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.
The first of more than 200,000 letters have been mailed to potential candidates, Bank of America says, and the outreach 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.