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."