Bank of America began mailing out more than 200,000 letters this week targeting borrowers thought to be eligible for principal-reducing modifications under terms of the recent settlement the company and four other servicers reached with the federal government and 49 state attorneys general. To qualify, the homeowner must owe more on the property than it is worth today (DUH!!) and must have been at least 60 days behind on payments on January 31, 2012. In addition, the monthly housing costs must be greater than 25%.
Whether these principal reductions actually happen, and how quickly, remains to be seen. I find it a bit humerous that you have had to have been delinquent for 60 days by January 31, 2012. What about the folks that have been ytrying their best to make payments but have only fell behind recently? It would appear, given the timelines, that they are targeting the homes that have already been served their Notice of Trustee Sale and were going to be foreclosed on. Depending on the amount of the principal reduction, they will most likely be receiving what they would be getting anyway.
I will have to admit that this is a step in the right direction but it is a far cry from what I would applaud them for!
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