While Bank of America’s decision to find an amicable way to settle its debt obligation to the federal government resulted in a $25 billion settlement between the top 5 mortgage institutions in the country and the government.
Investors in the mortgage sector, especially those whose monies are used to sponsor Bank of America mortgages are feeling hard done by the decision of the bank to reduce principal amounts owed by borrowers.
The investors do not believe it is right for the bank to take a decision that will affect them since it was the bank’s own doing that resulted in the settlement deal. According to some of the investors, they feel that the bank is asking them to pay the fine that has been imposed in it.
Quite frankly, if we look at the fact that Bank of America sometime in the past was vehemently opposed to giving out principal reductions, we would realize that the bank has accepted to do this because it feels it is a better alternative than paying the full amount that has been placed on it.
At a time where we need more investors in the mortgage market to help speed up the rate of recovery, any action that makes investors feel their interest is not being taken care of may have a detrimental effect on the recovery of the mortgage sector.