According to InsuranceNewNets.com, The California Housing Finance Agency announced today that Bank of America is participating in Keep Your Home California’s Principal Reduction Program, giving eligible cash-strapped homeowners the opportunity to lower their outstanding mortgage balances and avoid foreclosure.
Keep Your Home California’s Principal Reduction Program is part of a $2 billion, federally funded effort to help hard-hit families remain in their homes and ease the California foreclosure crisis. Bank of America has been engaged in a pilot of the principal reduction program since February, and is now moving into full participation to provide assistance to more qualified homeowners facing hardship. The bank is one of the largest servicers of single family mortgages in California, serving more than 2.2 million home loans.
“We’re excited to have
Bank America on board for one more of the Keep Your Home California Programs,” said
Claudia Cappio , Executive Director for the California Housing Finance Agency. “We believe principal reduction can be an appropriate tool for helping qualified homeowners obtain an affordable and sustainable modification. We continue to work with other mortgage servicers to offer this to their customers.”
The Principal Reduction Program assists homeowners at risk of default because of an economic hardship coupled with a severe decline in the home’s value. Principal balances will be reduced in an effort to prevent avoidable foreclosures and promote sustainable homeownership. Homeowners that qualify could be eligible for up to $50,000 in assistance from the Keep Your Home California program.
Additionally, the Principal Reduction Program requires the mortgage investor to match dollar-for-dollar the amount provided by the Keep Your Home California program. For example, if the Keep Your Home program is providing $50,000 in principal reduction, the mortgage investor must match that $50,000 reduction, for a total principal reduction of $100,000.
Under the program, borrowers whose loans are serviced by Bank of America may be eligible if they meet program guidelines and the entity or investor that owns the mortgage loan authorizes the servicer to reduce the principal.
All in all, Keep Your Home California has received almost $2 billion from the U.S. Treasury Department. After consulting with community leaders statewide, four programs were established to assist low and moderate income homeowners.
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