Bank of (everything in) America becomes the first bank to SAY it will forgive part of the balance owed on a mortgage to help homeowners avoid foreclosure.
Not that they are in any rush, the program does not start until May.
You must qualify under the HAMP program guidelines, and have missed at least two payments, to get a mortgage modification .
Bank of America bought Countrywide, the #1 offender in issuing sub-prime and other bad mortgages, just before the bubble burst in 2008.
This was only slightly dumber than their decision to buy Merrill-Lynch, which had a bunch of its own sub-prime mortgages.
How much principal reduction will you get?
If your home is at least 20% underwater, up to %30 of the principal.
Which means, that your mortgage debt is more than 120% of the value of your house.
Bank of America guesses 45,000 homeowners will qualify.
My guess?
Lots more will qualify, no prediction here on how many actually get principal reductions.
I bet they have more than 45,000 in Michigan alone who qualify.
Nothing in the announcement about how they will calculate a value for your home.
Once you get the modification, you have to make all the modification payments in order to get the reduction in the principal balance, which will take years.
This is not done out of the goodness of, forgive the term, “heart” of Bank of (everything in) America.
A bunch of state attorney generals sued Countrywide for its misdeeds, and this is part of the latest deal to resolve those suits.
Of course, I have been yelling for judicial mortgage modification, changing the law to allow bankruptcy judges to re-write first mortgages in Chapter 13 cases, since before I started this blog.
The mortgage companies short circuited that effort by telling the politicians, “Don’t worry. Trust us. We will make voluntary changes to fix the foreclosure crisis.”
Either that, or maybe it was all the campaign contributions they made, to both parties.
Instead of pushing for bankruptcy law reform, the Obama administration came up with HAMP.
HAMP is a failure by all accounts thus far.
We shall see how Bank of (everything in) America follows through, and whether any of the rest of the near criminal mortgage industry goes along..
Surprisingly enough, Bank of America stock rose on the news.
Foreclosures Avoided?
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