BofA begins contacting distressed homeowners about principal cuts
It’s not quite a check in the mail, but certain distressed mortgage borrowers at Bank of America Corp. will be happy they opened the letter anyhow.
The Charlotte, N.C., lender said Tuesday it has begun contacting about 200,000 customers who have fallen behind on home loans and owe more than their current home values. It is notifying them that they may qualify to have their loan balances reduced as much as $100,000 as part of a $25-billion, 49-state settlement over foreclosure abuses.
Borrowers must provide certain information in order to qualify. Only loans owned by Bank of America will qualify. Those owned or backed by government-controlled mortgage buyers Fannie Mae and Freddie Mac, or backed by the Federal Housing Administration, are ineligible.
The offers, to be mailed out gradually through the end of the third quarter, represent the second phase of the loan forgiveness program at BofA. The bank said it previously mailed 5,000 letters to homeowners who already had a loan modification bid under review.
The settlement requires Bank of America, Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc. and Ally Financial Inc. to reduce principal for some borrowers. But Bank of America is offering the most by far, about $11.8 billion in write-downs that it said would reduce the typical borrower payment 30%.
The bank did not break out how it would distribute the offers, except to say that more of them would go to states where Countrywide Financial Corp., the high-risk lender it acquired in 2008, had done the most business.
“The heaviest concentrations are California and Florida, as you might expect,” BofA spokesman Rick Simon said.
