Wednesday, May 9, 2012

BofA to reduce principal on 200,000 home mortgages

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.

1 comment:

  1. Loan modification is just the term used to refer to the modifications the bankers make when the borrowers are not able to make their loan payments of their mortgages.

    what is a loan modification california