Bank of America Forgiving Second Mortgages
BOA eliminates the full unpaid principal balance on some second mortgages.
Bank of America recently announced that it will be forgiving 2nd mortgages, for some homeowners, “under Bank of America’s participation in the 2012 national mortgage settlement.” We will be writing more about the 25 billion dollar National Mortgage Settlement soon, but, for now, here is part of BOA’s recent press release:
As part of Bank of America’s ongoing efforts to help customers in need of mortgage assistance, this company is in the process of mailing approximately 150,000 letters to pre-qualified homeowners offering automatic extinguishment of their second lien mortgages. The intention of the program is to place homeowners in an improved financial situation by reducing their monthly debt obligations and, potentially, help them create equity in their property.
The full forgiveness of second lien balances on eligible loans is being extended under Bank of America’s participation in the 2012 national mortgage settlement among the five largest mortgage servicers, 49 state attorneys general and the federal government.
Letters that began mailing in July 2012 and continue through the end of this year inform predetermined eligible homeowners that the full balance of their Bank of America-owned and -serviced second lien mortgage will be forgiven and the bank’s lien on the collateral property will be released free and clear, unless the customer opts out of this relief offer within 30 days of receiving the letter.
Our take: We like it! There could be tax consequences, but we doubt that would be reason enough to opt out. It would be wise to speak with a CPA.
Foreclosure Attorneys in Mineola
If you have any questions about this or other legal issues, call The Law Firm of Vaughn, Weber & Prakope, PLLC today, at 516-858-2620, for a free consultation!
This is not Tax or Legal advice!
Bank of America Reduces Mortgages by Forgiving a Portion of the Principal.
For those of you who have not heard the breaking news, Bank of America has begun to forgive a portion of the principal on certain people’s mortgages. The NYT is reporting that “Bank of America has started sending letters to thousands of homeowners in the United States, offering to forgive a portion of the principal balance on their mortgages by an average of $150,000 each.” In a press release announcing the new practice, Bank of America claims to have developed this program under the terms of a settlement involving five major banks, the Federal Government, and 49 state attorneys general. This may mean that other banks will begin taking similar actions in the near future, but that remains to be seen.
In some instances, the reduced principal could end up lowering mortgage payments by approximately 30%. By forgiving a portion of the principle and lowering monthly payments, Bank of America is able to turn mortgages that would otherwise default into long-term performing mortgages. At the same time, this will allow many individuals to remain in their homes. Bank of America will be contacting about 200,000 potential candidates.
If you have any questions about mortgages, feel free to contact The Law Firm of Vaughn and Weber at (516) 858-2620 to speak with a foreclosure attorney. We would be happy to speak with you about this or other mortgage issues.
The May 7, 2012 New York Times article by Natasha Singer can be accessed by clicking here.
Rent your home from BOA under its “Mortgage to Lease Program.”
Bank of America (BOA) recently issued a Press Release outlining a “Limited Pilot Test” of their “Mortgage to Lease Program.” Under this program some BOA mortgage customers will be allowed to deed their homes to BOA and become renters instead of owners.
From the BOA Press Release:
Beginning this week in targeted hard-hit markets, Bank of America will offer a limited number of mortgage customers who are facing foreclosure an opportunity to remain in their homes, but transition to tenant status, through a pilot program called “Mortgage to Lease.”
“When homeowners are struggling to make payments, owe more on their mortgage than their home is worth and face certain foreclosure, one of their greatest anxieties is the transition process they face in moving from their home,” noted Ron Sturzenegger, Legacy Asset Servicing executive of Bank of America. “This pilot will help determine whether conversion from homeownership to rental is something our customers, the community and investors will support. This program may have the potential to further round out the broad set of solutions we offer our customers in need of assistance.”
To maintain test controls, the Mortgage to Lease pilot will be conducted strictly on a solicitation basis; there will not be any opportunity for customers to volunteer or apply for consideration. Fewer than 1,000 customers will be invited to participate in the first phase of the pilot. Initial outreach has begun to preselected customers in test markets in Arizona, Nevada and New York, three states hit hard in the housing downturn. The pilot population will include customers who meet all of these requirements:
· Have loans owned by Bank of America.
· Are delinquent for more than 60 days.
· Have exhausted modification solutions or have not responded to alternatives to foreclosure, including short sale and deed-in-lieu.
· Have high loan balances in relation to their current property value.
· Face considerable risk of ultimate foreclosure.
· Have no junior liens.
· Are still occupying the home.
· Have adequate income to make an affordable rent payment.Pilot participants will transfer title to their properties to the bank and have their outstanding mortgage debt forgiven. In exchange, they may lease their home for up to three years at or below the current market rental rate. The rental payment will be less than the existing mortgage payment, and the customer will be relieved from certain other homeowner financial obligations, including property taxes and hazard insurance.
Initially, Bank of America will retain ownership of the properties, working with property management companies to oversee the rental properties. Properties in the pilot program will be transitioned to investor ownership. If the Mortgage to Lease program proves viable, it may lead to a broader program, potentially involving selected real estate investors who would purchase properties that meet their predetermined specifications and keep the previous homeowners in place as tenants.
In my opinion, this program will appeal to very few distressed homeowners. The majority of our Foreclosure Defense clients would actually like to keep their homes!
Therefore, it is unlikely that they would want to participate in such a program.
A couple of suggestions:
- Scrap this program and modify the loans of those who “Have adequate income to make an affordable rent payment.”
- Keep the program, but give homeowners a right of first refusal after the three year rental period or some other reasonable amount of time. Give the former homeowner an opportunity to repurchase “their” home instead of having the “Properties in the pilot program…transitioned to investor ownership.”
If you are facing foreclosure and need legal assistance, please call (516) 858-2620 to speak with a Foreclosure Defense Attorney!
Bank of America to Reduce Mortgages
According to a recent AFP article:
Bank of America has reached a side agreement with US authorities that could reduce the mortgages of some 200,000 borrowers….Bank of America borrowers are expected to receive reductions averaging more than $100,000…
This is very interesting! We will be contacting BOA today!
Updated on 03/10/12
The Tennessean reports that:
Underwater homeowners are eligible if they have a loan serviced by Bank of America and were at least 60 days delinquent on their mortgages as of Jan. 31.
Only loans owned by Bank of America or private investors are eligible, and those include mortgages originated by Countrywide Financial Corp. The Calabasas, Calif.-based subprime lender was acquired by Bank of America in 2008.
Loans are not eligible if they are owned or backed by Fannie Mae, Freddie Mac, the Federal Housing Administration or the Department of Veterans Affairs, Simon said.
Bank of America estimated that 200,000 homeowners will be eligible, though it does not anticipate that all of them will take part in the program.
The bank will begin reaching out to homeowners next month. It has three years to complete the principal reductions, but the settlement offers incentives for them to be completed within a year of the settlement’s completion, so Simon anticipated the process would move “fairly quickly.”
Bank of America mortgage customers can call 877-488-7814 to see if they’re eligible and to get more information.
If you are currently in foreclosure or in danger of falling into foreclosure, please call (516) 858-2620 to speak with an Attorney!
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