Bank of America has completed or approved more than $4.75 billion in principal reduction offers on first mortgages under terms of the Nationwide Mortgage Servicing Settlement in the five months since the settlement was approved by the court. As of Sept. 30, 30,000 homeowners were approved for trial modifications or had made the required three monthly payments during the trial period and converted to permanent modifications under the principal reduction program.
The bank said progress to date puts the bank well on the way to meeting its total obligations within the first year of the three-year agreement. Early results are in line with expectations, including:
►Among borrowers who began their trial plan period more than three months ago, more than 85 percent successfully completed the process and qualified for a permanent modification.
►Monthly mortgage payments are dropping by an average of 35 percent for customers qualifying for the program.
►The average reduction in principal balance is more than $150,000 for customers qualifying for the program.
►Within the first year of the program, Bank of America expects to have reached out to approximately 200,000 customers who are eligible to apply for a first lien principal reduction with letters requesting the limited documentation necessary to determine final eligibility.
To meet the terms of the national settlement, Bank of America has agreed to provide more than $7.6 billion in consumer relief through modifications of first and second liens and foreclosure avoidance solutions such as short sales. Under the agreement, banks will not receive full dollar-for-dollar credit for all of the assistance provided to customers, so this does not correlate directly to the $4.75 billion in first lien principal reductions provided so far. The government-appointed independent settlement monitor will make the crediting determinations.