From HW:
Bank of America will begin a new pilot program in the next few weeks, allowing some California homeowners to receive a principal writedown on their mortgage.
The program will be funded from the $699.6 million the California Housing Finance Agency received from Treasury Department’s Hardest Hit Fund last year. A spokesperson for the CalHFA said there is no set amount of loans BofA is targeting, but the bank will be soliciting eligible homeowners soon. CalHFA has not given BofA a limit to the funding “unless they blow us out of the water,” the spokesperson said.
CalHFA is in talks with other lenders and servicers, but they did confirm that Guild Mortgage Company will also participate in the program.
“We’re really excited to get the program going,” the CalHFA spokesperson said.
Rebecca Mairone, the new national mortgage outreach executive at BofA, said in an interview with HousingWire Monday that it would soon begin the California initiative as well as several other states that received Hardest Hit Funds.
Earlier in March, BofA announced it was sending letters to Arizona homeowners regarding possible principal writedowns under Hardest Hit Fund programs. Through that program, BofA said it was targeting 8,000 households.
Ally Financial agreed last week to participate in another principal-writedown program in Michigan, again using the Hardest Hit Fund.
“whom”…not to be a grammar nazi.
Just let the market correct. Make the banks mark to market. If you can’t make the mortgage or you don’t want to, leave.
That’s our money they are using to write off BoA’s bad loans.
How does this type of gov handout not drive people crazy?
Taking a percentage of everyone’s federal tax dollars, giving it to a state agency, and finally redistributing it to a special group of people defined as “homeowners”.
If you take a step back even further all this really equates to is a giveaway to bankers.
Sigh…
How about I get a reduction on my new mortgage on day one….that would stimulate the housing market with new owners who are above water.
Buy a house for $850, put $150k down, loan me $700k and make me payback $550k….now you’ve got a roughtly 65% ltv priced near the bottom of the market.
The market would explode!!! Much better use of money vs. subsidizing underwater homes bringing them to less underwater.
It’s amazing that this doesn’t start riots. Why the hell do I pay my bills like a total chump?
Re: #5
Somehow give priority for new mortgage reductions to people who are current on their existing mortgage and have a net loss due to purchasing during the bubble and I like your idea. Motivates people sitting on houses to sell by incentivizing them to buy something they can afford.
I’m defining net loss as – = negative number. Keeps it independent of size of loan or refinance.
Why aren’t there riots? Folks who pay their mortgages on time are working… to pay their mortgages on time. Just my 2 cents…
And here’s a chuckle for you, JtR. Just when I checked bubbleinfo this afternoon, I heard the distinct sound of “Jingle Bells” in my neighborhood. What??? Yep, it was an ice cream truck! Here’s hoping it brings you an awesome week in real estate land…
File this under principle reductions, not principal reductions.
It’s too bad that money couldn’t be used for our schools.
@ Clearfund. They did that already, in small size, with the rebate plan.
@ Shadash. For once, I agree with you. And I really wish I hadn’t paid cash for mine!
I don’t care if the banks are slow to foreclose, process short sales, etc. But I DO hate the idea of cash getting handed out in amounts that the homeowner likely doesn’t pay in 10+ years of income tax.
BTW, $700 mil is chump change for something like this, and won’t even DENT the problem. W
Valerie, and here I thought I was smart by putting down the biggest downpayment possible.