Bank of America Signs Side Deal to Reduce Mortgage Principles

Bank of America has signed a side deal with the federal government to write down mortgages for 200,000 homeowners.

The news of the side deal was first reported by The Wall Street Journal. Under this agreement B of A, will write down the principle of a homeowner’s mortgage if their property has lost significant value, according to The Huffington Post. For some this could be as much as $100,000.

A homeowner must meet certain criteria before they are considered for a principle reduction, including being late 60 days or more their loan payments, and hold a loan that exceeds the value of their home.

Many of the write-downs will be for Countrywide, which was acquired by Bank of America in 2008. Countrywide was accused of predatory lending and issuing subprime loans that has led to number of foreclosures. The terms of a subprime loan can cause a monthly mortgage payment to skyrocket and become in-affordable, pushing a homeowner into default. Foreclosure attorneys have been able to help some of the homeowners affected by subprime loans.

This will help the bank reduce the penalties it owes to the Housing and Urban Development agency by $850 million.  

Principle write-downs will help ease the financial burdens of many homeowners, but this is just a small fraction. Unemployment, underemployment and wage stagnation has caused many people to fall behind on their mortgages, but with the help of a foreclosure lawyer these troubled homeowners may be able to stay in their homes.

A foreclosure attorney can either negotiate for a mortgage modification or challenge a foreclosure in court.