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Bank of America: Debt Forgiveness on Second Lien
Mortgages
Posted By: Jordon [Send
E-Mail]
Date: Tuesday, 2-Oct-2012 15:09:08
.
Bank of
America to forgive 150,000 second liens
Bank of America
is erasing the debt on 150,000 second liens for mortgage borrowers in financial
difficulty, the lender has announced.
The move completely extinguishes the
unpaid balance on second lien debt for qualified homeowners, who are being
informed of their eligibility by mail. Mailings to eligible customers began in
July.
Customers chosen for the offer will typically be those who are
currently in default on their second liens. Bank of America said it is
undertaking the measure in order to help eligible homeowners get back on track
financially with their primary mortgages and avoid foreclosure.
A small
number who are current on their second liens but in difficulty with their
primary mortgages will also receive the offer to have their debt erased.
The
initiative is one of the customer relief programs Bank of America is initiating
in partial fulfillment of its obligations under the $25 billion foreclosure
abuses settlement reached by Bank of America and four other major mortgage
lenders with federal authorities and state attorneys general.
Second liens
will be automatically eliminated for borrowers receiving the offer unless they
contact Bank of America within 30 days to opt out. Some borrowers may choose to
opt out because there could be tax implications, with the forgiven debt counted
as income for tax purposes.
Extinguished second liens will be reported as
paid in full and closed, so there should not be any negative effects on
borrower's credit ratings, according to Bank of America.
Borrowers will not
be able to apply on their own to have second liens extinguished; only those
contacted by Bank of America will be eligible. In addition, the program only
applies to second liens serviced or held by Bank of
America.
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