.
Feedback

Blog: Bank of America Starts Mortgage Reduction Effort

BofA starts efforts to lower mortgage loans by an average of $150K for more than 200,000 homeowners and help qualifed homeowners receive $2,500-$30K in relocation assistance.

In the May 8 issue of the New York Times, an article reads that Bank of America has started sending letters to thousands of homeowners in the United States, offering to forgive a portion of the principal balance on their mortgages by an average of $150,000 each.

The article explains that the principal reduction offers from Bank of
America Home Loans are the result of a $25 billion settlement agreement earlier
this year with 49 state attorneys general, as well as federal authorities who
had been investigating allegations of abuses in the handling of foreclosures. 

The bank said it planned to contact more than 200,000 homeowners who could
be candidates for the offers, sending letters to a majority of them by the third quarter of this year.

To be eligible for the principal reductions, homeowners will have to meet certain criteria, including: having a loan owned or serviced by Bank of America; owing more on the mortgage than their property is worth; and being at least 60 days behind on payments as of the end of January.

Ron Sturzenegger, a legacy asset servicing executive, said in the statement that the bank had started making such offers in March to a narrower group of homeowners — those who were already in the process of seeking mortgage modification.

The bank estimated that the earlier wave of trial reduction offers to about 5,000 people could amount to more than $700 million in forgiven principal. But homeowners have to make at least three timely payments for the reductions to become permanent.

On May 15, Bank of America wrote a letter to Realtors with the heading, "Your financially distressed clients want to avoid foreclosure. You want to help them. So do we!"

This is great news.

They went on to write, "that's why Bank of America is excited to announce that for a limited time, we are offering enhanced relocation assistance payments in which qualified homeowners who initiate a short sale without an offer could be eligible to receive $2,500 - $30,000 in relocation assistance and owe no more on their mortgage with the sale of their property."

Newsletter & Alerts

Get the best stories each day and important breaking news

Subscribe

Not from San Clemente Patch? Find your Local Patch »

