According to the Charlotte Observer, Bank of America has a plan in the works to allow up to nine months reprieve from mortgage payments for their unemployed customers. The program is being drawn up as a result of the Home Affordable Modification Program (HAMP) efforts not providing the amount of relief initially anticipated.
The $75 billion federal mortgage-aid program, announced in February 2009, has struggled to fulfill President Barack Obama’s estimate of helping millions. Through March, only 230,000 families had received final mortgage modifications under the Home Affordable Modification Program, called HAMP.
Here’s how the program would work:
- Home makes no house payments–zero–for 9 consecutive months
- If work isn’t found at the end of 9 months, the homeowner must agree to sign over their house to Bank of America
- Homeowners would be given at least $2000 to assist with moving expenses
High unemployment has contributed to the many delinquent loans and foreclosures on the market. Some experts think Bank of America has a great idea because:
- It provides families with faster relief
- It allows them the ability to save money
- It provides a workable time table for decision-making and planning
- and Bank of America won’t be spending millions in collection/foreclosure expenses
Additionally, the money saved allows homeowners to stay current on car payments. It’s harder to find and keep work without a car. It may also allow homeowners the ability to pay for childcare while they are out on interviews or looking for work.
The bank has 1.44 million customers who are 60 days or more past due, nearly 14 percent of the 10.4 million mortgages it services. But it hasn’t broken out how many of those might be helped by the proposed plan. Many details, such as eligibility and the application process, also haven’t been finalized because the bank can’t go ahead without regulators’ approval.
Most lenders provide forbearances which provide only a three-month reprieve. Bank of America would provide the first of this streamlined, wide scale kind.
