Bank of America Corp. will offer interest rate and principal reductions to military borrowers under a new mortgage modification program it announced on Thursday.
The Charlotte, N.C., bank said it will reduce the amount of loan principal that borrowers owe to as low as 100% of the current market value and offer a 4% interest rate for certain active duty military personnel.
B of A said it also created a customer service unit specifically for military borrowers.
The Military Loan Modification Program aims to "address the heavy burden of financial matters at home that can weigh on those who are protecting our freedoms," Terry Laughlin, an executive vice president for B of A who was recently tapped to run a newly created unit for the bank's problem loans.
B of A's action follows recent industry accusations of mishandling of military loans that came to light after JPMorgan Chase & Co. disclosed problems with its own programs.
The New York bank last month said it was lowering the maximum interest rate charged to active duty members to 4% and offer loan mods to more borrowers. JPMorgan Chase faced criticism after it revealed that it overcharged 4,500 military members an average of $70 each and improperly foreclosed on 18.