The Yahoo! article begins with the line, “a select group of struggling mortgage borrowers are about to get an offer that sounds too good to be true.”
Sadly, they’re not kidding.
The article in reference is about Bank of America’s newest claim to offer principal reductions to 200,000 homeowners. This has come about as part of the $25 billion settlement among the five mortgage servicers charged with “robo-signing” foreclosures.
Bank of America claims those eligible for this offer could have up to $150,000 removed from their mortgage balances. However, eligibility is only one hurdle that recipients have to clear to even begin to hope for such aid.
Borrowers who receive one of the 200,000 letters, which are being sent out in a staggered pattern in an attempt to avoid an onrush of petitioners, will have to first respond to the letter or else they will not even be able to begin the process. Then, they must begin a lengthy process to prove that they qualify.
First, the borrower must show that they owe more on the mortgage than the home is worth and that the loan is either owned or serviced by Bank of America. Furthermore, full income documentation must be provided to show that the borrower cannot make their current monthly payment due to its being more than 25 percent of their gross income. This documentation must also prove that, under the new modifications, the borrower would be able to make future payments. As such, those with no income will not qualify for the principal reductions.
Yahoo! reports that Bank of America executives are not expecting to see responses from all 200,000 borrowers. They went on to state “there is a level of fatigue among delinquent borrowers who have already received several notices or who may have gone through a failed modification process already. Some borrowers simply don’t want to stay in their homes.”
One solution for those who wish for a fresh start, away from the unwanted debt of underwater homes, is to pursue a short sale. An option that we are glad to report is extremely successful.