US will recover from home loan disaster: Bank of America’s Barbara Desoer

SF Public Press
 — Aug 5 2011 - 2:27pm

The market slump that vaporized $6 trillion of homeowners’ equity, and left one in four owing more on their mortgage than their house was worth, will continue through 2012. But this too shall pass.

That was the somewhat reassuring message from Barbara Desoer, president of Bank of America’s home loans unit, at the Commonwealth Club of California Thursday. “We have weathered, and we have overcome, cycles like this before,” she said.
House prices are expected to fall another 3 percent during 2011, and won’t post anything more than “modest gains” before the end of 2012, she said.
Desoer, who oversees an operation that accounts for one of every five mortgages originating in the United States, and collects payments on 7 million home loans, delivered her grim prognosis with a reassuring bedside manner. And Desoer’s message received a generally friendly reception from an audience that included dozens of people wearing name badges emblazoned with the familiar Bank of America logo.
The calm atmosphere of the talk contrasted with the turmoil that has roiled housing markets in the Bay Area, and throughout California and the nation, since 2007. In the Bay Area, the median house price has plummeted 56 percent from July 2007 to March 2009, and remains 43 percent below its peak, according to DataQuick, a San Diego-based market data firm.  Statewide during the second quarter of 2011, lenders issued 56,600 notices of default to homeowners who were late on mortgage payments, and executed foreclosures of 42,500 houses. In the second quarter of 2005, when house prices were booming, only about 600 foreclosures took place.  
Desoer said factors that contributed to the recent and lingering crisis included Americans’ strong desire to become homeowners, the widespread view of houses as investments and the ready availability of government financing. The pressure to compete with cheap government loans led private lenders to ease up on underwriting reviews of prospective borrowers, she said: “Corners were cut.”
Desoer, who has a master’s degree in business administration from the Haas School of Business at UC Berkeley and has worked for Bank of America since 1977, got a ringside seat to the turmoil after the bank’s 2008 purchase of Countrywide Financial. That high profile, super-aggressive mortgage lender was one of the chief corner-cutters, with a website that in early 2007 promoted exotic “PayOption” adjustable rate mortgages and a loan program that “streamlines the paperwork and documentation normally required in the loan process.”
Such “streamlining” took a toll. Mortgages that Bank of America acquired as part of the Countrywide deal now account for 81 percent of the 1.2 million loans that the bank services and categorizes as “seriously delinquent,” Desoer said.
The Countrywide deal has also entangled the bank in legal disputes. In June, Bank of America agreed to pay $8.5 billion to settle claims by institutional investors who had purchased securities-backed by mortgages originated by Countrywide between 2004 and 2008. Bank of America is also engaged in settlement talks with state and federal regulators that might reduce loan balances of some borrowers, the Wall Street Journal reported Wednesday. Desoer did not comment on that report, and a bank spokesman could not be reached immediately for comment.
Desoer’s did have a terse response to a question about whether, with the benefit of hindsight, she would still have supported Bank of America’s purchase of Countrywide: “No.”
Desoer defended Bank of America’s record of modifying mortgages to ease the burdens of struggling homeowners, saying it had completed 910,000 permanent modifications. But Desoer also reaffirmed the bank’s position that it would only modify loans in cases where homeowners had sufficient resources to keep current under the new terms.
In answer to written questions from the audience, Desoer said she believed that, as the nation remodeled its housing finance system and redefined its overall goals, there was “a possibility” that the mortgage-interest deduction for homeowners might be scaled back. But Desoer declined to comment on the future of the property tax break enjoyed by long-term homeowners since Californians passed Proposition 13 in 1978. “Thanks for asking,” she said.
Speaking after a trading day in which the Dow Jones Industrial Average fell 5 percent and Bank of America’s share price fell 7 percent, Desoer volunteered that the bank remained financially strong and had repaid all of the loans it received under the controversial Troubled Asset Relief Program enacted in 2008, at the height of the financial crisis. “Nine of 10 Americans still believe in the dream of home ownership,” Desoer said, adding that the bank’s “goal is to support that dream.”



It's funny how this article states the US will recover, in what year!  The American people were sold on the fact that homeownership is something that everyone should have, so they raised the prices on property and most of the homes are only worth half of what we owe.  This is a complete JOKE and so are her comments.  The way it looks in my community is that the only people who will be able to remain in their homes are the 'original' purchasers and the ones who are able to rent or purchase now and more reasonable prices.    I have been attempting to get a modification or restructure from Bank of America for almost three years!

This officer of a corrupt institution says that her bank's goal is to "support that dream" of home ownership.   Unfortunately, the banks' collective inability to moderate that dream like responsible adults helped lead us into this recession. They, like so many other "trained professionals" from the "best schools" failed profoundly at their jobs, and they should pay a professional price. Instead, they have cashed out, enriching themselves while driving much of America deeper into poverty.   Ms. Desoer is speaking at the Commonwealth Club about real estate,  yet she won't address Proposition 13 and the many problems it has created? That's irresponsible, and insulting to the audience. Obviously, she wishes to continue the hallucination that leads the less-informed into debt slavery.   Bank of America, and exuctives like Ms. Desoer, collaborate in the destruction of working class wealth, while they get rich off of fees for moving numbers around in a computer. They are frauds; they are not to be trusted. I thank the Commonwealth Club for pointing out this venal class of sociopaths.  A few years from now, when the hardships of daily life come down to the creation of real value, folks like Ms. Desoer will have nothing to offer society. Nothing at all. She and her bloodsucking class will feel the wrath of millions who were knowingly sold a house of cards.

Yeah if we could all get principal reduction like she did then there will be a recovery. Until then its justice for the haves, and a so called "free market" for the have nots.

Wow so does that mean were finally going to give principal reductions to underwater homeowners. Of course not, fannie and freddie will never allow that. Ask Desoer how much she liked the principal reduction she got from b of a when she was relocated out to the west coast, or does she not like to talk about that? At 8 bucks a share and new lawsuits everyday, skank of america is a dead bank walking.