CHARLOTTE, N.C. (TheStreet) -- Bank of America (BAC) extended more generous mortgage terms to U.S. military customers on Thursday. The move comes after a big-bank competitor received heated criticism for having overcharged and improperly foreclosed upon service members.
Bank of America will offer a reduced 4% interest rate to service members who are eligible for mortgages under the Servicemembers Civil Relief Act, forgive principal for military borrowers who are behind on payments when they leave active duty and extend mortgage protections that are offered to active military to those who have left the service as well.
"Military men and women face extraordinary circumstances, and they make unique sacrifices for all of us," Terry Laughlin, an executive in charge of the Bank of America division that handles troubled mortgages. "For these reasons, we want this combination of tools to address their needs and help them when they need it most."
Last month, JPMorgan Chase (JPM) came under fire for overcharging 4,500 military borrowers on their mortgages and improperly foreclosing on 18 service members' homes. Soon after, the company shook up its mortgage unit's executive team and revamped the military mortgage program. CEO Jamie Dimon apologized for the mistakes and another executive told Congress the firm did a "terrible job."Bank of America, the country's biggest bank and top mortgage lender, hasn't received attention specifically for issues with military members, but has had trouble getting a handle on its huge book of bad loans. The Charlotte, N.C.-based banking giant, along with other big servicers like JPMorgan, Wells Fargo (WFC) and Citigroup (C), are all being targeted by regulators and state attorneys general for poor modification and foreclosure practices. BofA said its new program "goes above and beyond" to help military customers, based on the federal government's Home Affordable Modification Program standards. The bank will first forgive principal for under water borrowers to make the loan as low as 100% of the current market value. Then it will reduce interest rates as needed to ensure that the mortgage is affordable for military borrowers. Starting April 1, Bank of America will start offering active duty servicemembers a 4% rate on mortgages as long as they're serving and 12 months after release. It also has a special unit of its mortgage division devoted to helping military customers, with associates who are specially trained in SCRA policies and guidelines. -- Written by Lauren Tara LaCapra in New York.
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