While millions of Americans are foreclosing on their homes, Bank of America has stepped in by offering significant mortgage loan reductions—”the industry’s boldest move yet,” according to The Wall Street Journal. Struggling homeowners with subprime and other risky mortgages will be offered reductions as high as 30 percent on their loan principal. So far banks have been reluctant to reduce principal amid the financial crisis, instead offering lowered interest rates or extending the life of repayments. But these measures haven’t been enough to convince homeowners to hang on to their bum houses, which may never regain their purchase value. Bank of America’s approach reduces loan balances to the home’s current estimated value, and the bank estimates that at least 45,000 customers will qualify for the program.
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B of A Reducing Loan Balances
Filed under The Economy