BofA joins California principal reduction program
Bank of America ($13.51 0.08%) joined a program using the Hardest Hit Fund to reduce the principal balance of delinquent mortgages in California.
The California Housing Finance Agency received $2 billion from the Treasury Department's Hardest Hit Fund. Using the money, the now 27 mortgage servicers participating in the Keep Your Home California Principal Reduction Program would reduce the principal by as much as $50,000, matched by the investor for a total possible principal reduction of up to $100,000.
BofA started piloting the program in February. However, like other government-sponsored initiatives, Fannie Mae and Freddie Mac loans will not be eligible for the program, according to the Cal HFA.
"California has been particularly hard hit by reductions in property values," said Rebecca Mairone, national mortgage outreach executive for Bank of America. "By applying government-directed Hardest Hit Funds through the targeted Keep Your Home California program we create another potential solution for homeowners who are severely underwater, struggling to make their mortgage payments and who want to remain in their homes."
BofA will also participate in two other programs using HHF money. They include a mortgage assistance program for the unemployed, which provides up to $3,000 per month in aid, and another initiative to give up to $15,000 to help delinquent homeowners pay off past-due balances on first liens.
"We’re excited to have Bank of America on board for one more of the Keep Your Home California Programs," said Claudia Cappio, executive director for the California Housing Finance Agency. "We believe principal reduction can be an appropriate tool for helping qualified homeowners obtain an affordable and sustainable modification. We continue to work with other mortgage servicers to offer this to their customers."
A BofA spokesperson could not immediately comment on how many loans could be eligible for the principal reduction program.
Write to Jon Prior.
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