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 April 11, 2010

BANK OF AMERICA SAYS IT HAS A NEW ARRANGEMENT FOR FORGIVING LOANS
As housing prices began to tumble, foreclosures increased and are still increasing. When a home's value is lower than the amount remaining on the mortgage, the owners often relinquish the debt and go into foreclosure. In addition, some owners find that they are suddenly unemployed and are unable to continue making their mortgage payments.

The Federal Government has been pressing lenders to come up with ways to facilitate a reduction in the number of people who are losing their properties. The Bank of America's new program appears to respond to this need, as it would rescue owners from having to go into foreclosure by giving them a reduction in both payments and in the remaining principal.

Not all owners will fit the requirements necessary in order to make application for a modification of their loan. The offer to modify a mortgage would be via an invitation from the bank. B of A says that it will target those who have been battered most by the drop in the housing market, those who have a remaining loan balance that is at least 20 percent higher than the value of the home. B of A hopes to be able to aid approximately forty-five thousand owners, and the amount of mortgage reductions would total nearly three billion dollars.

The Bank says that the greatest decrease in the remaining debt would be 30 percent, with a few requirements of the owners. Rather than reducing the mortgage right away, the reduction would be given to the borrower in portions each year. As the borrower continues to make his payments, a portion of the remaining amount will be lowered.