Bank of America Corp., the second-largest U.S. lender, was faulted by Senator Barbara Boxer for making borrowers wait as long as 90 days to apply for mortgage refinancing and was urged to speed up the process.
“Delays could prevent borrowers from taking advantage of today’s historically low interest rates and improvements recently made to the Home Affordable Refinance Program,” the California Democrat wrote in a letter today to Chief Executive Officer Brian T. Moynihan.
The lender began a reservation system last week that asks those who call during high-volume times if they wish to be contacted again in 60 to 90 days, according to two people who requested anonymity because the measure hasn’t been announced. President Barack Obama has said housing relief programs may aid the economy by lowering monthly payments for borrowers who are current on their payments.
“It is critical that Bank of America take the steps necessary to meet the increased demand for refinancing caused by changes in the HARP program,” Boxer wrote. “Making it easier for responsible homeowners to refinance at today’s low rates will help keep families in their homes and boost the economy.”
Obama has urged an expansion of HARP that would let homeowners who are current on their payments save $3,000 a year through refinancing into lower-interest loans guaranteed by the Federal Housing Administration.
Rates for 30-year U.S. mortgages held at the lowest level on record, Freddie Mac said in a statement. The average rate for a 30-year fixed loan was unchanged in the week ended today at 3.87 percent, the lowest in records dating to 1971. The Federal Reserve said last month that economic conditions may warrant “exceptionally low levels” for interest rates through at least late 2014.
Bank of America is “working hard” to meet customer demand, a spokesman for the Charlotte, North Carolina-based lender said this week. Customers with a Bank of America checking account or those who apply at a branch aren’t subject to the delay, a person with knowledge of the matter said.
The move is the latest by Bank of America, once the biggest mortgage lender and now No. 4, to prioritize who it serves as the firm scales back. Last month, the company suspended refinancings that allowed homeowners to extract cash from their properties. Bank of America’s policies may be reversed if demand falls or as more employees are added, one person said.
Bank of America lost about three-quarters of its market share in U.S. home mortgages since 2007 while grappling with defective loans inherited from its acquisition of Countrywide Financial Corp., falling to 5.6 percent of originations in the fourth quarter, according to FBR Capital Markets Corp. Refinancing makes up about 80 percent of all U.S. mortgage lending, according to FBR.
Wells Fargo & Co. and New York-based JPMorgan Chase & Co., the biggest U.S. mortgage lenders, said they aren’t stalling customers.