Bank of America has sent out thousands of letters to homeowners in the United States offering to forgive a part of their principal balance on their mortgages by an average of 150,000.00.
This amount for qualifying homeowners could amount to a monthly savings of up to 35 percent on mortage payments. This effort is the result of a 25 billion dollar settlement agreement earlier this year with 49 states attorneys general. Bank of America was investigated for abuses over the handling of foreclosures.
“To the extent principal reduction and other modification tools help us turn mortgages headed for foreclosure into long term performing loans, it will be positive for homeowners, mortage investors and communities,” Ron Sturzenegger, a leagcy asset servicing exec said in a statement. A win win for everyone.
Bank of America will be contacting more than 200,000 homeowners who could be candidates for this plan. The homeowners must meet certain criteria, including having a loan woned or serviced by Bank of America, owning more on their mortage than the property is worth, and being at least 60 days behind.
The bank said it had started making such offers in March to a smaller group of homeowners, those who were already seeking home mortgage modification.