BANK OF AMERICA TO REDUCE MORTGAGE BALANCES

Bank of America to Reduce Mortgage Balances
By DAVID STREITFELD and LOUISE STORY
Published: March 24, 2010 from the NY Times



Bank of America said on Wednesday that it would begin forgiving some mortgage debt in an effort to keep distressed borrowers from losing their homes.

The program, while limited in scope and available by invitation only, signals a significant shift in efforts to deal with the millions of homeowners who are facing foreclosure. It comes as banks are being urged by the White House, members of Congress and community groups to do more to stem the tide.
The Obama administration is also studying whether to provide more help to people who owe more on their mortgages than their homes are worth.
Bank of America’s program may increase the pressure on other big banks to offer more help for delinquent borrowers, while potentially angering homeowners who have kept up their payments and are not getting such aid.
As the housing market shows signs of possibly entering another downturn, worries about foreclosure are growing. With the volume of sales falling, prices are sliding again. When the gap increases between the size of a mortgage and the value that the home could fetch in a sale, owners tend to give up.
Cutting the size of the debt over a period of years, however, might encourage people to stick around. That could save homes from foreclosure and stabilize neighborhoods.

To read the entire article visit http://www.nytimes.com/2010/03/25/business/25housing.html?th&emc=th

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