So much has been discussed about Bank of America’s new Principal Reduction program and how it will help struggling homeowners. The facts are listed here for your review and specifically quoted from the B of A announcement with underlined words to keep in mind.
“When the loan is being considered for restructuring through the government’s Home Affordable Modification Program (HAMP) qualifying borrowers, will receive a principal reduction as the first step toward reaching HAMP’s affordable payment target of 31 percent of household income, ahead of lowering the interest rate and extending the term. The reduced principal balance will be a non-interest bearing forbearance amount, and the homeowner may earn forgiveness of the forborne amount by remaining in good standing on payments.
Loans eligible for principal forgiveness include subprime, Pay-Option adjustable-rate mortgages (ARMs), and prime-quality two-year hybrid ARM loans originated by Countrywide before January 1, 2009. The amount of principal owed must exceed the current property value by at least 20 percent and the loan must be at least 60 days past due.
There you have it. If you fit within this criteria…you “may” get a modification from B of A if they can keep track of the paperwork you’ll need to resend to them 11 times. 🙂
Reports from Hope Now a congressionally-formed private sector alliance of mortgage servicers says that 172,000 modifications were offered to homeowners in April 2010 up 43% from the same month of 1009. Over 400,000 proprietary modification were offered to homeowners. These are banks own mod programs that use the MHA as a guideline.
Hope now also goes on the say that since 2007 over 3 million homeowners have received some kind of modification. I LOVE HOW THEY ONLY MENTION HOW MANY GOT DONE AND NOT HOW MANY APPLIED AND OR WERE TURNED DOWN. No one really knows the number, but studies suggest less than 13% of all homeowners seeking help actually get it.
I think Hope Now needs to address the other 87%.
Remember, every single document you sent to B of A (if you are going to handle this yourself) needs to be considered. The bank can and will deny you based on too much income, too much savings or other various ratio-related figures.
If you have any questions, I can help coach you on what to send and what not to send to the bank. Please call me with any questions. John Callahan 623-252-0545.