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Wow! Bank of America Is Sending Out Principal Reduction Invitations – Who Gets One?

Here is the American FlagAs you all know, people all over the United States are having problems with paying their mortgages. In fact, millions are impacted and they are in the process of losing their homes because they may be too far behind to catch up. These financial problems apply to virtually every financial institution in America.  However, banks like Bank of America are actively seeking ways to provide viable solutions to these immediate issues. For example, Bank of America is offering 200,000 homeowners an opportunity to reduce the principle payments on their home loans. These 200,000 owners are scheduled to receive a letter in their mailboxes them a chance to participate in this program.  Although many home owners are receiving the letter, others want to know the answer to the question, “How do I get a letter?”

The offer is available to this select group of borrowers but there are several eligibility requirements that must be met before the mortgage is reduced. Some of the eligibility requirements include a specific amount of time late (at least a couple months), owing more than the home’s current value (underwater),  BofA has to be the loan owner or service provider, to name a few.

Do you have to be late on your payments?

The homeowner is late on their mortgage is one of the requirements that must be met before the reduction is considered. Based on their guidelines, the homeowner must be at least 60 days late on their mortgage. Which means, when the person sends their paper work into the bank’s processing center, the loan must be 60 days late as of January 2012.

Home Value Must Be Lower Than Mortgage Balance

To qualify for the mortgage principle reduction program, the homeowner will also have to meet specific home value requirements. Being underwater on the mortgage is another requirement that Bank of America has set. This means, the owner must owe more on their current mortgage than the actual value of the home.

Of Course, B of A Has To Own The Loan!

Another major requirement involves reviewing the owner of the loan and who services it. Although this program is being offered to 200 000 homeowners, it will only apply to Bank of America borrowers or to those who have loans that are serviced by Bank America (i.e. investors who have agreed to honor the new loan modifications).

What Are The Income Requirements, If Any?

If the owner meets all of these requirements, there are still other basic requirements that must be met and this involves the owner’s income. Owners who do not have any income are ineligible. However, owners who have a source of income will have to prove that they are not making enough to afford the current payments (i.e. monthly mortgage payment is more than twenty- five percent of their gross pay).

Other Requirements

For those who are interested in taking advantage of this principle reduction program, there are also other prerequisites involved. These conditions include sending in the appropriate documentation to Bank of America. For instance, if the owner says they are unable to pay their mortgage based on their current income, they will have to send proof of this information with their application. This information should be well documented because there will be a large staff of selected professionals reviewing and approving the information based on these established guidelines. If the owner has questions and concerns about the program and its requirements, there will be a staff of employees (approximately 50,000 employees) responding to homeowner’s questions. This staff will be available throughout the duration of the reduction program.

Certified Letter – The Plan To Mail Out 200,000 Letters

To give the bank an opportunity to handle the mass mail out appropriately, the certified letters will be sent out in large increments. Starting in the month of May, the first group of letters will be sent to a specific group of Do I Qualify for a principal reduction picturetargeted homeowners. Starting in the month of May, approximately 6,500 certified letters will be sent to homes all over the United States. After the first 6,500 letters, the next distributions will be scheduled by week. Which means, this process could continue from the month of May throughout the summer months. These pre-planned increments will give the bank and their employees an opportunity to meet the new demands that will be generated by each of the mail outs. It will also give them an opportunity to process the paper work and respond to the huge amount of questions and concerns expected.

According to bank executives, all 200,000 homeowners are not expected to respond because of various reasons. Some may not respond because of other recent mailings that addressed other modification programs. Unfortunately, these programs did not work and they have made owners very wary of quick financial fixes and to good to be true offers and programs. Other homeowners may not respond because they may choose to move from their present location to another home, since they may want to eliminate the debt that they have found him or herself under. For those, however, who may be interested in applying for the new reduction program, the bank and its executives are making sure the communication is detailed and explained well. The information should encourage the homeowner to call and find out what is available to them and their specific situation.

Although this program may seem like a hoax or too good to be true, it is legitimate and it is being done for a select group of BofA borrowers. Therefore, these letters are being sent by certified mail to ensure its authenticity. Certified mail is also being used because there are also scams being offered by fraudulent organizations. Sometimes trying to distinguish between the two can be difficult and sometimes next to impossible for even the savviest homeowner.

According to information from Lending Processing Services, there are over 5.5 million delinquent loans with a certain percentage already in the foreclosure process. This is one of the main reasons why Bank of America and its executives are responding to this issue with this type of principle reduction program. It is also part of a legal settlement.

Do I Have To Wait And See if I Qualify?

Not necessarily.  You can call the lender directly and see if you are a candidate for the program or fill out the form on the site to learn what your options are. Remember, for this program you have to be 2 months late to qualify.  Do not intentionally miss payments, it’s a bad idea.

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