Bank of America Begins Principal-Forgiveness Program
As part of a settlement with 49 states and the United States government, Bank of America has begun to process of contacting some of its mortgage customers that may now be eligible for a mortgage balance reduction. The bank says that it is fully committed to forgiving some mortgage loan principal for many of its underwater borrowers.
In the first round of letters, Bank of America said it is targeting more than 200,000 mortgage-holders who could potentially save as much as 30 percent of their monthly payments under the program. The bank says its goal is to utilize all available tools and programs to help turn mortgages headed for possible foreclosure into long-term performing loans.
Despite these and past efforts, many Bank of America customers are becoming increasingly aggravated, saying they have tried to modify their mortgage loans to no avail. Many say they have been told they are eligible and filled out all the necessary paperwork, only to still be waiting for any response from BOA as long as 18 months later.
Bank of America's new principal forgiveness program will target many customers already in the modification process, so it remains to be seen if this resolves the issues that have plagued the process so far.
Bank of America has expressed great confidence the new program, noting that 5,000 modification offers have already been mailed. This reportedly has the potential to provide a total of more than $700 million in forgiven principal. Participating homeowners are required to make at least three timely payments before the modification can become permanent.
To be eligible for this program, a homeowner must meet the following criteria:
- Owes more on a mortgage than the property is worth.
- Was at least 60 days behind on payments on January 31, 2012.
- Has a contractual monthly payment for principal, interest, property taxes, hazard insurance and any applicable homeowner association fees totaling more than 25 percent of gross household income.
- Has a loan that is owned and serviced by Bank of America, or serviced for another investor that has given the bank delegated authority to do such modifications.
To find out if you are eligible, contact your local Bank of America representative.