Bank of America Home Loans, the mortgage entity formerly known as Countrywide, announced today that a million borrowers have received its Clarity Commitment, a one-page summary of mortgage loan terms. This is a significant number when you consider that only 66,465 Americans have received permanent mortgage modifications through the Obama Administration's Home Affordable Modification Program.
How clear is the document, which the bank introduced last April? The prototype Clarity Commitment on BofA's website seems fairly straightforward, although not that different from the first page of a regular loan document. It lists the mortgage amount, type of mortgage, interest rate and loan term under "Loan Summary." However, it's hard to tell from the sample how the Clarity Commitment would handle balloon and adjustable-rate mortgages.
"Customers told us they wanted transparency and 'no surprises' in the lending process, and the Clarity Commitment answers that need — helping potential homeowners clearly understand the key terms and conditions of their mortgage agreement prior to closing a loan," said Barbara Desoer, president of Bank of America Home Loans, in a statement. "Now, with more than one million applicants who have received a Clarity Commitment, we are pleased with how consumers and associates have rallied around this evidence of our brand promise to help lead the industry into a new era of responsible lending."
Bank of America is also providing credit card and deposit customers with tools that respond to their needs for simplicity and transparency. In December, Bank of America mailed a Credit Card Clarity Commitment " a one-page summary of each customer's card rate, fees and payment information " to 40 million consumer credit card customers.
The Clarity Commitment was created to provide consumers with greater transparency in the homebuying process. According to a survey conducted by Bank of America in December 2009, more than four out of five consumers think it is important to have such a summary.