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Information on the National Mortgage Settlement

National Mortgage Settlement enhances modification, refinance and short sale programs

May 10, 2012

Bank of America has agreed to settlement with federal and state officials

The U.S. Department of Justice and the State Attorneys General have agreed to the terms of a global settlement with the largest mortgage servicers, including Bank of America. This government agreement extends our ongoing commitment to help homeowners who are struggling to make their mortgage payments.

Under the agreement, we are implementing a new modification program that offers principal reduction to qualified customers. For mortgages that are owned by Bank of America, we will be lowering interest rates to provide reduced payments for eligible homeowners who are current on their payments but who owe more than the current value of their homes. We are also continuing to help customers who are pursuing short sales and may offer additional assistance programs, such as deed in lieu of foreclosure and/or financial assistance to help those who are transitioning out of their properties.

At Bank of America, we are committed to making government and proprietary home loan assistance solutions available as quickly as possible. We are offering these enhanced loan assistance solutions, including the new mortgage modification program that will include principal reduction, to qualified customers.

Please check here for details and updates on these enhanced programs including eligibility requirements and information on how to take advantage of these solutions.

In the meantime, if you are experiencing a financial hardship and are struggling to make your mortgage payments, help may already be available. Please contact us right away at 1.877.488.7814 to update us on your current financial situation. The sooner we understand your situation, the sooner we can explore all of the options that may be available to you.

Read the press release

Frequently Asked Questions

The U.S. Department of Justice and the State Attorneys General reached a global settlement with the largest mortgage servicers, including Bank of America. We are in the process of developing and implementing these programs. These questions and answers explain how the settlement will work.

If you are currently experiencing a financial hardship and are struggling to make your mortgage payments, help may already be available.

Learn more about the National Mortgage Settlement:
OverviewOverview FAQ Option | Interest Rate ReliefInterest Rate Relief FAQ Option | ModificationModification FAQ Option | Home EquityHome Equity FAQ Option | Short SaleShort Sale FAQ Option | Military ServicemembersMilitary Servicemembers FAQ Option

Overview

 

Bank of America is extending our ongoing commitment to help homeowners struggling to make their mortgage payments. Among other things, the agreement includes enhancements to existing programs as well as the development of new programs.

We are reaching out to homeowners who may be eligible for one of the programs. The settlement includes mortgage and home equity loan and line of credit modifications, special modifications for customers who are current on their loans but who owe more than the current value of their homes, and short sales.

  • Modifications: Bank of America is implementing new programs to provide mortgage modification solutions, including principal reduction. With a principal reduction, we forgive a portion of your unpaid balance that will not have to be repaid. We have begun to reach out to customers who may qualify for principal reduction and will continue to do so over the coming months.
  • Interest Rate Relief: Offering benefits similar to refinancing, this special rate reduction modification will help eligible customers receive lower interest rates. The program is for mortgages owned and serviced by Bank of America and is offered to eligible customers who are current on their mortgage payments but owe more than the current value of their homes, and who do not qualify for any other refinance or principal reduction options.
  • Short Sales: We will continue to help customers pursuing short sales and deeds in lieu of foreclosure. We may also offer financial assistance to eligible customers transitioning out of their properties.

Freddie Mac, Fannie Mae, the Federal Housing Administration (FHA) and the Veterans Administration (VA) are not participating in the programs provided under the settlement. Customers whose loans are owned or insured by one of those entities are not eligible for relief through these programs.

The modifications under this program could include lowering your interest rate, moving you from an adjustable to a fixed-rate loan, deferring some portion of the unpaid principal balance to the end of the loan, and/or forgiving some portion of the unpaid principal balance. We also have a special rate reduction modification program for eligible customers who are current on their loans but who owe more than the current value of their homes. A short sale allows you to sell your house for an amount less than what is actually owed in order to pay off the mortgage and avoid foreclosure. Short sales are subject to the approval of the owner of the loan (also referred to as the investor).

Eligibility requirements will vary for each program. Freddie Mac, Fannie Mae, the Federal Housing Administration (FHA) and the Veterans Administration (VA) are not participating in the programs provided under the settlement. Customers whose loans are owned or insured by one of those entities are not eligible for relief through these programs.

