All the banks, of which Bank of America [B of A] is one of the largest, are aggressively seeking solutions to the problem affecting millions of their customers specifically, homes that are underwater, missed payments and payments that are unsustainable in the long term. B of A has taken a proactive approach to solving their customers problems by soliciting over 200,000 of them and offering an opportunity to participate in a program in which the principle is reduced on their home loans. The direct fallout? A reduction in the monthly payment, a home value that is more reflective of current market value and customers that are paying their mortgages as agreed.
However, this program is only available to a very select group of borrowers. And like every program from Loan Modifications to Short Sales the homeowner has to meet several eligibility requirements. The first and most important one is that the Bank of America has to be the loan owner or service provider. Here are a few other requirements:
You have to be late on your payments.
Based on their guidelines, the homeowner must be approximately 60 days behind on their mortgage payment. So, when the homeowner responds to the invitation and sends in their paperwork to the bank processing center, the loan must be 60 days late.
Your home must be “up side down” in value.
In other words, you have to owe more on the mortgage than the actual value of the home. A good place to start to find out if you are ‘underwater’ is to contact a local Realtor and ask them for a Market Analysis of your homes’ value. This is a free report and will give you insight into what your home would sell for today as well as what the trend is in your neighborhood market.
You must have a source of verifiable income.
Homeowners with no income are ineligible for the program. Further, those homeowners with an income must prove that the payment they currently have exceeds 25% of their gross take home pay and they cannot afford the payment they currently have.
Only complete packages will be considered.
In addition to sending in all the documentation requested by the bank; the homeowner must supply verification aka ‘proof’ of income. The bank has hired a large staff of professionals to review and approve the information submitted. Further there will be a staff of over 50,000 employees available to answer any questions from homeowners.
How will you know you have been selected to participate?
Starting in the month of May 2012, the first wave of 6,500 Certified Letters was sent to a specific group of selected Bank of America customers. Every week there after there will be another mass mailing of Certified Letters and this process will likely continue throughout the summer into fall until all 200,000 pre-screened/ pre-selected customers have been contacted. This strategic mailing is being done to prevent bottlenecks and avalanches of customers calling in and overwhelming the representatives at the customer call centers. The bank knows not everyone will respond to their offer. Some homeowners have moved on and out, some have quit opening their mail from the bank and others have engaged outside entities to render a quick fix. The bank is spending the extra money on Certified Letters to ensure the homeowner knows it’s from the bank and is not a hoax or scam.
Why is the bank willing to take less now and in the future?
Certainly, it makes the banks books look better when they have customers who are actually paying their mortgages as agreed (performing assets vs. non-performing assets). It impacts how much they can borrow from the Fed and their ranking; however, this move to offer a principle reduction is also part of a larger legal settlement with the government.
If I didn’t get a letter, does that mean I can’t participate?
No, not necessarily. If that coveted Certified Letter did not come through the mail call the lender directly and ask them “Am I a candidate for the program?” After reading this article you already know what is required and if the shoe fits---call them!
A final word to the wise
Do not intentionally miss payments. This is a very bad idea. I cannot tell you how many clients I have worked with who were unhappy with their home being underwater and/or their payments being too high and felt the only way to get the banks attention was to be behind on their mortgage. The problem is, once you get behind it is very difficult to dig out. If you are then rejected for a short sale, loan modification or principle reduction, you have significantly reduced your options to stay in the house and have placed yourself on the bottom of a pig pile of debt, bad credit and stress.
If you would like to receive a complementary evaluation on whether you qualify for a loan modification, short sale or principle reduction please contact me, without obligation or cost to you.