The first batch of Bank of America’s (BofA’s) principal reduction offers was sent out to 60,000 qualified borrowers in the U.S. this May. Borrowers at least 60 days behind on their mortgage payments were offered an average $150,000 cramdown. BofA is expected to make a total of 200,000 principal reduction offers by August.
These cramdown offers are part of BofA’s efforts to meet the terms of February’s $25 billion national industry settlement resulting from the epidemic of fraudulent home loan originations and subsequent foreclosures. BofA has remained closed-lipped as to the precise criteria for electing which lucky borrowers are given the offer.
It seems that 200,000 floundering homeowners are in store for an unexpected windfall. However, the response from borrowers so far has been nothing short of uncanny: eerie silence.
Over half of the qualified borrowers solicited have not responded to BofA’s cramdown offer, even though a cramdown is an economically viable option in light of foreboding foreclosures.
Many are speculating about the lack of enthusiasm from BofA’s borrowers. Theories range from previous unpleasant customer service experiences with BofA, to a simple case of borrower fatigue. Many homeowners behind on mortgage payments whose previous calls for assistance went unanswered may be fed up with the taxing process of seeking help, believing BofA’s offer is among a large list of other modification offers which never come to fruition, or shortsale strategies that are just too good to be true.
BofA also has a somewhat notorious reputation for losing paperwork and poor administration, leading to a sense of mistrust among their disgruntled borrowers.
Keep your eyes open for these little golden tickets to arrive in the mail. Every avenue for financial salvation should be considered, especially those resulting from a government-enforced settlement.
Credit given to the first tuesday Journal Online — P.O. Box 5707, Riverside, CA 92517.