system,’ and now you’re asking people to trust this system, a lot of people are reluctant to believe the banks", and while we are certainly not on the side of a wealth transfer for non-performing mortgage holders leaving the diligent mortgage payers at an implicit loss; as Bloomberg notes "If the attorneys general and the monitor are willing and able to crack down on Bank of America and the other servicers, the settlement may help a lot of people, if they don’t, it will be yet another disappointment", leaving people so mistrusting that they won't even take 'free money' because what 'strings are attached' this time?