Bank of America to Reduce Mortgage Balances

[babylonsister]

Source: NYT

Bank of America to Reduce Mortgage Balances
By DAVID STREITFELD and LOUISE STORY
Published: March 24, 2010


Bank of America, under pressure to keep distressed borrowers from losing their homes, said Wednesday that it would begin forgiving some of their mortgage debt.

While limited in scope and by invitation-only, the program is a significant shift in efforts to assist the four million homeowners who are facing foreclosure. It comes as banks and the Treasury Department are under growing pressure from the Obama administration, lawmakers and community groups to stem the foreclosure tide.

With the housing market entering another period of stress, worries about foreclosure are compounded. As the volume of sales drops, prices start to slide as well. When the gap keeps increasing between the size of a mortgage and the value that the home could fetch from a buyer, owners tend to give up.

“Banks are willing to take some losses now to avoid much greater losses later if the housing market continues to spiral, and that’s a sea change from where they were a year ago,” said Howard Glaser, a housing consultant in Washington and a former H.U.D. official.


Read more: http://www.nytimes.com/2010/03/25/business/25housing.html

[FrenchieCat]

1. Guess they are ready to play ball....

for about a minute, I'm sure!

[babylonsister]

2. Sounds like the admin is applying the pressure-good! nt

[Duer 157099]

3. I hate to by cynical, but...

proportionately, I'm guessing that wealthier people are going to benefit more from this. I hope I'm wrong. I hope it will only apply to people who only own one home and that they live in it. But I'm betting that it will benefit more people who have "investment" property.

[alstephenson]

4. "While limited in scope and by invitation-only"

Just another PR ploy.

[Robb]

7. Bingo. You nailed it.

[midnight]

10. Yes, I saw that. Can you imagine if the tarp money was extended with the express

condition of helping those who were swindled with the mortgage scam.

[SOS]

12. Exactly

This will help almost nobody.
When the financial reform bill comes up, BoA will say they are voluntarily addressing the situation.
No reform necessary.
Once their PR machine and lobbyists get the job done, they'll go right back to shafting everyone.

[earcandle]

5. They got paid for those homes already by AIG. There are no liabilities on the books of banks for

defaulted loans.  Why should they get paid twice? 

Can someone explain? 

[galileoreloaded]

6. Their models show massive defaults, so there is nothing to lose

by prolonging even partial payments by targeted customers.

Good business, IMHO.

[ms.smiler]

8. If BOA failed to work with you, join the class action suit

"In a potentially wide-ranging lawsuit, two Seattle-area homeowners have filed a class-action suit against Bank of America claiming the bank has failed to work with owners facing foreclosure."

"Filed Tuesday, the potentially wide-ranging lawsuit alleges Bank of America failed to keep up its end of the deal cut with the federal government in early 2009 when it took $25 billion and promised to work with homeowners struggling to make their mortgage payments."

http://www.seattlepi.com/local/417333_mortgage24.html

[Riley18]

9. I wish it were true, but their track record says otherwise. My family has been

trying to just get the interest rate modified since 2008. We are still waiting for a "negotiator" to take a look at our paperwork. If anyone gets a principal reduction, it will be the officers of the bank and their buddies. Unless the government makes the banks modify the loans they never will. All they will do is make money off of the TARP money we gave them interest free.

[babylonsister]

11. You might want to google current news items; seems this is a new

policy with them.