Bank of America, the nation's largest mortgage lender, on Wednesday announced a program to offer homeowners who owe significantly more than their homes are worth the opportunity to have their loan balances reduced.
The program, which starts in May, would potentially help about 45,000 homeowners nationwide. In launching the effort, Bank of America is jumping into the debate about how to address the millions of homeowners whose mortgages exceed the value of their homes and who have complicated industry and government efforts to prevent foreclosures.
Lenders have traditionally resisted reducing borrowers' loan balances, arguing that doing so would encourage homeowners to miss mortgage payments to qualify. But as foreclosure-prevention efforts have struggled, the industry has started to relent. Bank of America is hoping that by reducing principal balances it will give borrowers an incentive to keep up with their payments and potentially create an industry model.
The company "has found that many homeowners who owe considerably more on their mortgages than their homes are worth are reluctant to accept a solution that addresses only the amount of the payment without an accompanying reduction in the balance due on the loan," said Barbara Desoer, president of Bank of America Home Loans...
Bank of America expects to forgive about $3 billion in principal on loans as part of the program.
Finally! Bank of America is to be applauded for taking a small step to help Main Street, after so much government effort has been made to bail out the banks at the taxpayers expense. Let's hope that more banks will follow suit in the coming months as the president continues to work to get the economy working smoothly again.
Read the entire story at The Seattle Times news site.
Comments: (9)
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By: bill coleman on 3/26/2010 10:57AM
Bank of America is the worst company to begin any new programs. It take Bank America over 1 year just to process SHORT SALES. Their system is always down, their processors is very slow, It is the worst company to begin a new program. I am a Real Estate Broker in Sacramento, CA and I have Short sale with Bank America over one Year Old is still not closed. I would rate them the worst company to make Real Estate Loans.
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By: Kare' on 3/27/2010 2:53AM
Believe me, it's something in it for Bank of America. I heard that they will get to write a certain amount off as unpaid debt and collect some of their money through insurance and at the same time lessen their tax burden. They have done so many foreclosures (some unlawful and unwarranted), its time that they give back to society.
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By: melodee on 3/27/2010 12:01PM
I received my loan through Countrywide Home Loans, then soon found out they changed to BOA. I asked them to send me the original loan papers to me and they couldn't. My loan has been bought and sold to so many lenders, they have no idea where the original contract is. It was all about buying and selling. Homeowners mortgages played on the stockmarket where only the rich prevailed at the expense of innocent and responsible working class people,
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By: Joe on 3/27/2010 2:40PM
I just bought a house I can't afford with a loan I don't understand.
What could possibly go wrong?
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By: ray ellis EPS on 3/29/2010 2:47PM
its not necessarily that people bought homes they couldnt afford. somr of these people could afford their homes for years and when the economy went under so did their ability to make house payments. I perform short sales and loan mods everyday. Most of these individuals are two income households where 1 person got laid off and they fell behind. They qualified for the mortgage but 5 yrs later after making on time payments cant find employment and when they do they are too far behind to catch up.
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By: K Mac on 4/01/2010 3:42PM
Joe, your comment would be funny if it weren't so painfully true.
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By: Roy Smith on 7/04/2010 9:35PM
Joe I can Help You with this send your contact info i will get you in this program.
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By: K Mac on 4/01/2010 3:46PM
Ray, when your mortgage balance exceeds your home's worth, it isn't because you fell on hard times. It's because you borrowed too much to begin with. People who took out huge loans with interest only payments then were "shocked" when they couldn't afford the principal payments should not be bailed out, IMO. People who bought more house than they could afford with ARMs, then weren't prepared when the adjusted rates came up shouldn't be bailed out, IMO.
Then again, I didn't think the banks should have been bailed out no strings attached, either
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By: Ross Wolf on 8/06/2010 6:28AM
The Government's New Genius Idea: The $1,000 Down Payment
http://www.businessinsider.com/1000-down-payment-2010-8#ixzz0voMUt0iG
$1,000 down payment to buy a home is effectively no down payment and amounts to renting with 100% government insured financing. Real Estate Brokers won’t work selling homes where there is no equity to pay their commission. In such cases homeowners usually walk leaving a house to foreclosure, bringing down home values in a neighborhood. If this government experiment proliferates, making mortgages to home buyers with a mere $1,000 down payment, it will not only cost taxpayers billions covering no down payment foreclosures, it will force homes values down to where Americans may find it economically safer to rent not own. The Obama government could effectively socialize home ownership, transferring homeowner equities to the poor, making homes so undesirable as an investment that once valuable homes would sell and rent dirt cheap as poor housing. Subsequently, Government would not have to sell homes to the poor for a $1,000 down payment as home ownership plummeted, but provide millions of abandoned homes free or cheap rent to millions of poor.
If the Obama government's socialized housing proliferates it could in Obama’s own words, “level the playing field” destroying the value of Americans’ number one free enterprise investment their home. Next would be other investment properties like apartment buildings. Most Americans’ savings have been the equity in their home. Once that is destroyed most Americans will have nothing. Historically when Citizens have little or nothing, they will support a socialist or communist government.
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