Bank of America Launched Program for Unemployed Borrowers

by on Bank of America Foreclosures

A program launched by Bank of America makes it possible for mortgage holders who are unemployed to waive off payment for as long as nine months. However, the deed to the property would have to be handed over to the bank if the beneficiary failed to find a job before the nine-month grace period is over.

Those who would qualify under the bank’s program, which still requires the approval of regulators, are homeowners who receive benefits. The program is being seen as something that could help lower the number of bank foreclosed homes for sale in the country.

Market observers have claimed that the effort would benefit the bank’s balance sheet since principal reductions would be avoided for homeowners who manage to hold on to their properties. In addition, the bank will not be left with a long list of cheap homes for sale that they would need to get off their books.

Real estate market analysts stated that Bank of America launched the program because it believes that passing off an income equivalent to nine months would be more beneficial since it will enable borrowers to find employment and restart mortgage payments.

Furthermore, the grace period is equal to how long it usually takes for homeowners to lose their homes. In short, if the borrower failed to find a new job, the bank would just end up at the same position it would have been in had it refused to give borrowers the nine-month grace period. At the same time, both the bank and the borrower would be able to avoid the lengthy process of foreclosure.

The program also stipulates that if a borrower got employed during the specified period, the months that they were unable to pay would be added to their loan and would be spread out throughout the total period of the mortgage contract.

Prior to the announcement of the project, the bank presented a testimony to the U.S. Congress stating that it supports limited use of a process that allows judges to reduce a mortgage principal for bankruptcy homes or during bankruptcy and financial restructuring.

The latest program from Bank of America is being seen by real estate analysts as a win-win situation for both bank and homeowners. However, the effort is still awaiting the approval of legislators before it can be implemented.