Bank of America has put $11 billion aside to reduce principal on existing mortgages as part of yet another settlement to the government. What do you have to do to qualify:
1. Have a mortgage with Bank of America or have a loan serviced by Bank of America for an investor who is allowing the modifications.
2. Be 60 days late as of Jan. 31, 2012.
3. The mortgage must be underwater: the homeowner owes more than the home is worth.
So if I stopped paying my mortgage and paid too much for my home, I will now be rewarded with a reduction in the principal of my mortgage? We should be focusing on the magnitude of the settlement: $11 billion. This is 5.5 times the loss of J.P. Morgan Chase’s derivative gamble last week that made headlines. What is my point? Until we can grasp the magnitude of our financial crisis, we have no hope of understanding the real problem the America is facing. Unless we can truly grasp the magnitude of a $130 trillion national debt with unfunded liabilities and a $700 trillion exposure of our banks to derivatives, we cannot comprehend the level of our slavery to our masters: politicians and financiers.
If you are a taxpayer, your share of this debt is $1.3 million. That is the level of your slavery and that is the legacy to our children for our apathy.
A select group of struggling mortgage borrowers are about to get an offer that sounds too good to be true. Executives at Bank of America say they will begin mailing 200,000 letters offering certain customers mortgage principal reduction.
“If people get these things and toss them, they won’t be eligible,” says Ron Sturzenegger, the Bank of America executive charged with providing solutions to borrowers in need of mortgage assistance.
But the offer is real, and eligible borrowers could get as much as $150,000 knocked off the balance of their mortgages. It is all part of the $25 billion settlement reached this year between federal and state agencies and the nation’s five largest mortgage servicers over fraudulent foreclosure document processing (so-called “robo-signing”).
Bank of America (BAC), in a deal with state attorneys general and the U.S. Department of Justice, committed $11 billion to mortgage principal reduction, but executives say they will go beyond that if enough borrowers respond to their offer. Five thousand borrowers have already received a collective $700 million in principal reduction through a pilot program for those already in a modification negotiation. The 200,000 borrowers being targeted now may have already exhausted modification options or may have yet to contact the lender.
Executives say borrowers receiving the letters are eligible, but they still have to prove they qualify. In order to be eligible, a borrower must be 60 days late on the mortgage payment as of Jan. 31, 2012. The borrower has to owe more on the mortgage than the home is currently worth, commonly known as being “underwater” on the mortgage, and the borrower’s loan must either be owned by Bank of America or serviced by Bank of America for an investor who is allowing the modifications.