Charlotte - The
nation's largest bank will reduce principal on home mortgages to as
low as the current value of the property.
Eligible
homeowners will have a chance to reduce the principal debt of their
mortgages by as much as 30 percent, according to notices mailed by
Bank of America this week.
Part
of a huge deal, a consent order worked out by a federal judge between
states Attorneys General, federal agencies and the nation's five
largest mortgage servicers, the bank began sending notices to
200,000 clients who are upside down and underwater on their home
loans.
To
qualify, homeowners must owe more than the property is worth; be at
least 60 days behind on payments as of January 31; have a monthly
payment obligation of at least 25 percent of gross household income;
have a loan owned and serviced by Bank of America, or serviced by
Bank of America and owned by an investor who has given permission to
the bank to reduce the amount of principal.
The
bank announced that it had recently concluded a test phase of the
program, which began in March, by mailing offers to reduce principal
by about $700 million in notices to 5,000 consumers.
It
is the first step in a settlement that will be in effect for three
years.
Bank
of America is responsible for a total of $11.8 billion in the massive
settlement involving 5 major banks.
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