Tuesday, May 8, 2012

Bank of America lays out who is eligible for principal reduction

More than 200,000 letters from Bank of America will begin landing in homeowners' mailboxes offering principal reduction under the terms of the $25 billion mortgage settlement announced in February, the bank said Tuesday.

If you fit the following criteria, be looking for a letter sometime before September. If you throw it out, you won't be eligible for the program, mortgage executive Ron Sturzenegger told CNBC.

  • Owe more than the property is worth.
  • Be at least 60 days behind on payments as of Jan. 31.
  • Make a monthly payment of at least 25 percent gross household income.
  • Have a loan owned and serviced by Bank of America, or serviced by Bank of America and owned by an investor who has given the bank permission to reduce principal. Fannie Mae, Freddie Mac and the FHA/VA have not.
The bank announced the outline of this program in March.