Bank of America announced that for homeowner’s who qualify, they will forgive a percentage of the principal balance of the mortgage as a way to incentivize homeowners to continue paying their mortgage.
In order to qualify, the homeowner must be 60 days late on their mortgage and Bank of America is looking for precarious conditions that would warrant a default risk such as having an adjustable rate mortgage (ARM) whose payments have increased and / or a homeowner that has had financial distress in their lives.
Bank of America has also said that one of the conditions for the principal balance forgiveness is that the homeowner must make on-time payments for 5 years in order to be granted the forgiveness.
The program is expected to roll out at the end of May 2010 and Bank of America states that approx 45,000 homeowners will qualify. Fannie Mae and Freddie Mac loans do not qualify for this, but Bank of America’s hope is that they will start a trend that other financial institutions will follow.
To read more go to:
http://www.walletpop.com/blog/2010/03/24/how-bank-of-americas-principal-reduction-plan-will-work/
