Bank of America Corp. said Tuesday that it is the first mortgage servicer to get on board with a government plan to modify second liens.
"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," Barbara Desoer, the president of Bank of America's home loans unit, said in a press release.
The plan, known as 2MP, is a new component of the Home Affordable Modification Program, which started last year. Critics of that program say the major servicers of first mortgages have a disincentive to provide effective modifications because they hold the second liens and would take big losses by writing them off. B of A, JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. are large holders of second liens.
B of A, which services about 3 million second liens, said it would modify eligible second liens regardless of whether it serviced the first mortgage. The Charlotte company said it has systems in place to begin modifying seconds once the final policies and guidelines of 2MP are in place, which is expected to be soon.