BofA moves on principal reduction promised in AG settlement
Looks like the mortgage settlement wasn’t just a long, unsettling dream. Bank of America [stock BAC][/stock] saved a family from foreclosure via the agreement, and plans to save about 200,000 more by August.
One family was alerted that they were spared foreclosure on the day their home was supposed to go up for auction, reported CNN Money on Tuesday.
The Vallejos of Sacramento bought their home in 2001 for less than $240,000. But at the height of the boom when their home was worth $430,000, they refinanced.
After some other financial troubles, they wound up behind on their payments and still owed $385,000 on their home in 2010 when their home’s value had slipped to about $300,000.
After trying for two years to get a modification and being turned down, the family thought all hope was lost. Then, BofA gave them a principal reduction to bring their mortgage down to nearly match the value of the home. You can see their happy faces in the family photo CNN published here.
While the majority of those that will get principal reductions from BofA because of the settlement have not been notified, the Vallejos got a swift decision because they were well into the modification process and were already being considered for programs offered under the government's Home Affordable Modification Program.
I called Rick Simon, spokesperson for BofA, to get a better idea of the process of the early alerts, and this is what he said:
“All we did was say that because the courts agreed to this we aren’t going to hold them up or put them into another modification that doesn’t include principal reduction when we know they would qualify under the settlement,” he said.
So there you go.
Newly considered applicants — that 200,000 I referenced earlier — will be getting letters in the next few weeks. Simon said the process of sending out letters finalizing the principal reductions would be shored up “hopefully by the end of August.”