Bank, Government Augment Relief to Insolvent Mortgage-Debtors

posted on March 27th, 2010 filed under: Financial Responsibility, Real Estate News

Bank of America will forgive up to 30% of the principal owed by debtors who have missed at least two months of mortgage payments and owe at least 20% more than their home is worth.

Separately, the federal government expanded its assistance program for defaulting debtors.  Most significantly, the plan pays lenders, who made bad loans, to reduce the amount owed by debtors, who borrowed more than they can afford to pay.  The Federal Housing Administration will then guarantee new loans at 97.5% of the current market value, or 115% if the debtor took out a second mortgage and spent all that money already.

To be eligible, the debtor’s loan balance must be less than $729,750, and the debtor’s monthly mortgage payments must be more than 31 percent of the debtor’s income.  The bigger the debt and the lower the income, the more likely the debtor is to qualify for government assistance.

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posted by // This entry was posted on Saturday, March 27th, 2010 at 8:14 am and is filed under Financial Responsibility, Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed.

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