Bank of America announced that they will have a very limited relief program for those that obtained mortgages through Countrywide Financial, the most notorious for aggressive loans that backfired and toppled the industry. While the media has been hyping the program all day, it will only affect a small percentage of homeowners who might be foreclosed on. BofA explains the program this way: "A borrower owes $250,000 on a house now worth $200,000. Fifty thousand dollars of that balance would be moved into a special interest-free account. As long as the owner continued to make payments on the $200,000, every year $10,000 in the special account would be forgiven until either the balance was zero or the housing market recovered and the borrower once again had positive equity."
On paper this plan sounds amazing, and will really keep people in homes and keep values from dropping even farther. Hopefully BofA will stick to the spirit of this program and modify as many loans as they can.
Read the New York Times article here.
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