Bank of America Corp. is planning a new mortgage-modification effort aimed at homeowners who are 60-plus days delinquent on payments and have a principal balance of at least 120% of the value of their home, CNBC reported Wednesday, citing sources.
B of A's plan will focus on reducing principal payments first instead of as a last resort, and will offer principal forgiveness of up to 30% in two stages over five years.
The plan will target subprime, pay-option and adjustable-rate loans, and two-year adjustable-rate mortgages. It will affect about 45,000 mortgages for a total of about $3 billion in reduced principal. The plan is expected to be detailed later today.
According to CNBC, some believe the B of A plan could provide a framework for a new mortgage-modification plan the Treasury Department is working on.