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Bank of America’s Mortgage Reduction Program
Bank of America announced that it will forgive some troubled mortgages debt in order to provide assistance in stabilizing the economy and housing market, reports Solomon Finance. With further dropping housing sales and house values, increasing alternative lending such as payday loans due to less traditional credit availability, and pressure from both homeowners and investors, the lending giant will start reducing mortgage balances to a select group, possibly leading other banks to follow suit if things work out well.
After unsuccessful attempts of stabilizing the housing market with interest rate decreases by many banks and the government reduction program, which helped less than 200,000 homeowners, Bank of America, recently announced that it will stop overdraft fees due to legislation, is responding to cries for more help by giving mortgage debt forgiveness a try and avoiding last resort measures such as foreclosure, which has proved to be devastating to both homeowners and to banking portfolios.
However, mortgage debt reduction is not an easy way out made available to everyone; the program will be accessible by invitation only based on certain criteria. To start, Bank of America will extend this program to homeowners, initiating from a purchased company in 2008, Countrywide, the most aggressive lender during the housing boom, with proof of payment difficulty and balances exceeding 20% of their property value. In addition, Bank of America will only allow up to a 30% reduction of the principle value.
Tags: bank of america, credit availability, debt forgiveness, debt reduction, foreclosure, house values, housing boom, housing market, housing sales, interest rate, invitation, last resort, mortgage debt, mortgage reduction program, overdraft fees, payday loans, portfolios, select group, stabilizing the economy, unsuccessful attemptsRelated posts
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