March 7, 2011 (Shirley Allen)
Bank of America (BofA) is piloting a program to write down mortgage principal for borrowers in three states participating in the Hardest Hit Fund. To date, Arizona, Nevada, and California are among the states that have proposed using federal aid money to have BofA lower the amount struggling borrowers owe on their mortgages.
In June 2010, the Obama administration released $1.5 billion in foreclosure prevention funding for states hardest hit by home price declines. BofA will begin the mortgage principal reduction program for customers in Arizona first, which has received $125.1 million in aid.
A spokesman for the Arizona Department of Housing said about 40% of the 380 applications received so far are from BofA customers. “We are hoping to assist 8,000 households with these federal funds,” the spokesman said.
Additionally, BofA is finalizing how it would participate in other principal reduction programs in Nevada and is in “advanced discussions” with the California Housing Finance Agency.
BofA is also involved in discussions with other state housing agencies who are receiving Hardest Hit Funds. Along with principal reductions, the bank is also considering pilot programs in California, North Carolina, South Carolina, Ohio, Oregon, Florida, and Washington D.C., that will offer unemployment assistance programs.
“Since the Obama administration established the Hardest Hit Fund initiative one year ago, Bank of America has worked closely with both the Department of Treasury and state housing agencies to design and implement the program to provide interim payment assistance to unemployed borrowers, as well as funding for loan modification assistance to delinquent borrowers,” Laughlin said. “We are excited this program is coming to fruition.”
Tags: Bank of America, Hardest Hit Fund, mortgage principal reductiion, federal aid, unemployment assistance