You think BoA will write-down your mortgage to what your house is worth? Maybe. Then again maybe not.
Friday was a day of rejoicing for many homeowners who saw the press releases touting that Bank of American will writedown your mortgage balance to the actual value of your home. Hold the champagne.
According to The New York Times, BoA won’t actually write down loans to the value of the property. Rather (and here’s the dirty secret):
Bank of America executives said the program would work this way: A borrower owes $250,000 on a house now worth $200,000. $50,000 of that balance would be moved into a “special” interest-free account.
As long as the owner continued to make payments on the $200,000, without fail, every year $10,000 of the money in the special account would be forgiven until either the balance was $0 or the housing market recovered and the borrower once again had positive equity.
The program would be available only to former Countrywide customers (Countrywide was acquired by BoA in 2008) and is by “invitation only.” It is unclear what the application process is or when this program will go into effect.
This is s joke right? Let’s examine a few problems:
- How do you score an invitation?
- Why only Countrywide former customers? Maybe because Countrywide is on the hook to several state attorney generals for predatory lending?
- What is the criteria BofA will use to determine when the house “has equity”?
- What are the tax consequences?
I guess some is better than none. Let’s just stop now before I really get fired up.
- The Bank Slayer
I have a countrywide intrest five year arm which is now Bank of America. I have been trying to work out a modification through an attorney but, all I get is a runaround. Now I have recieved a notice of Defalt. I have had the loan for four years is it to late for statue of limitations on preditory lending.