bbq May 19, 2012 at 10:44 pm
Hmmm... it's about time. Too little, too late for many homeowners who have already lost their homes, though.
Mahtty Kowalik May 20, 2012 at 01:16 pm
BBQ - So true! It is about time! It has been very sad during this these times, I am glad to see that the banks are willing to assist now to help in some way. Some assistance is better than $0.
JB May 20, 2012 at 01:27 pm
Yet again let's help those foolish starry-eyed individuals who were suckered into purchasing more home than they could afford with thoughts of "I'll flip it in a few years and make $200K", all the while using their home as an ATM. Just walk away from the home and do a short sale, people are not entitled to owning the home, it's a luxury. A home is not an investment (unless ou are buying positive cashflow rental properties),instead, it's simply a place to live. Look at the 100 year historical appreciation of home values, it nearly matches inflation, meaning near 0% appreciation in the long run. You can live in the house for several months scott-free while you try to short-sale it saving thousands a month!. Then, once you do short-sale the home think of how much money you will save per month by renting for the next few years. $500 to $1000 a month cheaper for a comparable rental. That means a lot more disposable income so you can go back to living your normal life without the need to use your house as an ATM because 50% + of your net income is no longer going to paying for an overpriced mortgage. Wake up America!
Yeparoo May 20, 2012 at 02:00 pm
Mahtty - Plenty of folks over leveraged their real estate in So OC. They are absolutely not Illiterate nor ignorant victims. Beyond the publicized listings of NDF and Foreclosures, Countrywide/BofA have a large number of non-performing loans that have not had a mortgage payment made for 1, 2 and 3 years. This includes both owner occupied and rental properties. Adding insult to injury, many landlords have no qualms collecting rent payments and not paying the mortgage. I guess BoA will pay down these unfair loan balances with higher bank fees. Yes, this is all very unfair indeed.
bbq May 20, 2012 at 04:57 pm
Not everybody just used their homes as an ATM. In our neighborhood we had some good, responsible people who lost their homes because, when the economy crashed, they lost their jobs. They struggled to hang on as long as they could and tried to get loan modifications. The banks that were "working with them" would string them along for more than a year, asking for more and more paperwork, and in the end deny the modification and foreclose on them. I think the lenders were just trying to get the info so they could come up with a new property deed, as they (lenders) no longer had the original deed to the property due to the electronic mortgage bundling. In addition to foreclosing on the properties, the lenders were also able to recoup the losses through insurance.
On the other hand, we have one other neighbor that has been living in his house for about three years without paying his mortgage. He has a lawyer that sends a letter to the lender monthly to stave off the foreclosure. His goal is to stay in the house a total of four years without paying his mortgage. We also had a home where the owners rented the house out while not paying the mortgage. Once the foreclosure notices started showing up on the gate, the tenants stopped paying the rent and lived for free for almost a year. So... it's not always so black and white.
Yeparoo May 21, 2012 at 05:23 pm
Ok BBQ, did the tenant also file for bankruptcy so the bank would think it was a good idea to bribe them with a fat check to vacant the rental property? Just want to make sure we can clearly see the theater of the absurd in play here. Please don't tell the Occupy Wallstreeters that this is why they slept on park benches playing bongos for 6 weeks. Could be a big let down for them.
I still do not see a bank victim in any of your scenarios. I do see the "bank" as the victim. But looking on the rosy side of things, banks won't pay for the financial mess, regular folks that are tax payers and have nothing to do with the problem will. Too bad.
bbq May 21, 2012 at 06:36 pm
Yeparoo,
I don't know if the tenants mentioned above filed bankruptcy or not. No, they, and the guy with the lawyer, are not victims. Now, the people who lost their jobs and tried so hard to keep their homes I do feel were somewhat victimized. The banks really could have worked with them by either lowering their payments by extending the terms, lowering the interest rate, or a combination. The banks seem to have no incentive to help as they are recouping all of their losses. After we bailed them out they should have tried to help as many people stay in their homes as possible in my opinion.
Yeparoo May 21, 2012 at 06:51 pm
BBQ - If a bank misrepresented a loan product or illegally foreclosed on a mortgage holder, that sounds like something the bank should be liable for. I do not think a bank should be liable for not being nice and not working with people. Seems like the settlement missed the mark and is rewarding plenty of poor decisions. The economy has been very tough on some. I especially am sadden by the stories i've heard about parents that gave up all hope. Too bad they didn't just wait 3 years.
You might be interested to know who is really paying for the settlement. It's an eye opener.
MFriedrich May 23, 2012 at 02:32 pm
Next thing you know we'll be bailing out two bit gamblers in Las Vegas.
At least it's not taxpayer funded this time, right? My view is that this program, like many other mortgage market interventions before it since 2007, will fail miserably. The track record in this area is horrid. If you're 60 days + behind on your mortgage, you're pretty much toast anyway. How many cases have we seen of loan mods reverting back to foreclosure 6 months later? Up to $150K principal reduction? Why? And on what principal? How many of these inflated "principal" loan balances in California are the result of shameless HELOC equity withdrawal by the homedebtor? I would wager at least 50%, perhaps much more. It may be nice to see Countrywide's new owner getting a conscience and going all philanthropic here, but this is simply throwing more good money after bad. Here's the deal: Foreclosure exists for a reason. It's actually the SOLUTION to the housing market problems and instability today. It releases homedebtors from obligations they cannot afford and allows them to invest their resources anew. It also allows banks to rid themselves of non-performing loans and write off losses. It also allows prospective new buyers to buy homes and become performing loan payers (and property tax payers). So your credit is bad and you have to rent for a few years after foreclosure? I think you'll survive. Foreclosure is not a "problem" to be avoided at all costs with bailouts, etc.
Yeparoo May 23, 2012 at 03:15 pm
LAO: Using mortgage settlement for budget 'makes sense' - WOW
Read more here: http://blogs.sacbee.com/capitolalertlatest/2012/05/lao-using-mortgage-settlement-for-budget-makes-sense.html#storylink=cpy Boo Hoo. So the Federal Government bails out the banks a 2nd time, charges new Freddie loans an extra 1/4 pt, the banks hand over the money to the State Governments? Say it ain't so. Just throw the people in the burbs a few bucks and know one has to know this is a scam. http://blogs.sacbee.com/capitolalertlatest/2012/05/lao-using-mortgage-settlement-for-budget-makes-sense.html
Online Jobs June 25, 2012 at 06:10 am
Find Us:
http://www.SchoolandUniversity.com http://www.Facebook.com/UniversityandSchool http://www.Twitter.com/FreeEduAid http://www.crunchbase.com/company/schoolanduniversity http://www.universityandcolleges.net http://www.helpmefindauniversity.org
Joker Joe September 27, 2012 at 11:47 am
Should of done this instead of bailing the banks out!
Must be an election year.
Joker Joe September 27, 2012 at 11:59 am
Bankruptcy is good for screwing the guy that did you a favor by doing work for you or lending you money or etc. It is a way of saying to that person or company, tough luck dummy!!!
The banks will eventually raise fees to pay for the people who were not astute enough do handle a home and we all will pay for it.
Note Article
Just a short thought to get the word out quickly about anything in your neighborhood.
Share something with your neighbors. Write a new post... What's up? Make an announcement, speak your mind, or sell something
D.M. June 18, 2013 at 08:46 am
Any chance they'll add back the daily weather in the header? or anywhere? I used to check theRead More Patch daily just for the weather which of course led me to the additional news articles but I honestly don't read it as often now since the weather is not on the 'new look'.
Penny Arévalo (Editor) June 18, 2013 at 10:24 am
It's being discussed, but it's further down the list. I know we're working on bringing back theRead More comment stream (the quotes people would leave a stories, I always loved that). We're making tweaks everyday, and I think the look is a huge improvement over little blue East Coast houses. ;-)
lost hikers Jonny and Zach
Maura Mikulec June 1, 2013 at 08:17 pm
Arg. So frustrated. I really wanted to read this article, but will not read an article of thisRead More length with *no paragraph breaks*. This is not the first time I've encountered this on The Patch. Very frustrating....actually haven't even looked at The Patch in a bit because last time, same thing. Arg.