More than 200,000 underwater home owners with mortgages through Bank of America may be eligible to have a reduction in the amount they owe on their loan, which could possibly trim their monthly payments by up to 35 percent.
Bank of America has sent letters to home owners who may be eligible to take part in a program to write-off a portion of underwater home owners’ mortgage principal, reducing it by, on average, $150,000 each.
The bank’s move stems from the $25 billion settlement, which it and four other of the nation’s largest lenders reached earlier this year with federal and state officials over past foreclosure mishandlings. Bank of America agreed to reduce some home owners’ mortgage principles as part of the settlement.
Home owners eligible for the principal write-offs must be:
- “underwater” (owing more on their mortgage than their property is currently worth),
- have a loan owned or serviced by Bank of America,
- be at least 60 days behind on their mortgage payments as of the end of January.
- in order for the mortgage reductions to be made permanent, home owners must make at least three on-time payments.
“To the extent principal reduction and other modification tools help us turn mortgages headed for possible foreclosure into long-term performing loans, it will be positive for home owners, mortgage investors and communities,” said Ron Sturzenegger, a legacy asset servicing executive.
SOURCE: The New York Times; REALTOR Magazine