Among other criteria:

  • customers must be at least 60 days delinquent as of January 31, 2012.
  • customers who owe more on their mortgage than the value of their home.
  • customers must have a contractual monthly payment for principal, interest, property taxes, hazard insurance and any applicable homeowner association fees totaling 25% or more of their gross household income.
  • customers must have a loan owned by Bank of America or a loan held by a mortgage investor that has delegated authority to Bank of America.

No. The principal reduction offers that are being extended under the terms of the global settlement are only for customers who were 60 days delinquent as of January 31, 2012. Customers who became delinquent after that date will not be eligible for this program, but would be evaluated for assistance available through other home loan assistance programs.

In addition, there are other assistance options available for customers who are current on their mortgage and owe more on their mortgage than the value of their home. These options are designed to help customers obtain a more affordable mortgage payment without the damage that can be caused to one’s credit as a result of becoming delinquent or going through foreclosure.

As part of the settlement, we are contacting eligible customers to offer lower interest rates if they:

  • are current on their mortgage
  • owe more on their home than it is worth
  • have a home loan owned and serviced by Bank of America
  • meet program qualifications

These customers would be able to modify their existing loan and achieve benefits similar to those obtained through refinancing.

We also currently offer refinancing through the Home Affordable Refinance Program and other traditional refinance programs that can assist mortgage customers who are current on their payments.

We offer a variety of programs and resources for customers who are in need of mortgage assistance. In addition to traditional modification offers available through government and proprietary programs, in some cases, customers may be eligible for principal reduction opportunities offered through our National Homeownership Retention Program and the state-led Hardest Hit Fund programs.

Bank of America expects to offer programs to eligible customers in all states, regardless of whether or not they participated in the agreement.

We will provide additional details on eligibility requirements and implementation plans as program enhancements become available. We will reach out to you if it is determined that one of the programs may provide assistance to you.

If you have questions about this settlement, please contact us at 1.877.488.7814 (Mon-Fri 8am-12am ET, Sat 8am-8pm ET, Sun 3pm-12am ET).

Eligibility for the Independent Foreclosure Review has not changed as a result of this settlement.

Eligibility for the Hardest Hit Fund programs has not changed as a result of this settlement. Bank of America will evaluate you for all programs for which you may qualify and consider you for the most favorable alternative for your situation.

If you are currently experiencing a financial hardship and are struggling to make your mortgage payments, help may be available. Please call us at 1.877.488.7814 (Mon-Fri 8am-12am ET, Sat 8am-8pm ET, Sun 3pm-12am ET) to update us on your situation.

You should continue to explore all of the solutions that are available to you today and continue with the loan modification if you are already in the process. Customers in the foreclosure process will be considered for the new programs. However, you should not ignore any foreclosure notices as there is no guarantee these proceedings will be postponed.

Subject to mortgage investor guidance, it is Bank of America’s practice not to proceed with foreclosure until every option to qualify customers for a modification or other solution has been exhausted. You should not ignore any foreclosure notices as there is no guarantee these proceedings will be postponed.

This settlement will not change a completed foreclosure sale, but you may be eligible for cash compensation if your house went through foreclosure between January 1, 2008 and December 31, 2011. If you are eligible, a settlement administrator designated by the Attorneys General will send you a claim form. Please note that Bank of America is not making payments directly to customers. For more information, you can contact the National Mortgage Settlement Administrator at 1.866.430.8358.

 

Interest Rate Relief

 

This program helps eligible homeowners who are current on their payments but who owe more than the current value of their homes take advantage of lower interest rates. It offers benefits similar to those of refinancing and will generally reduce the monthly payment.

The Interest Rate Relief program is a loan modification which changes the terms of the current mortgage. The loan maturity date will remain the same, no appraisal is needed and there are no fees. Refinancing involves creating a new loan with new terms and documents, and may require closing costs, appraisals and other fees.

