Bank of America to Homeowners: How about $150,000 Off?

#1
myrobbins7

myrobbins7

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#1
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.


Bank of America Offers Principal Reductions to 200,000 Homeowners

I wanna take $150,000 off!!! :)



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#2
#2
So if I had stopped paying my mortgage payment back in November, then I would qualify for this principle reduction? But, unfortunately, I would also have stopped paying my property taxes and the city or school district would have taken my home...

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.

In order to qualify for the modification, the borrower must answer the letter with full documentation of income, showing that under the terms of the modification they can still make the monthly payment. A borrower with no income would therefore not qualify. A borrower’s current monthly payment must be more than 25 percent of gross income, and the borrower must show they are unable to afford that.
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#3
#3
YorkVol said:
So if I had stopped paying my mortgage payment back in November, then I would qualify for this principle reduction? But, unfortunately, I would also have stopped paying my property taxes and the city or school district would have taken my home...
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I have to agree with the backwardsness of this.

I know an attorney specializing in short sales, foreclosures, etc. Says that if you want to qualify for any sort of relief, you have to stop paying your mortgage. Until then, bank won't even talk to you.
 
#4
#4
sounds like winning the lottery without buying a ticket. Good plan BoA
 
#8
#8
Grrrrrrr...... I have a mortgage with BofA. Unfortunately, I can afford my mortgage.

GrrrrrrrrrrrrrrrrrrRRRRRRRRRRRRRRR...........
 
#9
#9
Thrasher865 said:
Grrrrrrr...... I have a mortgage with BofA. Unfortunately, I can afford my mortgage.

GrrrrrrrrrrrrrrrrrrRRRRRRRRRRRRRRR...........
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sucker

volinbham said:
Should this be treated as taxable income?
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it won't and since they will still be able to "afford" their mortgage instead of moving to a rental there will still be a nice little interest deduction at the end of the year

are there really people $150k under water that deserve saving?
 
#11
#11
utvolpj said:
are there really people $150k under water that deserve saving?
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Ouch. I tend to agree for the most part, but that's a very blanket statement.

I know of people that bought houses around 2008 that subsequently lost 25%+ of their value, and you could argue that they outspent their budget. However, after a job loss and that kind of depreciation, it can turn very mild, forgivable irresponsibility into a very desperate situation.
 
#12
#12
utvolpj said:
are there really people $150k under water that deserve saving?
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If they are, its because they bought it as investment property.

Didn't read the article but I hope a requirement is that it be primary residence.
 
#13
#13
Thrasher865 said:
Ouch. I tend to agree for the most part, but that's a very blanket statement.

I know of people that bought houses around 2008 that subsequently lost 25%+ of their value, and you could argue that they outspent their budget. However, after a job loss and that kind of depreciation, it can turn very mild, forgivable irresponsibility into a very desperate situation.
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but 25% would require a $600k house right?

IMO if you can't afford the house you are contracted to pay for then you get rid of it and face the consequences. Mine lost value (about 15%) but I am not under water. I just don't see how someone can get $150k under water without making some very bad decisions. For those they should own up to their responsibilities
 
#14
#14
A zero down mortgage, with any depreciation = underwater. It's all timing. If you bought a house in 2008, and didn't have any equity, you found yourself underwater very easily. I bought my house in 2009, at what I thought was close to the bottom. It wasn't, but I am not underwater.
 
#15
#15
When we were house hunting in 2006-07, I was still in the Army and still in Hawaii where the housing market was crazy. But, I had the income of a LTC with a housing allowance for the bank to determine what I could buy. However, the VA would have given me a loan for $650k without an income qualification and well over 1 Mill with the income check. In my view they were crazy to make such an offer but houses were being sold in less than 1 day without so much as a look in the door, so I was very tempted. After retiring on half pay, then watching the market collapse, I could easily be 200-300K under water at this point.

Glad I moved to a small town and bought a 200K house instead.
 
#17
#17
Lesson learned. Next time I see a recession looming or an impending housing bubble collapse, I'm going to the bank to see what I can get approved for, and I'm rolling the dice!
 
#18
#18
$150K? All I need to do is get a assessor to play ball, skip a couple of payments, and go part time at work...and I should have my house paid off by this time next year.
 
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#19
#19
Thrasher865 said:
A zero down mortgage,
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like I said

utvolpj said:
IMO if you can't afford the house you are contracted to pay for
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with zero down (and most likely interest-only/ARM/other magical mortgage trick) any depreciation will put the owner underwater. People gambled and lost but now we're being required to pay the vig. Doesn't feel right
 
#20
#20
Screw it, let's just have the gov't send a check to all the banks/mortgage holders and pay off everyone's house.

Will BoA get funds from the gov't to offset the $150k in losses?
 
#21
#21
The moral hazzard of this is great. Don't worry about putting yourself in a bad spot, because if you do, you're going to be saved at the cost of others.


There's no such thing as a free lunch
 
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