The Town Broker

Now This Could REALLY Be A Game Changer…

Earlier today, I was showing homes for sale in Union and Essex Counties. I have an investor looking to buy, and there are some really good opportunities out there at the moment. The sad part is that these were ALL distressed properties…bank owned or pre-foreclosure.

Now you might remember that only yesterday I posted a story saying that distressed property sales were not as big a problem in NJ as in other states. I even went so far as to say that in some Union County towns, there weren’t enough out there to have a significant impact on home values.

I still stand by that claim. But in several Essex and Union County communities there ARE distressed properties…LOTS of them. I learned a long time ago that there is a story behind each of these homes. In most cases, distressed property sales are the result of decent, hard working people, who met with an unfortunate twist of fate (can anyone say unemployment?!)

As I drove home, I listened to the evening news on the radio. This story really caught my attention. Bank of America announced a bold new plan today to not only modify troubled mortgages, but in some cases, FORGIVE some of the mortgage principle.

Mortgage Debt Forgiveness Could Be A Game Changer.

At the moment, the program is limited in scope. It’s only being offered to borrowers who received loans from Countrywide Financial, the biggest and one of the most aggressive lenders during the housing boom. (Incidentally, Bank of America bought Countrywide in 2008.) But this is one of the first programs I’ve heard  of that would actually forgive some of the debt, and not simply restructure the payments.

And that could really make a HUGE difference to folks who are underwater.

Bank of America executives said the program would work this way: A borrower owes $250,000 on a house now worth $200,000. Fifty thousand dollars of that balance would be moved into a special interest-free account. As long as the owner continued to make payments on the $200,000, every year $10,000 in the special account would be forgiven until either the balance was zero or the housing market recovered and the borrower once again had positive equity.

Now this could be a game changer…

Tags: bank of america, Foreclosure, mortgage debt relief

This entry was posted on Wednesday, March 24th, 2010 at 7:09 pm and is filed under Distressed Property, Real Estate Industry News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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