Bank of America announced today that they will be taking the most aggressive foreclosure prevention effort ever in the U.S. Don't be giving them their props just yet, it is court ordered due to a law suit filed by 11 states for predatory lending practices. Luckily all 50 states are eligable. Actually it is Countrywide who done wrong but they were just acquired by BofA.
Starting in December, financially strained borrowers who got their loan between January of '04 and December or '07 can try to get their monthy housing payment cut so that it is no more than 34% of their gross income. This deal could help so many, especially those who shouldn't have been in those loans to begin with.
This is the best program going and I find it so sad that it is forced instead of volunteery. They are going to be proactive about calling and informing those who are eligable. They are targeting subprime adjustable rate mortgage (ARMs), subprime fixed rate loans and option ARMs, but prime and Alt-A borrowers, who did not document their income, will also be considered.
No fees are going to be applied either, but this isn't for everyone. Those who have delinquent loans for normal, legitimate reasons like divorce, job loss or illness are not going to be able to pay a regular payment.
I cannot figure out how banks did not offer to do this themselves, of their own free will, considering the state of our country and it's economy. Sure this program is costing $8.4 billion but it is still less than letting all those homes foreclose and then trying to sell them in a market where no one is buying. It really doesn't take much to figure that out.
Each borrower will be evaluated on a case by case basis and then BofA has some options. They can freeze or lower a loan's interest rate, or even shrink the principal loan balance. The Hope for Homeowners program is also an option now making FHA-insured loans available to the delinquent borrowers.
Ideally, other banks will follow this lead. If it goes well for BofA, well meaning not loosing as much as they would have, then others should follow suit. If not for their own bottom line, then perhaps for their country.
http://money.cnn.com/2008/10/06/real_estate/Drastic_plan_slashes_mortgage_costs/index.htm?postversion=2008100615PLEASE CHECK OUT OUR NEW PODCAST ON THE HOMEPAGE OF OUR WEBSITE http//:www.TonyandLibby.com