BofA Reducing Mortgage Principal

Bank of America Corp. is giving some of its most troubled mortgage borrowers relief from the threat of foreclosure.  The bank will forgive up to 30 percent of some customers' total mortgage balances.  Homeowners must have missed at least two months of mortgage payments and owe at least 20 percent more than their home is currently worth.  The move has the potential of putting pressure on other banks to also forgive principal on loans that are in danger of failing.  The Treasury Department, is developing similar plans for principal reductions at other mortgage servicers.  Bank of America estimates that about 45,000 customers will qualify for its plan. The offer will cut total reduced principal by about $3 billion. 

The new plan begins in May.