A new Bank of America plan to limit foreclosures and stymie strategic defaults will cut principal balances on some troubled home loans, allowing up to a 30 percent decrease in what borrowers owe.
The program, announced today, was virtually unthinkable just months ago.
But sinking real estate values has made it more attractive for borrowers to just walk away from homes. Bank officials said more people have been rejecting loan modifications that reduce monthly payments but not principal amounts in favor of foreclosure.
Full story: Bank of America has new ‘forgiveness’ program to help struggling homeowners cut principal balan