As part of a $25 billion settlement between banks and government regulators, Bank of America (NYSE:BAC) mailed out offers to 60,000 delinquent mortgage holders in May promising to slash their mortgages by an average of $150,000.
Despite the offer, most didn’t even reply to the letter, Bloomberg reports.
The failure to engage delinquent homeowners caught the bank by surprise. Bank officials said they are trying to understand why the offer didn’t attract a greater response.
One possibility is “fatigue,” according to company officials. Many delinquent mortgage holders have been bombarded by so much mortgage-related correspondence, including offers by outside companies, that they simply become overwhelmed and ignore new offers altogether.
Bank of America’s effort isn’t the first mortgage assistance program to fall below expectations. The federal governments Home Affordable Modification Program managed to modify only one million loans — significantly less than the three to four million loans that program was predicted to handle.
Bank of America is planning a number of mortgage assistance programs, including incentives for homeowners to sell delinquent homes or become renters in their bank-owned residences, and an effort to reduce mortgage balances for at least 200,000 mortgage holders by next month.
Roughly one million mortgages held by Bank of America are delinquent on payments by at least 60 days. Most of that is the legacy of Countrywide Financial, which Bank of America acquired in 2008.
Shares of Bank of America slipped more than 1% in early Thursday trading.