Bank of America to forgive 150,000 second mortgages

The principal reduction is automatic and doesn't require any paperwork.

By Teresa at MSN Real Estate Oct 1, 2012 1:22PM

© Radius Images/JupiterimagesHave you ever dreamed of having your mortgage disappear?

 

For about 150,000 customers who have second mortgages with Bank of America, that dream is coming true. The bank is sending letters to eligible customers, informing them that the bank is planning to wipe out their second mortgages completely.

 

They don't even have to send in reams of documentation and wait months for an answer, as sometimes occurs in a conventional mortgage modification. The forgiveness of all the remaining principal of the second mortgage will be automatic, unless the borrower objects within 30 days.

 

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Unfortunately, borrowers can't volunteer for the program. If you're eligible, you'll get a letter, the bank says. The letters started going out in July and will continue to be mailed until the end of the year.

Basically, the relief is offered to borrowers who have second mortgages — usually, home-equity lines of credit — that Bank of America owns and services and that "meet certain threshold delinquency or property value criteria, or a second lien mortgage associated with a first lien mortgage that is severely delinquent."

The forgiveness of the second mortgage won't end foreclosure proceedings on a delinquent first mortgage, the bank noted.

 

Most of the second mortgages involved in the initiative are in default, but the relief may also be offered to some borrowers whose second loans are not in default but who meet other criteria. The first mortgage does not need to be owned or serviced by Bank of America.

A Bank of America news release noted that the principal forgiveness was offered in conjunction with the $25 billion settlement reached with federal regulators and attorneys general. That means it's possible that other major lenders participating in the settlement may offer some relief on second mortgages.

 

The government's Making Home Affordable program also offers options for relief on second mortgages, including principal forgiveness, for recipients of Home Affordable Modification Program modifications.

 

Borrowers may have to pay state or federal income tax on the forgiven debt. This is also true of other principal reductions and debts wiped out in foreclosure or short sales.

 
329Comments
Oct 15, 2012 9:38AM
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I hope to never have to do business with Bank of America again.  They are scumbags.  A few years back we got a HELOC thru BofA, on the condition I pay off my car payment (with another lender) from the initial proceeds of the HELOC.  Needing the funds to do home improvements we agreed.  So in retrospect the remaining 3 years on my car payment ultimately turned into 8 years, when we finally sold our home and got out from under it.  Almost 1/3 of the  $30K HELOC was used immediately to pay off the car loan, leaving less for home repairs.   And when we finally sold our home and paid off the mortgage and HELOC there really wasn't much left.  On top of that our original mortgage had also been absorbed by BofA so it was just a nightmare to be that much in debt to one lender.  Too bad they're not going back and offering to make amends for some of their practices for those of us who finally paid them off! 
Oct 15, 2012 9:38AM
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This is complete mularkey!  Bank of America, earlier this year, conveniently sold millions of loans that would have qualified for this.  I have a loan on a property in Arizona that is worth less than half of the original purchase price with a 2nd that has a balloon payment due at the 10 year mark (2015).  While I will continue to make my monthly payments, I can see the inevitable 2015 foreclosure looming.

AND PRESIDENT OBAMA hasn't fixed a darn thing in four years so the poster that thinks it will be Romney who throws you out of your house needs to explain to me why OBAMA hasn't required the banks to refinance EVERYONE.
Oct 15, 2012 9:38AM
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Such BS - forgive people who can't pay??? SERIOUSLY???  What about those who bust their a$$ working everday to pay the responsibility they agreed to and make payments on time???  Why aren't the good hard working people getting breaks??  The ones who spend money wisely to support the economy NOT those who continue to increase debt???  This why the US is so messed up because we reward those who sit on the a$$ and take from those who work hard and screw them over again and again - how much more pathetic can this country get
Oct 15, 2012 9:36AM
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What ever happened to self  responsibility?
Oct 15, 2012 9:34AM
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All these programs are to help out people who dont even try.. I know so many people whohave jobs and dont even make a effort to pay their bills.. I understand if u loose your job, but if u got a job you should pay your debts.. Unfortunately atleast 50% of the foreclosed houses are people who have jobs but want to take a ride on America!

Shame on our Country..  Our Country is just as corrupt as the people running it! Sad -so very sad that we will literally have to reach ROCK BOTTOM untill we come together as a proud american. hopefully we wont be speaking Chinese..

Yeah I remember the good old Days with creative Financing and people make 50k a year buying 300k houses, and people 100k a year buying 500k houses.. Morgage brokers living the good life!

