Bank of America Home Loans has begun reaching out to customers who may
be eligible for forgiveness of a portion of the principal balance on
their mortgage under terms of a recent settlement among five major
banks, 49 state attorneys general and the federal government.
The first letters in a targeted outreach to more than 200,000 potential
candidates for this assistance are arriving in homes this week; most of
the letters will be mailed by the third quarter of this year. The bank
estimates average monthly savings of 30 percent on mortgage payments of
customers who qualify for this program.
“Building on home retention and payment assistance programs already in
place, we are meeting our obligation to deliver this additional relief
to our customers following the completion of the recent global mortgage
settlement,” said Ron Sturzenegger, Legacy Asset Servicing executive.
“To the extent principal reduction and other modification tools help us
turn mortgages headed for possible foreclosure into long-term performing
loans, it will be positive for homeowners, mortgage investors and
Bank of America actually began making principal reduction offers under
the program guidelines in March, initially concentrating on homeowners
who were already in the modification review process. So far under this
early initiative, about 5,000 trial modification offers have been
mailed, providing a potential total of more than $700 million in
forgiven principal. Homeowners are required to make at least three
timely payments before the modification can become permanent.
The wave of mailings beginning this week will reach a broader base of
customers who may be eligible for this principal reduction program.