The plan is one of the boldest moves yet to address the plight of millions of U.S. homeowners who are "under water," owing more on their homes than they're worth. It could make it easier for the Obama administration to move in a similar direction with its existing loan-modification program, although senior government officials and many bankers remain very wary of offering to cut loan balances as the main way of helping distressed borrowers.
So far, most modifications, including those under the government-subsidized Home Affordable Modification Program, involve reducing interest rates. Some also extend terms to 40 years, to shrink monthly payments.
But banks are finding that some borrowers aren't willing to keep making even reduced payments, believing they have little hope of ever having equity in their homes and might be better off renting, and perhaps buying a less-expensive home later.
"Severely under-water homeowners are reluctant to accept a solution that does not offer some reduction in principal," said Barbara Desoer, president of Bank of America Home Loans. "The whole purpose of the program is to get more customers to return phone calls" and make payments for trial modifications so workouts can be made permanent, she added.
Thursday, March 25, 2010
Under government pressure, Bank of America to Cut Mortgage Debt
Typical nonsense, I am for helping those who got into bad luck but the segment of those people underwater who tried to flip, overpaid or took out stupid loans and overpaid. Screw them.