Bank of America offers mortgage relief

Shutterstock.com/Sean Pavone

(MoneyWatch) As required under a $25 billion foreclosure agreement struck with the U.S. government earlier this year, Bank of America (BAC) has started reaching out to customers who may be eligible for mortgage relief. 

The financial giant, the country's largest mortgage lender, this week is contacting by mail the first of 200,000 borrowers who may qualify for assistance. The bank expects to complete the offers by the third quarter of this year.  The January deal between five of the nation's five biggest lenders and federal and state legal officials ensured that some homeowners who are "underwater" on their loans could see their loan principal reduced by an average of $20,000. B of A expects borrowers who qualify for the program to save an average of 30 percent on mortgage payments.

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"Building on home-retention and payment-assistance programs already in place, we are meeting our obligation to deliver this additional relief to our customers following the completion of the recent global mortgage settlement," Ron Sturzenegger, a legacy asset servicing executive with B of A, said in a statement. "To the extent principal reduction and other modification tools help us turn mortgages headed for possible foreclosure into long-term performing loans, it will be positive for homeowners, mortgage investors, and communities."

B of A began offering principal reduction to borrowers under the settlement guidelines in March, according to company. The bank initially concentrated on homeowners with mortgages already under review for modification. Under this initiative, roughly 5,000 trial modification offers have been mailed, potentially adding up to more than $700 million in forgiven principal, B of A said.

Homeowners must make at least three timely payments before a modification can become permanent under B of A's offer. To be eligible for the program, homeowners must:

The foreclosure settlement requires lenders to provide affordable payments to qualified underwater homeowners. To help borrowers reach their target payment, B of A says it will first reduce the principal balance for eligible borrowers to as low as 100 percent of a property's current value. The bank will also lower the interest rate and forebear additional principal, as necessary.

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The foreclosure settlement requires the five participating lenders, which along with B of A include Ally Financial, Citigroup (C), JPMorgan Chase (JPM), and Wells Fargo (WFC) -- to determine that a loan modification doesn't exceed the expected loss if they foreclose on the property instead.

For more information about the government's foreclosure pact, go to NationalMortgageSettlement.com. If you're a homeowner and have questions about whether you qualify for a loan modification or refinancing under the Home Affordable Refinance Program (also known as HARP 2.0), contact the Homeowner's HOPE hotline at 1-888-995-HOPE or go to MakingHomeAffordable.gov.

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[kstm101]

I feel the same exact way, WOW I have had enough, we have worked hard to stay on top of things, done everything correctly.

We bought about 15% under market when we bought in '06, bought the lower dollar home in the high dollar area, Still our house has gone from 230k to 160k, I called our mortgage giant, and seeing how our home is a FHA loan they are not participating in any programs for us!! SunTrust!!

I am at the point of buying another home and letting them have this one back, I am sick and tired of my tax dollars paying for everyone else s homes!

Obama you are ruining this country further! step down take your cronies with you and let someone that knows what they are doing run this country! and QUIT BAILING OUT EVERYONE WITH MY MONEY THIEF!

[kuabay]

This absolutely blows my mind! The only message that I'm getting from this is that I SHOULD have stopped paying my mortgage. Instead I have taken on significant personal debt in order to feed my family and pay the mortgage. I'm at least $75,000 underwater on a loan that I have been paying for 7 years AND put down a $50,000 initial payment. Screw the responsible people and bail out the weak. Thank you BofA!

[wishfull4me]

I am in a quandry. This year has offered me and my family nothing but pain and heart ache. My home owners insurance went up through the ceiling, my husband got laid off and the business I worked at that was keeping us a float, burnt to the ground. The Bank of America 'dream team' denied my claim for hard ship. I CHALLENGE! anyone from CBS news to look at my Hard Ship Crisis logs and records and tell me why I am not eligible for any Government asistance. I have phone logs and copies of every piece of paper sent to them, just to be denied. Last Thursday my husband was watching CBS Nightly News and a representative from Bank of America stated clearly that they had 0% of the population applying for this help I have data and a record of all phone calls to Rebecca Garza, her supervisor, and her Supervisor's Supervisor who NEVER PICKED UP THEIR PHONE. When I finally went to the local branch here in Forsyth Georgia, Rebecca finally started to answer and return my calls, only to eventually tell me I didn't meet their 'hard ship' criteria. My question is? WHY IS THE GOVERNMENT PAYING PEOPLE TO NOT ANSWER OR RETURN THEIR CALLS and WHAT ARE THEY DOING WITH THIS MONEY, SINCE THEY ARE NOT HELPING PEOPLE WHO DESPERATLY NEED HELP. Personal note: I have been in the working class and paying taxes ALL of my life. Why is this happening to me???