Customers with mortgages from five national lenders may soon receive letters notifying them that they could qualify to have the balance on their home loans reduced.
Bank of America announced on Tuesday that it had begun mailing such notices as part of a multistate settlement over alleged foreclosure abuses.
On Wednesday, Hawaii Attorney General David Louie announced that similar notices will also come from J.P. Morgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and GMAC Mortgage parent Ally Financial Inc.
Louie said BofA and Wells Fargo have started informing eligible homeowners, and that the other three lenders are expected to follow shortly.
BofA estimated that more than 200,000 of its customers nationwide may potentially qualify for saving 30 percent a month on their mortgage payments, with some homeowners seeing principal reductions up to $100,000.
To qualify, BofA borrowers must owe more on their mortgage than the property is worth, and be at least 60 days behind on payments as of Jan. 31. Other requirements also apply.
Typical loan modification plans, according to BofA, begin with an interest rate reduction. Additional changes can include extending the life of the loan and an interest-free forbearance of principal to be paid back at the end of the loan.
Under the government settlement, the bank will try to reduce the principal balance to as low as 100 percent of the current property value, then lower the interest rate and forbear additional principal as necessary to reach an affordable target payment.
The letters being mailed ask customers to provide financial information to help the bank review eligibility for the program.
Though BofA has begun sending the letters, it could be until September before all such notices are mailed.
A spokesman for the state Department of the Attorney General said there is no estimate of how many Hawaii homeowners may receive notices or qualify for mortgage reductions from BofA or the other lenders.
The Attorney General’s Office suggests if homeowners have questions or concerns regarding the notification process, they should contact their loan servicer at the following toll-free numbers:
» Ally/GMAC: 800-766-4622
» Bank of America: 877-488-7814
» Citigroup: 866-272-4749
» J.P. Morgan Chase: 866-372-6901
» Wells Fargo: 800-288-3212
