BoA forgives debt
(29 March 2010 – Australia) The Bank of America has announced that in an effort to lower the rate of home foreclosures, the bank would begin to forgive some of its distressed customers’ mortgage debt.
The customers that would receive the saving grace will be selected by the bank, signalling a possible significant shift in the approach American banks could take with home owners who are facing foreclosure.
The announcement comes as banks are being urged by the White House, members of Congress and community groups to do more to stem the tide.
Bank of America's program is expected to increase the pressure on other big banks to offer more help for distressed borrowers.
The government is worried about a possible rise in the already high rate of home foreclosures, especially as another downturn in the market looks possible.
Howard Glaser, a housing consultant in Washington and former government regulator told The New York Times, that banks are willing to take some losses now to avoid much greater losses later if the housing market continues to spiral, and that's a sea change from where they were a year ago.
The program is designed for borrowers who received subprime or other high-risk loans from Countrywide Financial, the biggest and one of the most aggressive lenders during the housing boom.
Bank of America bought Countrywide in 2008.
The announcement comes as banks are being urged by the White House, members of Congress and community groups to do more to stem the tide.
Bank of America's program is expected to increase the pressure on other big banks to offer more help for distressed borrowers.
The government is worried about a possible rise in the already high rate of home foreclosures, especially as another downturn in the market looks possible.
Howard Glaser, a housing consultant in Washington and former government regulator told The New York Times, that banks are willing to take some losses now to avoid much greater losses later if the housing market continues to spiral, and that's a sea change from where they were a year ago.
The program is designed for borrowers who received subprime or other high-risk loans from Countrywide Financial, the biggest and one of the most aggressive lenders during the housing boom.
Bank of America bought Countrywide in 2008.
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