Principal reductions on first liens
Of the 30,000 homeowners approved for offers of first-lien principal reduction, nearly 5,800 had completed their required three monthly trial payments and converted to a completed modification as of September 30. About 85 percent of those approved for trial plans are successfully completing the process.
The program is resulting in an average of nearly $150,000 in reduced principal balance and 35 percent reduction in monthly payments.
Bank of America is offering principal reductions on loans it owns and services, as well as loans it services for other mortgage investors under delegated authority agreements. Fannie Mae, Freddie Mac, FHA, VA are not participating in the principal reduction program.
Second-lien extinguishments and modifications
The overwhelming majority of assistance to second-lien holders – more than $2.4 billion of the $2.5 billion total in home equity relief through September 30 – has been provided through home equity debt elimination and extinguishment of the lien, releasing any claim to the mortgaged property. The average financial relief provided through lien extinguishment to about 43,000 customers is more than $56,000.
About 1,400 additional loans that did not meet the parameters of the extinguishment program have been modified, reducing the balances owed by a total of $100 million.
The second-lien extinguishment and modification programs are intended to place the homeowners in an improved financial situation by reducing their monthly debt obligations and, potentially, help them regain equity in their property. Only loans that are both owned and serviced by Bank of America qualify for these programs under the settlement.
Interest rate reductions
Bank of America is providing interest rate reductions at no cost to qualified customers who have remained current on their first-lien mortgage payments but owe more than 80 percent of the value of their home today.
The bank’s process features rate reduction with no associated fees or costs and allows eligible homeowners to benefit from an expedited approval process with significantly reduced documentation requirements.