Stock Market Watch

Bank of America to Cut Down Principal of Some Mortgages (BAC)

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bank of americaBank of America Corp. (NYSE: BAC) on Friday said that it is lowering the principal of some of its mortgages. Accordingly, the bank will be reducing the amount owed by as many as 200,000 underwater homeowners as part of the recently announced government foreclosure settlement with top mortgage servicers.

Richard Simon, bank’s spokesperson said that the bank made the commitment as part of its side deal; as a result it will side aside $1 billion out of the $25 billion foreclosure settlement.


Simon also said that reduction in the principal could remove the entire underwater portion of some mortgages that the bank services,

According to the bank, by cutting down on mortgages, it will reduce the $3.25 billion in penalties it faces from the foreclosure settlement by $850 million.

Bank of America said that underwater homeowners are eligible for principal reduction, provided they have a loan serviced by Bank of America and was at least 60 days delinquent on their mortgages as of Jan. 31.

Simon said that only loans owned by Bank of America or private investors are eligible under this scheme ,including mortgages originated by Countrywide Financial Corp.

The new scheme only applicable to the loans owned by the Bank of America and private investors including those mortgages originated by Countrywide Financial Corp.

However, those loans that are owned or backed by Fannie Mae, Freddie Mac, the Federal Housing Administration or the Department of Veterans Affairs are not eligible for reductions, said Simon.

At present, according to Simon, the bank estimates about 200,000 homeowners will be eligible; nevertheless it does not anticipate all will take part in the program.

 

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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