If you're a cash-strapped homeowner in California with a mortgage serviced by Bank of America, you may have a chance at getting your principal lowered through a state program that helps people stay in their homes.
The California Housing Finance Agency said earlier this week that Bank of America is now part of Keep Your Home California’s principal-reduction program, making it the largest loan servicer involved in lowering loan balances for those with economic hardships.
A servicer is a company homeowners make their mortgage payments to every month. Bank of America serves more than two million home loans in the state, agency officials said.
Other servicers involved are the California Department of Veterans Affairs, the California Housing Finance Agency, Community Trust/Self Help, GMAC, Guild Mortgage Company and Vericrest Financial.
Agency officials hope that list continues to grow.
"We believe principal reduction can be an appropriate tool for helping qualified homeowners obtain an affordable and sustainable modification," said Claudia Cappio, California Housing Finance Agency's executive director, in a statement.
Keep Your Home California’s principal-reduction program is one slice of a $2 billion effort to help struggling homeowners avoid foreclosure.
Qualified homeowners could be eligible for up to $50,000 in assistance from the Keep Your Home California program, which requires the mortgage investor to match dollar-for-dollar the amount provided by the program.
For instance, if the program agrees to reduce the principal by $50,000, then the mortgage investor must match that $50,000 reduction, resulting in a total $100,000 reduction.
Bank of America borrowers who don't qualify for the principal-reduction program will be evaluated by bank representatives to explore other options, including a loan modification.
Keep Your Home California is funded by the U.S. Treasury Department.
If you have questions, call 888.954.KEEP (5337) or visit KeepYourHomeCalifornia.org.
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