Bank of America May Reduce Mortgages For Some New Jersey Residents

As part of an $11.8 billion dollar settlement, Bank of America is mailing letters to many of its mortgage customers offering loan modifications. Approximately 200,000 customers, including some in New Jersey, could be impacted by these loan modifications. Some Bank of America loans will be reduced by as much as $100,000. To qualify, borrowers must be at least 60 days behind on payments and owe more than the house is worth, among other criteria.

More than 11 million American households owe more than their home is worth, in many instances as the result of shady and improper mortgage practices. The Bank of America settlement, which is part of a larger $25 billion settlement, stems from litigation over illegal foreclosure practices.

During the housing crisis of the past several years, many banks and lenders allegedly committed fraudulent acts in the processing of foreclosures in order to streamline and make the process more profitable. These alleged illegal acts included a failure to verify required foreclosure documentation and the use of "robo-signing" - which refers to a process in which groups of employees would sign documentation without proper review or authority.

The intention behind the settlement is to help aid the multitude of individuals affected by these actions, but it may not provide the relief necessary for all homeowners who are currently underwater on their mortgage. For New Jersey residents who are not fortunate enough to be included in the Bank of America offer, filing bankruptcy can be a viable option to aid in financial recovery.

What Bankruptcy Offers

Filing bankruptcy can often allow a person the opportunity to delay foreclosure actions and give the filer the chance to plan for a new, more stable financial future. For some New Jersey residents another option is the Loss Mitigation Program. The LMP is a place where debtors and lenders can meet to determine if there is a mutually agreed upon resolution to avoid foreclosure. This includes the possibility for a debtor to modify or refinance their loan and even put the loan into forbearance.

No matter the financial circumstance, there are options available to help those in difficult positions regain financial footing. If an individual is going through financial uncertainty, meeting with an experienced bankruptcy attorney can help plan a path to a fresh start.