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Bank Of America Starts Principal Reduction.. Forbearance In The Mix….

By
Real Estate Broker/Owner with Darney Realty 01458057 & 01464957

Bank of America

In a recent article, Bank of America “Circles the Wagon” on principal reduction….Lot’s of “May” and “If”….nothing about how much principal “May” be written down…Until we get more information….here you go!

Bank of America said it has initiated its new earned principal forgiveness program for borrowers being considered for the government’s foreclosure prevention program.

Letters were mailed in mid-May to the first customers who may qualify for the new program.

But there are several requirements before a borrower is considered.

To qualify, homeowners must have taken out subprime, pay-option ARM or two-year hybrid ARM loans originated by Countrywide on or prior to Jan. 1, 2009. In addition, the amount of principal owed must exceed the value of the property by at least 20 percent. Loans must be 60 days or more past due.

Once approved, borrowers will be offered a non-interest bearing forbearance amount. The homeowner may earn forgiveness of that amount by remaining current on payments. The goal is to reach the target of 31 percent of household income in monthly payments – which is the intention of the government’s Home Affordable Modification Program.

Bank of America is the U.S. lender with the most HAMP mortgage modification trials underway.

“Our tests have shown that many homeowners who are severely underwater on their mortgages will respond positively to a modification offer that includes reduction of their principal balance, increasing the rates of acceptance of HAMP trial modification offers, conversion to permanent modifications and long-term success of the homeowner,” said Jack Schakett, credit loss mitigation executive for Bank of America Home Loans.

Schakett said the letters were mailed to “customers who are in the most imminent danger of foreclosure to begin trial modifications by the end of June.”

Bank of America said it may offer earned principal forgiveness over a five-year period, or over the three-year timeframe that “Treasury intends to include in its HAMP principal forgiveness design, depending on individual borrower situations.”

Under the its own foreclosure prevention efforts from December 2008 through March of this year, Bank of American said it has made more than $113 million in foreclosure relief payments to former Countrywide customers who went into early default.

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