Good job!
Oct 15, 2012 9:32AM
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Man, all you play-haters!!!!...This comments is to all you "Americans" who always pay your bills on time---that is part of your reward and it is indeed a blessing that you have been able to do this...You say you are not rewarded??..well, what about every time you apply for a loan, you have the confidence that your excellent credit score will make that possible to be approved..You don't have the anxiety that you won't be approved....And, when the loan is approved, you will get the very best interest rate!!..possibly zero percent on a car loan or credit card..and that is not a reward???..often, the money you save in interest accounts for the entire loan payment that the 2nd mortgagees incur...Wow, I wish I was in that position...Bottom line, be thankful and grateful...In doing that you are creating a carma around your life that will be far more lasting that actually reaches through generations...Doing right is always the "right" thing to do..Be Blessed people and let go of that hostility!!
Oct 15, 2012 9:30AM
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When Mitt Romney is elected President, all the people who are in default on their loans will be escorted to the curb and thrown out on the street where they belong.  Mitt will tell the banks to ignore the judgements against them and to keep the money in their bank.  These settlements with state AG's will be forgotten and the banks will be back in business taking money from the people - not giving it to them. This is nits.
Oct 15, 2012 9:22AM
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i hope when wells fargo fargo finally takes my home in foreclosure after a year and a rejected cash short sale offer last may for 90% remaining on the note, i don't get hit with a 40k deficincy judgement.

 

 

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There are many programs that offer some relief. For those home owners that have the last 12 months with no lates may be eligible to short refinance which is a principal reduction to today's market values. Easy to get answers for HARP, refinance, short sale, short refinance.

 


Sheryl Arndt, Broker – Loan Officer
DRE# 01440252
NMLS# 297251
760-486-4225

Oct 15, 2012 9:20AM
Oct 15, 2012 9:18AM
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Ha. Ha. Most people who took second mortgage, used the money to buy expensive vehicles or Time share and things like that. They screwed up  ppl like me drive a decade old minivan and trying to payoff the mortgage. no help for me.
Oct 15, 2012 9:17AM
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TURN TO YOUR NEIGHBORS, not on them.  ITS US AND THEM, not us or them.

Oct 15, 2012 9:16AM
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That is really good for the economy....God speed for all these folks that need the help!!!
Oct 15, 2012 9:15AM
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I tried to get a refi on my residence thru Bank of America at a lower interest and all the paperwork was filled in and submitted. No answer for 3 weeks so I called and the loan officer said that low interent rate didn't apply and they offered me a 3% higher interest rate which was 2% higher then what I was already paying. I went round and round with the loan officer to no avail. I went to Wells Fargo and got the loan at about the teaser rate that B of A first offered and lowered my monthly payment by 375.00 a month. i will not use Bank of America for anything because of that incident. The loan officer at the other bank said they had heard lots of people were scammed by B of A and they had went to Wells Fargo for their loan needs
Oct 15, 2012 9:11AM
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why cant I get my loan wiped out, i have a second w/HSBC have never missed a payment for years and it turns out HSBC has been using my money to fund terrorists!!   Where is the invetigation into these people and why do I have to pay my money so it can be used to fund terrorists?!  Hello Congress if you're going to get involved in this you need to be "fair" to quote our President!
Oct 15, 2012 9:10AM
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The Emergency Economic Stabilization Act of 2008 (Division A of , 122  3765, enacted October 3, 2008), commonly referred to as a of the U.S. financial system, is a law enacted in response to the authorizing the to spend up to $700 billion to purchase distressed assets, especially , and supply cash directly to banks

 

President George W. Bush signed the bill into law within hours of its congressional enactment, creating the $700 billion (TARP) to purchase failing bank assets. TARP was dwarfed by other guarantees and lending limits; analysis by Bloomberg found the Federal Reserve had, by March 2009, committed $7.77 trillion to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

Oct 15, 2012 9:09AM
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Im with you Pis_d! Been current on all of my bills and wheres my forgivness..heck I cant even get my student loans paid for like some of the people do! I make too much money to qualify for any type of assitance and just barely enough to put food on the table, but I guess since I only have one mortgage and didn't buy more house than I could afford I don't qualify...and dont say its becuase I haven't lost my job, my spouse was out 6 months...and I still paid my stuff!
Oct 15, 2012 9:04AM
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HA HA HA HA LMFAO! Look at all of the sheep and cattle complaining. Don't you realize that the only thing that gives something value is what somebody is willing to pay for it or what somebody is willing to accept in return as value. The banks have been running these scams forever, the people who are smart are the ones who fall into the scam and then sue them!!! The people who are stupid are the ones who go to work every day in support of this BULLSH*T!! For all of you so called "FREE" Republicans out there, save yourself some time in complaining and go read the EMERGENCY ECONOMIC STABILIZATION ACT OF 2008 and look who signed it into law!!!!!! GO!!!  NOW!!!!
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