Bank of America Offers a Bailout for Struggling Homeowners

As a part of its recent settlement with the federal government and state attorneys general, Bank of America has initiated broad-based outreach to borrowers who might be eligible for principal reductions on their mortgages. More than 200,000 Bank of America borrowers will be recieving letters offering them a mortgage pricipal reduction and more letters will continue through the summer. The company estimates that borrowers who qualify for the program will see an average monthly savings of 30% on their mortgage payments. "To the extent principal reduction and other modification tools help us turn mortgages headed for possible foreclosure into long-term performing loans, it will be positive for homeowners, mortgage investors and communities," says Bank of America's Ron Sturzenegger. Bank of America began making principal-reduction offers at a small scale in March, initially concentrating on homeowners who were already in the modification review process. To be eligible, borrowers must be 60 days late on their mortgage, owne more than the home is worth, and the loan must be serviced or owend by Bank of America... Homeowners whose loans are serviced by Bank of America but the mortgages are held by Fannie Mae, Freddie Mac, the Federal Housing Administration or the Veterans Administration are not eligible for principal reductions under the settlement.