Bank of America to forgive part of mortgage balances

March 25, 2010

CHARLOTTE - Bank of America Corp. is giving some of its most troubled mortgage borrowers relief from the threat of foreclosure. The bank, the largest mortgage servicer in the country, said Wednesday it will forgive up to 30 percent of some customers' total mortgage balance. The homeowners must have missed at least two months of mortgage payments and owe at least 20 percent more than their home is currently worth. The plan is the newest provision of an agreement the Charlotte, N.C.-based bank reached 18 months ago with state attorneys general to settle charges over high-risk loans made by Countrywide Financial Corp. The loans were made before Bank of America acquired the mortgage lender in mid-2008. The bank has since stopped making those loans. Although the motivation for Bank of America's announcement was to resolve legal problems, it has the potential of putting pressure on other banks to also forgive principal on loans that are in danger of failing. - Associated Press

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