Bank of America To Forgive SMALL Amount of Principal on Housing Debt

While far from anything like what a) NEEDS to be done or b) COULD be done,

the fact that a major American mortgage holder is – for the first time – willing to reduce the PRINCIPAL on houses that are “underwater” —

While far from anything like what a) NEEDS to be done or b) COULD be done,

the fact that a major American mortgage holder is – for the first time – willing to reduce the PRINCIPAL on houses that are “underwater” —

While far from anything like what a) NEEDS to be done or b) COULD be done,

the fact that a major American mortgage holder is – for the first time – willing to reduce the PRINCIPAL on houses that are “underwater” —

ie, worth less than the amount of the monthly payments – is definitely noteworthy.

It’s especially so if it comes from BofA, the largest bank in the US. [br]

At the same time, no one should think this move has come without the possibility of a serious threat if it DIDN’T happen.

Part of it would definitely seem to be the fact that, with health care “out of the way” as a legislative priority –

and one where Obama “won,” altho it remains unclear what, exactly, he DID “win” 😉 —

the next areas of legislative / media focus are clearly going to be the interrelated messes in the housing and financial sectors,

and BofA shrewdly seems to be trying to take itself out of the running as any sort of poster child for the consistent mis-deeds of that whole problem area.

More specifically, it also follows on the successful prosecution by the state of Massachusetts —

in the person of defeated Senatorial candidate, Attorney General Martha Coakley —

who had convinced the Commonwealth’s Supreme Judicial Court last year that another bank’s loans were “presumptively unfair, and, on that basis,

“We were prepared to bring suit against Bank of America if we had not been able to reach this remedy today, which we have been looking for for a long time” …

a remedy that included a payment of $4.1 million to the State as well …

As always with the NYTimes, you MUST read all the way to the end, since the Massachusetts angle doesn’t come until about 3/4 of the way through the piece,

not to mention these little tidbits contained in the story’s last four paragraphs, which we have broken up for easier absorption 😉 :

[quote]

Policy makers have been hoping the housing market would improve before any significant principal reduction program was needed. But with the [national housing] market faltering again, those wishes seem to have been in vain.

Bank of America’s announcement came within hours of a fresh report that underscored the renewed weakness.

Sales and prices are dropping, leaving even more homeowners underwater.

Sales of new homes fell in February to their lowest point since the figures were first collected in 1963, the Commerce Department said.

Sales are about a quarter of what they were in 2003, before the housing boom began in earnest.

“It’s shocking,” said Brad Hunter, an analyst with the market researcher Metrostudy. “No one would ever have imagined it would go this low.”

[/quote]

But it certainly has — with NO sign of things getting better anytime soon …

Which kind of makes you wonder why no one’s gotten tough with the banks until now …