On Wednesday, March 24, Bank of America announced that it would eliminate as much as $3 billion in principal owed by thousands of delinquent homeowners whose mortgage balance was at least twenty percent greater than the value of their house. Bank of America’s new program is directed at borrowers who received high-risk loans form Countrywide Financial, a company purchased by Bank of America in 2008.
Bank of America’s newly announced loan modification program both differs from, and supplements, the government’s own modification program announced in 2009, in that it provides a reduction in principal owed, rather than merely a lowered interest rate. With home sales and prices dropping substantially, some commentators have welcomed this shift toward principal reduction, while others are more cautious, emphasizing that this represents yet another temporary fix to a larger crisis.
Bank of America will directly contact borrowers it deems eligible for the program. Eligibility is established where borrowers can demonstrate a hardship in making current payments, are at least sixty days delinquent on their loan payments, and owe at least 120% of the outstanding loan balance. The plan is designed specifically to address troublesome loans such as option ARMs, or adjustable-rate mortgages, of which there are an estimated 900,000 currently in existence.
If you are burdened with a high risk home mortgage, and are having difficulty making regular payments, this is certainly welcome news. However, there are many Americans who either will not be afforded access to this program, or will find that even with a mortgage modification they are unable to avoid a foreclosure action. In which case, it is time to call the Law Offices of Robert Manchel at (866) 503-5655. Our New Jersey bankruptcy attorneys can provide options for saving your house from foreclosure, with or without bankruptcy protection. Contact Robert Manchel today for a free consultation.