BofA's Mortgage Principal Reduction

Bank of America has announced that they will be offering mortgage principal reduction to a certain 200,000 customers. The catch is, however, that if the customers do not reply to these letters that they will receive in the mail, they will not be eligible. The borrowers who qualify could get up to $150,000 deducted from the balance of their mortgages. This is part of the $25 billion settlement between federal and state agencies and the five largest mortgage lenders in the nation. These lenders were caught up in a scandal involving fradulent foreclosure document processing that qualified homebuyers that were not actually qualified. We reported on this a couple months ago.

Bank of America, state attorneys general and the U.S. Department of Justice have committed $11 billion towards this mortgage principal reduction. If enough borrowers respond to the offer, they may go beyond the $11 billion. There has already been $700 million in principal reduction given to a total of 5,000 borrowers through a pilot program.

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