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Digital News Report – Bank of America announced that they have started to modify certain loans for principal forgiveness through the National Home-ownership Retention Program (NHRP). The NHRP program is available for those that are being considered for the governments Home Affordable Modification Program (HAMP). The struggling homeowner may owe more on the loan that then home is currently valued at, and the lenders could forgive a portion of the principal over time. This would help the homeowner to stay in the home and not walk away from it, which often leads to a home foreclosure. The principal forgiveness program is for qualified homeowners and the amount is forgiven over a three to five year time period.
Bank of America is using the principal reduction as one of the first steps toward reaching the HAMP’s payment goal of 31 percent of the homeowners income. The bank will modify the NHRP eligible mortgage loans first with principal forgiveness before offering the lower interest rates or extending the length of the loan. If the homeowner makes on time payments, they earn the principal forgiveness over time.
Bank of American mailed out letters to NHRP-eligible homeowners who are more than 120 days overdue on payments to apply for the principal forgiveness program. Bank of America said that the homeowners that have applied and are accepted, will be mailed notices in the second part of June. These approved participants will then begin their first trial modifications with principal forgiveness for a home loan modification.
There is another government earned principal forgiveness program which was announced by the US Treasure Department and is scheduled to start later this year. This mortgage loan modification program will be accessible to more homeowners.