This is part of our ongoing effort to help customers in need of mortgage assistance and is an addition to customer relief programs we have launched under the National Mortgage Settlement between the five largest mortgage servicers, state attorneys general and the federal government. Our goal is to help you remain in your home and avoid foreclosure whenever possible. With lower interest rates and potential savings, you may be better able to keep your home.

Among other criteria, this program will be available to customers:
•    whose loans are owned and serviced by Bank of America
•    who have remained current on their mortgage payments
•    who do not qualify for any other refinance or principal reduction options

You will be notified by mail if you are eligible for a special rate reduction modification.

If your loan is not owned by Bank of America, it will not be eligible for the program. Freddie Mac, Fannie Mae, the Federal Housing Administration (FHA) and the Veterans Administration (VA) are not participating in the programs provided under the settlement. Customers whose loans are owned or insured by one of those entities are not eligible for relief through these programs.

If you do not know whether or not your loan is owned by Bank of America or another participating investor, please call us at 1.877.488.7814 (Mon-Fri 8am-12am ET, Sat 8am-8pm ET, Sun 3pm-12am ET).

No. The offer is optional.

No. The modified status of your loan will not be reported to the credit reporting agencies. This program is designed for customers who are current on their mortgage payments.

We have an array of programs with tools designed to make mortgage payments more affordable, such as the government’s Home Affordable Refinance Program. The programs and tools available to you depend on your situation and who owns your loan. To learn about other programs, explore our home loan assistance solutions or call us at 1.800.669.6607.

 

Principal Reduction Modification

 

If your loan is eligible, you may be offered a trial payment plan that reflects a principal reduction that makes the monthly payment more affordable. The outstanding loan balance may be reduced to an amount equal to the current value of the home. You must successfully complete the trial payment period on time before the loan is permanently modified.

Among other criteria:

  • you must be at least 60 days delinquent as of January 31, 2012.
  • you must owe more on your mortgage than the value of your home.
  • your loan must be owned by Bank of America or held by a mortgage investor that has delegated authority to Bank of America.
  • you must have a contractual monthly payment for principal, interest, property taxes, hazard insurance and any applicable homeowner association fees totaling 25% or more of your gross household income.

If your loan is not owned by Bank of America or another participating investor, it will not be eligible for the program. Freddie Mac, Fannie Mae, the Federal Housing Administration (FHA) and the Veterans Administration (VA) are not participating in the programs provided under the settlement. Customers whose loans are owned or insured by one of those entities are not eligible for relief through these programs.

You will be notified by mail if you are eligible for a principal reduction. If you want more information about your potential eligibility, you can call 1.877.488.7814 (Mon-Fri 8am-12am ET, Sat 8am-8pm ET, Sun 3pm-12am ET).

If you do not know whether or not your loan is owned by Bank of America or another participating investor, please call us at 1.877.488.7814 (Mon-Fri 8am-12am ET, Sat 8am-8pm ET, Sun 3pm-12am ET).

Yes, if you meet the eligible criteria for the program.

You should continue with your loan modification process. You will be notified by mail if you are eligible for a principal reduction under this settlement. If you want more information about your potential eligibility, you can call 1.877.488.7814 (Mon-Fri 8am-12am ET, Sat 8am-8pm ET, Sun 3pm-12am ET).

Your home equity loan or line of credit may be eligible if it is owned by Bank of America or another participating investor. Freddie Mac, Fannie Mae, the Federal Housing Administration (FHA) and the Veterans Administration (VA) are not participating in the programs provided under the settlement. Customers whose loans are owned or insured by one of those entities are not eligible for relief through these programs.

 

Home Equity

 

If you were eligible, it eliminated any outstanding balance on your home equity loan or line of credit. It also closed the second lien on your property, which removed any current or future claim we may have had on it.

With a principal reduction, only a portion of your home equity principal balance is forgiven and you are responsible for the remaining balance. An extinguishment (also referred to as debt elimination) removes the full balance of the loan or line of credit and cancels the mortgage note. When your home equity loan or line of credit is extinguished, we no longer have a legal claim to your property, and you will not be asked to make any more payments.

To qualify, you needed to have a home equity loan or line of credit that was owned and serviced by Bank of America. In most cases, you also had to owe more on your property than its current value, or be seriously delinquent on your home equity loan or line of credit payments. In some cases, you may have been eligible if your home equity loan or line of credit was associated with a first mortgage that was severely past due.

