Bank of America’s Lottery

Bank of America is set to unveil their plans for at risk borrowers later today.
This program is designed to reduce principal balance on mortgages as the first option.
This is unheard of in the loan modification space since lenders try everything possible to avoid such measures.
Most loan modifications aim at extending the length of the loan as well as reducing interest rates to conform with specific debt to income ratios. Principal reductions are extremely rare to come by as most lenders will simply add a balloon payment instead, which is a lump sum due at the end of the loan term.

Although you may be thinking this is good news there are specific requirements for this program.
It will only apply to certain subprime pay-option ARM’s (adjustable rate mortgages) meaning no conventional methods of financing such as 30 fixed and so on. Additional requirements include a loan to value in excess of 120% and 60+ days delinquent on their mortgages. The maximum principal reduction shall be 30% of the original balance and will never go below 100% loan to value.

As this plan seems like a great solution I can’t help comparing the chances to qualify for this program with the odds of winning the lottery. Out of the millions of home owners struggling to make their payments it is said this program will affect 45,000!

My belief is that Bank of America is using this technique to gain publicity, yes helping a few along the way but in my opinion far from enough. This is not to mention that this was a result of a settlement from a suit against Countrywide, now Bank of America.

About Daniel Di Matteo

Realtor at CENTURY 21 Award, Daniel was Voted U-T San Diego’s Best Real Estate Agent in 2014. A Husband, Father, and most recently, accomplished Blog writer, which explains your visit today.


  1. It’s a very good thing

    • Hi Kacey, Thanks for stopping by. This post however is almost 3 years old now and Bank of America has rolled out several other programs since then. Please let me know if there is anything I can help you with.