New Programs for Home Owners

Over the last 18 months with the National Homeownership Retention Program, it seemed that only those that had gotten themselves into trouble one way or another were refinanced and given relief. Well today in a news release, Bank of America announced a Earned Principle Forgiveness program which should be rolling out in May. This program is tied to homeowners performance. If you make the payments on time, that performance is going to be "rewarded". This is an innovative approach: An interest-free forbearance of principal that the homeowner can turn into forgiven principal over five years resulting in a maximum 30% decrease in the loan principal balance to as low as 100 percent LTV (loan to value); in each of the first five years, up to 20 percent of the forborne amount will be forgiven annually for borrowers that remain in good standing on their mortgage payments; forgiveness installments for the first three years set at the 20 percent level; in the fourth and fifth years, the amount of forgiveness will be dependent upon the updated value of the property, so that the LTV will not be reduced below 100 percent through principal forgiveness. This sounds like a move in the right direction for those seeing themselves in certain Pay Option ARMs (adjustable rate mortgage) or 2 yr hybrid ARMs set to adjust.