Bank of America announced this week it’s plan to eliminate debt accrued on second lien mortgages for some lucky borrowers – approximately 150,000 lienholders across the country. This is big news for those who are underwater and would like to be able to stay in their homes. The lender says the goal behind the program is to help homeowners stay in their homes and build equity.
If you have a second mortgage that is serviced by B of A, you may soon receive a letter in the mail telling you your second lien can be extinguished. But don’t get too excited – the 150,000 letters are being sent out only to pre-qualified borrowers, and you cannot elect to be in the program. Apparently if you receive a letter your debt will be released within 30 days if you do not opt out of the program.
There is no data on which specific parts of the country may benefit the most, although one article mentioned the inland empire may see quite a few of these releases, as there were many second mortgages in that area and a substantial number of those loans that were issued by Countrywide (which was acquired by Bank of America). There is also no word on how credit may be effected, but if the bank is agreeing to release the debt in full there is a chance there may not be a credit ding…that remains to be seen.
While this is not a solution to preventing foreclosure, it could be a very powerful tool in it’s prevention, and those who are included in the program could really be receiving a life preserver. It is a new start and the chance to stay in a home that otherwise may not have been possible for much longer.
If you are the lucky recipient of one of these letters from B of A, please let me know. I would love to read the letter and understand the terms. You can email it to me at Rachel@LaMarRealEstate.org.