In January Bank of America agreed to modify home-equity loans in cases where borrowers had already qualified for relief under the U.S. Treasury's mortgage-modification program.
On March 23, 2010 Wells Fargo agreed to do the same.
Under pressure from criticism over the slow progress of its foreclosure-prevention efforts, the administration struck deals with the two giant banks that would extend mortgage relief to homeowners with second mortgages. Together the two banks account for 25% of the second-mortgage market.
A weakness with the government's foreclosure-prevention program is that mortgage modifications leave second loans unchanged. Some of the second mortgage are larger than the first. This leaves borrowers that qualify for lower mortgage payments on the first mortgages at risk of default because of larger payments on the home equity loan. This is a considerable step in fixing one of the major problems facing the mortgage-modification program.
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