If you were eligible, you would have received a letter from Bank of America via Federal Express or certified mail explaining how to have your home equity loan or line of credit debt extinguished. You were eligible only if you received the letter. To decline the offer, you needed to notify us within 30 days of receiving the letter. Otherwise, the debt and associated lien would have been extinguished after the 30-day period.

Even if your home equity debt was eliminated, it probably would not stop a foreclosure action that had already begun on your primary mortgage. We urge you to answer and reply to all foreclosure communications from the servicer of your first mortgage.

We are required to report all forgiven principal debts above $600 to the Internal Revenue Service. This amount could become taxable income. Current federal law provides certain exceptions for some customers with situations involving debt forgiveness when it is part of a foreclosure prevention transaction. However, the debt forgiveness may trigger state and federal income tax liability for some customers. To find out the tax implications, you should contact a tax professional. For additional information, see the IRS guidelines.

Every home equity loan or line of credit that was eliminated through this program was reported to the major credit bureaus as "paid and closed" with a zero balance. This could affect your credit rating. Your credit score is determined by several factors and is not controlled by Bank of America. You can get more information on credit scores from the Federal Trade Commission.

Call us at 1.800.496.7831, Monday through Friday, 8 a.m.—11 p.m. Eastern.

We want to work with you to address your financial needs. You can:

  • Call us at 1.800.669.6607
  • Learn about our other loan assistance programs
  • Visit one of our many Customer Assistance Centers around the country

 

Short Sale

 

If you do not qualify for a modification or just want to leave the property, but it is worth less than the amount remaining on the mortgage, a variety of short sale programs are available. We will continue to work with all eligible homeowners to pursue a short sale of their property.

By working with us to pursue a short sale, you may be eligible for financial assistance to help with your relocation as well as a deficiency waiver. This means that we would waive the right to collect the difference between the amount owed and the amount resulting from the sale of the property.

For customers in eligible programs, we will continue to offer financial assistance to qualified borrowers who are leaving their property. The amount varies depending on the program.

Yes, you may be able to pursue a short sale. However, you will need permission to pursue a short sale from the lender who gave you your home equity loan or line of credit (also referred to as a second lien or second mortgage). You will have to contact that lender and request a Second Lien Release as part of the process of getting a short sale from Bank of America. Your home equity lender needs to provide this form and send it to you before your short sale can be considered.

 

Military Servicemembers

 

Under the terms of the global settlement eligible customers, including servicemembers, will be offered new or enhanced loan modification, rate reduction, and/or transition services programs. Eligible servicemembers will also be provided enhanced short sale programs.

Yes, if you also meet the other eligibility criteria for the short sale program you participate in. In certain circumstances, we may be able to waive the difference between the amount owed and the amount resulting from a short sale (also referred to as a deficiency waiver).

In appreciation for the sacrifices made by our servicemembers, we are extending relief beyond what is offered by the global settlement. If you are under Servicemembers Civil Relief Act (SCRA) protection, or do not qualify for protection but are on active duty, or within 12 months after release, you may be eligible for a deficiency waiver in a short sale or deed in lieu. This benefit applies regardless of whether you are under PCS orders. It is available on loans that are both owned and serviced by Bank of America.

For loans that are both owned and serviced by Bank of America, we will waive the difference between the amount owed and the amount resulting from a short sale (also referred to as a deficiency waiver) for eligible servicemembers.

Loans that are owned by non-participating investors will follow that investor’s short sale guidelines.

We have taken additional steps in recent months to help military customers, including:

For loans that are both owned and serviced by Bank of America, we offer:

  • Home Affordable Military Modification for military borrowers on active duty, or within 9 months after release, who are struggling with their mortgage payments
  • a special interest rate of 4%, which is 2% lower than the Servicemembers Civil Relief Act (SCRA) requires
  • our commitment that we will not start a foreclosure sale, if we own the loan, on property owned by any military borrower on active duty or within 9 months after release

The terms of the global settlement do not change your SCRA benefits.