Wednesday, March 2, 2011

New Bank of America loan modification program reduces principal

new logoBank of America announced today it will begin offering loan modifications under an Arizona foreclosure-prevention program funded by which is funded by $268 million from the Treasury Department's Hardest Hit Housing Program.

The program is run through the Arizona Housing Department. The state provides money to pay off up to $50,000 of a mortgage if the bank agrees to forgive an equal amount,

This week, BofA will begin mailing notices to Arizona homeowners who are eligible for the loan modifications, bank spokesman Rick Simon said. The bank is encouraging customers to wait for those notifications in their mailbox instead of contacting the bank to find out if they qualify.

Do You Qualify for Bank of America’s loan modification with principal reduction plan?

Based on reporting in other public news sources (links below), these are the qualifications for consideration for Bank of America’s new loan modification with principal reduction program.

  • Bank of America will send letter in the mail to borrowers who are at least 60 days' delinquent.
  • Borrowers must be able to show their income was cut through unemployment, underemployment, illness, death or divorce, but they must have some income.
  • Borrowers must owe at least 20% more than their home is worth.
  • Borrowers who took out a second mortgage that wasn't used to buy the home are not eligible.

Although most of the money in the Hardest Hit program is intended to encourage loan modifications, a second portion will cover up to $50,000 in mortgage payments for unemployed or underemployed residents.

this data was originally reported by the Arizona Republic

(interesting note: my business partner Chris Butterworth predicted 2 years ago that loan principal reductions were needed in the hardest hit foreclosure cities)

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