Bank of America Home Loan Modifications—Homeowners Want Principal Reductions

Bank of America homeowners have been experiencing underwater mortgage troubles, which is the case for the majority of mortgage lenders, but the idea of principal reductions on these underwater mortgages isn’t as widespread as the problem.

Homeowners with a Bank of America mortgage that is now underwater, meaning they owe more on the home than the home is worth, are looking for assistance through principal reduction programs that are going to bring principal amounts on their mortgage more in line with the current market value.

Principal reductions from lenders aren’t being as widely offered because some homeowners are asking their principal be reduced because of the loss they may sustain on their home as an investment if they continued to pay on the underwater mortgage.

However, Bank of America is offering an earned principal forgiveness option to homeowners that continue to pay on time, which reduces their principal if they keep up their mortgage payments.

There are homeowners, that may have an adjustable-rate mortgage who stand to have trouble in making their mortgage payment due to underwater mortgages, and this is a case many lenders feel is one where a principal reduction is warranted.

While unpopular, principal reductions look to only be a hope for homeowners that are having trouble making their mortgage payment as a result and not to aid homeowners in keeping their mortgage affordable so they can make a profit in the future.