Talk to a Bankruptcy Lawyer Today.
Evening and Weekend Appointments Available.

BofA says it will offer principle reductions to some underwater loans, P. 1

Giant home mortgage lender Bank of America says that the financial institution will aggressively reduce the principle balances of underwater mortgages in the wake of the financial meltdown and foreclosure crisis.

The agreement to write down mortgages comes as a side agreement that lenders entered into alongside the $25 billion state and federal settlement that was recently reached in the foreclosure-abuse debacle. BofA says that it will act more aggressively than other banks in its efforts to write down mortgages of homeowners who are underwater.

Writing down the principle of underwater mortgages is seen as an incentive for homeowners to retain ownership and possession of their homes. Underwater mortgages-those home loans that have a principle balance that exceeds the current market value of the home-have become an increasing overall problem for the housing market.

Many people who could no longer afford the mortgage payment have decided to walk away from homes after foreclosure. Cincinnati bankruptcy lawyers note that walking away after foreclosure could leave a former homeowner on the hook for any deficiency if the home sells for less than the principle balance and other fees. Generally, such deficiencies can be discharged in a bankruptcy proceeding.

Short-sales have increased in recent months across the country as the number of underwater mortgages has risen. Now, some banks may agree to write down the principle balance of an underwater mortgage to better reflect the market value of the home.

This blog has previously discussed that the major banks and the government reached a settlement in the wake of the foreclosure abuse debacle. And while that settlement includes provisions to help currently distressed homeowners, BofA has indicated that it intends to reduce principle in a large number of underwater mortgages. In the next post, this blog will continue the discussion of underwater mortgage write downs.

Source: Boston Herald, "Bank of America to cut principal on some mortgages," E. Scott Reckard and Jim Puzzanghera, March 10, 2012

No Comments

Leave a comment
Comment Information

Contact The Rose Law Office Today For A FREE Initial Consultation

Phone 513-729-7196
Fax 513-621-6402

Office Locations

The Rose Law Office
35 East 7th Street,
Suite 610

Cincinnati, Ohio 45202

Phone: 513-729-7196
Fax: 513-621-6402
Cincinnati Law Office Map

The Rose Law Office
6020 Cheviot Road
Colerain, OH 45247

Phone: 513-729-7196
Fax: 513-621-6402
Colerain Law Office Map