|Mortgage customers rate Bank of America|
Bank of America has begun contacting some of its mortgage customers who may be eligible for a mortgage balance reduction. The bank is committed to forgiving some principal for underwater borrowers, as part of a settlement with 49 states and the U.S. government.
In the first wave 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.
"Building on home retention and payment assistance programs already in place, we are meeting our obligation to deliver this additional relief to our customers following the completion of the recent global mortgage settlement," said Ron Sturzenegger, Legacy Asset Servicing executive. "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 homeowners, mortgage investors and communities."
Unfortunately Bank of America, as most other mortgage lenders, has drawn complaints from struggling homeowners who have been trying to modify their mortgages.
"We have a BOA loan and we cannot get them to do anything to help," Cat, of Mulberry, Tenn., wrote in a ConsumerAffairs post. We get the runaround, we send documents and never get replies other than being told to send documents again. We were told we were getting a modification over a year ago and now we are not getting it."
"For the past 18 months I have been trying to get a loan modification from Bank of America," wrote Carolyn, of San Diego, Calif. "My house is now in foreclosure."
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 confidence the program will help, noting that it actually began it back in March
"So far under this early initiative, about 5,000 trial modification offers have been mailed, providing a potential total of more than $700 million in forgiven principal," the company said in a statement. "Homeowners are required to make at least three timely payments before the modification can become permanent."
Bank of America says the wave of mailings beginning this week will reach a broader base of customers who may be eligible for this principal reduction program. The letters provide each homeowner with a description of the program and an invitation to provide financial information to begin the review process.
To be eligible for this program, a homeowner must meet certain criteria, including:
- Owes more on the mortgage than the property is worth today.
- 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.
Fannie Mae, Freddie Mac and FHA/VA are not participating in the principal reduction program, but Bank of America says other modification programs which may provide comparable reductions in monthly payments are available on those loans.