Bank of America recently announced its commitment to reduce the mortgage principals for as many as 200,000 underwater homeowners.
Bank spokesman Richard Simon stated that the average reduction is expected to be more than $100,000 per underwater mortgage. To qualify, the loan must be owned by the Bank of America, Countrywide Financial Corporation (now owned by B of A), or private investors. Loans owned or backed by Fannie Mae, Freddie Mac, the Federal Housing Administration or the Department of Veterans Affairs are ineligible.
Bank of America’s decision to reduce the mortgage loan amounts could reduce the $3.25 billion of penalties it faces from the government foreclosure settlement by $850 million.
