About Government Refinance and Home Purchase Programs

Information and Updates on Government Mortgage Programs
Filed under Government Mortgage Financing Programs News

With so many US homeowners underwater on their mortgages and so many homeowners defaulting, Bank of America has decided to start a principal reduction program. It appears that B of A has decided it would be less expensive to reduce principal in some cases than to go through the trouble and expense of foreclosure. Here is a bit from the AP story on the subject:

Bank of America is taking a major step to help some of its most troubled mortgage borrowers. The bank says it will forgive up to 30 percent of some customers’ loan principal.

The bank has said Wednesday it will start forgiving principal for homeowners who owe more than 120 percent of their home’s value.

The plan, to begin in May, is among the first by a U.S. mortgage lender that takes a systematic approach to reducing mortgage principal when home values drop well below the amount owed. The effort is aimed at preventing foreclosures.

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