Bank of America (B of A) is in a charitable mood and is supposedly sending out 200,000 certified mailed letters offering their borrowers a principal reduction to their mortgage. And of course it is only given to struggling default homeowners in need of assistance. So to the non-default homeowners that are struggling and in need of assistance your option may be the HARP version 2.0 program, which is another topic altogether.
This B of A loan modification will not be a type of "robo signing" process loan leading to another $25 billion government settlement. But rather it seems that B of A has had a push from Mr. State Attorneys General and the US Dept. of Justice giving a $11 billion bankroll to help out. It has been reported that about 5.6 million US loans are delinquent or in the process of foreclosure, while B of A services about 20% of that. To give you a head count number that's over 1 million US loans. Which many of them are owned by Freddie Mac and Fannie Mae.
If given this golden goose of a letter you must have the following to be eligible:
- 60 days late on their mortgage payment since Jan. 1st 2012
- Must be able to pay the modified monthly payments (proof of documents will be needed)
- Owe more than the home is worth, which is known as being "underwater" ($150,000 maximum principal reduction)
- Your loan is owned by B of A or the private owner of your loan will allow you receive this loan modification
And the possible downfall if you have received this letter:
- If you can't provide any income or the ability to pay for the modified payments - VOIDED
- If you trashed the letter sent to you, then you're out of luck - VOIDED
- Federal Housing Finance Agency (FHFA) has yet to agree to this loan modification - Possible VOID???
Well, it seems that over 5,000 B of A's borrower have received aid prior to this letter and has spent $700 million of their principal reduction reserve. But the spokes person from B of A reportedly said that they can handle if the total amount goes over their government allowance. Over 8,000 letter have been sent and every week more will be sending out until all of the 200,000 letters are sent. A final bonus to this gift is that all of the 200,000 borrower's home have been put on a stop list on any type of foreclosure until their offer has been denied or unanswered.