Posts Tagged ‘bank of america principle reduction program’

Bank of America Launches Its Earned Principle Reduction Program Under HAMP

Bank of America has started its program to reduce principle balances on some of the loans it services as part of  it’s participation in HAMP. 

The way it will work is that Bank of America would use principle reduction, ahead of interest rate reductions and term extensions, in order to bring the borrowers’ payments to 31% of their verified income.  The amount of principle reduced will be foreborn in an non-interest bearing account, and as the homeowner makes timely payments on his modified mortgage, he will earn forgiveness of the forebeared principle.

As of this writing, loans that are eligible for this earned principle reduction program are Pay-Option ARMs and two year hybrid ARMs originated by Countrywide before January 2009. The amount owed must exceed 20% of the property value and the mortgage must be 60 days or more delinquent.

Treasury has announced that it will implement a similar idea for HAMP later this year so that it may benefit a wider range of homeowners.

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