I received a phone call from an Alumnus Brother a couple of weeks ago stating he received a letter from Bank of America forgiving him of his obligation to them. He stated the loan was for $45,000 and was a 2nd loan on his home which we was currently paying and was never late. He further asked me many questions of why they are doing this and what repercussions he could incur for accepting it.
Although this may sound odd it is not. Back in October Bank of America announced that they are erasing about 150,000 mortgages to help struggling homeowners. In reality, Bank of America is doing this as part of the settlement of the National Foreclosure Settlement. What seems odd is that it was suppose to be for struggling homeowners but we are seeing it happening to both good and bad loans.
If you are one of the lucky ones you will be receiving a letter from Bank of America stating that they will completely pay off your mortgage unless you decline the offer within 30 days. If you wish to accept this gift you will not have to do anything. You will be automatically enrolled into the program and your mortgage will be paid off.
According to Bank of America your credit report will be listed as “paid in full” but no one is clear if the homeowner needs to pay taxes on the debt as they normally would. It is my recommendation that anyone receiving this letter talk to their accountant and find out the benefits and potential penalties before accepting the forgiven debt.
This Bank of America program is to reduce the amount owed in hopes that more Americans find themselves above water and able to move forward with their lives.
Joel Gruenke
The Kim Tokar Team
Keller Williams Real Estat
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