Principal write-downs offered under the Keep Your Home California program are part of a $2 billion, federally funded effort to help hard-hit families remain in their homes and ease the California foreclosure crisis.
Bank of America has been engaged in a pilot of the principal reduction program since February, and is now moving into full participation to provide assistance to more qualified homeowners facing hardship. Bank of America is one of the largest servicers of single-family mortgages in California.
“California has been particularly hard hit by reductions in property values,” said Rebecca Mairone, national mortgage outreach executive for Bank of America. “By applying government-directed Hardest Hit Funds through the targeted Keep Your Home California program we create another potential solution for homeowners who are severely underwater, struggling to make their mortgage payments and who want to remain in their homes.”
The state-run principal reduction program assists homeowners at risk of default because of an economic hardship coupled with a severe decline in the home’s value.
Homeowners that qualify could be eligible for up to $50,000 in assistance from the Keep Your Home California program.
Participating mortgage investors match dollar-for-dollar the amount provided by the Keep Your Home California program, allowing struggling borrowers to cut their loan balances by as much as $100,000 in qualifying cases.
Under the program, borrowers whose loans are serviced by Bank of America may be eligible if they meet program guidelines and the entity or investor that owns the mortgage authorizes the servicer to reduce the principal.
Mortgages owned or guaranteed by Fannie Mae or Freddie Mac are among those that are not eligible for the principal reduction program.
Bank of America says borrowers that do not qualify for this program will automatically be evaluated for one of its own alternative modification programs, possibly including interest rate reduction, term extension, or principal forbearance.
“We’re excited to have Bank America on board for one more of the Keep Your Home California Programs,” said Claudia Cappio, executive director for the California Housing Finance Agency, which designed the program.
“We believe principal reduction can be an appropriate tool for helping qualified homeowners obtain an affordable and sustainable modification,” Cappio said. “We continue to work with other mortgage servicers to offer this to their customers.”
Bank of America is also participating in two other Keep Your Home California programs: a mortgage assistance initiative for homeowners who’ve lost their jobs and a mortgage reinstatement program that helps qualifying delinquent borrowers settle past-due payments to bring their accounts current.
By: Carrie Bay via dsnews.com 07/27/11