Bank of America Cuts Principal for Some Customers
Repost from Black & Lobello
Posted: March 26, 2010 by Randi Kolesar
Coldwell Banker Premier Realty has partnered with one of the most dynamic, aggressive law firms in Las Vegas to assure our clients are protected during the Short Sale process. Yesterday, it was announced that Bank of America will cut loan principal for some customers. Below is a blog entry written by Black & Lobello's own Tisha Black-Chernine, Esq. Reposted with permission.
Bank of America announced on March 25, 2010 that it will implement a principal forgiveness program to modify underwater loans. Bank of America is specifically targeting certain, subprime and adjustable-rate mortgages (ARMs) qualifying for its National Homeownership Retention Program (NHRP), Pay-Option ARMs, and prime two-year hybrid ARMs. The program is limited to Bank of America customers who are at least 60 days overdue on payments, can demonstrate a financial hardship prevents them from making payments at the current level, and whose loan balance is at least 120 percent of the estimated home value.
Under the earned-principal forgiveness approach, qualifying homeowners will be offered an interest-free forbearance of principal that they can turn into forgiven principal over five years, resulting in a maximum 30 percent decrease in the loan principal balance. More specifically, in each of the first five years, up to 30 percent of the forborne amount will be forgiven annually for borrowers that remain in good standing on their mortgage payments. For the first three years, forgiveness installments will be set at the 20 percent level. And in the fourth and fifth years, the amount of forgiveness will be dependent upon the updated value of the property. This will ensure that the loan-to-value ratio (LTV) will not be reduced below 100 percent through principal forgiveness.
Bank of America estimates that 45,000 customers will qualify for this relief program.
Tisha Black-Chernine, Esq.