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There is good news for all borrowers having a mortgage deal with Bank of America because in the last week, it has been announced by this bank that many homeowners struggling with foreclosed properties who are eligible for loan modification will soon receive a letter on behalf of this lender stating that there will be a deduction in their respective principal amounts.

This initiative taken by this bank is a part of the 49-state settlement that was held this February to put an end to various foreclosure related scandals.

According to the Charlotte, there may be some 2 hundred thousand or more homeowners who are eligible for this loan modification. This lender has already started issuing letters and many homeowners will receive mails by the end of this week. On receipt of this letter, customers have to meet the bank officials along with the present database of their financial condition because this is also a part of this review program.

BofA declared that by the end of September 2012, all the eligible homeowners will receive this letter and according to their estimation, this loan modification will save nearly 30% of the monthly mortgage payments of these homeowners.

For eligibility, there are some criteria. Firstly, the homeowners must be more than two months delinquent on their monthly payments as on January 31, 2012. Secondly, these homeowners must owe a larger amount than the respective values of their properties.

Only those homeowners will get this facility whose mortgages are presently with this lender. Any other loans that are in possession of any other federal agencies like Freddie Mac or Fannie Mae will not be entertained by this bank. According to this bank, the maximum possible reduction in principle amount will be $ 100,000.

Bank of America has started this process of principal reduction since March 2012 and the first priority where homeowners who previously applied for loan modification and whose cases were under review. The bank has already dispatched five thousand trial loan modification offers which sums up to $700 million in principle reduction.

There are nearly 11 million foreclosed properties in US which are underwater. This means that these homeowners owe more on their mortgages than the value of their homes. According to this multistate settlement in February, among these 11 million homeowners, only one million homeowners will be called for principle reduction and the rest will receive some amount as compensation for improper means of foreclosing.

Photo by Renjith Krishnan.

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