The Bank of America has been helping older people holding options adjustable rate mortgages (ARM) from losing their properties to San Diego foreclosed homes for sale.
The bank has adopted the reverse mortgage strategy. Industry experts explained that reverse mortgage is made available to older people in the form of equity loans. But senior homeowners do not need to pay the mortgage until after they die.
For example, a senior homeowner had a loan of $490,000 on a property that is appraised to be worth only $150,000 in the current market. About $405,000 of the amount was written down by Bank of America and it issued $85,000 as reverse mortgage. However, unlike a traditional reverse mortgage process, the bank's strategy involves paying the proceeds directly to itself instead of to the homeowner. This means that the homeowner can stay in his house without making mortgage payments to the bank.
In the event that the homeowner dies, the property will be returned to the Bank of America. The heirs of the homeowner will be given the priority to purchase back the house for $85,000, excluding interest and fees. Or if the heirs opted not to buy back the house, the bank will then sell it and give any proceeds that exceed the loan amount to the homeowner's family.
According to industry experts, banks are being pressured by the federal government to work with troubled homeowners to save their properties from San Diego foreclosed homes for sale. On the case of Bank of America, it has issued about 20 reverse mortgage loans with write-down feature to homeowners who are in direct circumstances.
Officials said that the bank is losing money in the process but explained it would lose more if they foreclose on a property and sell it in the current market. Home prices have been dropping drastically because of the foreclosure crisis. In fact, many homeowners whose properties are worth less than their mortgages are forced to reduce prices on their properties just to compete with cheap foreclosure homes.
Meanwhile, the U.S. Treasury Department said that it was able to meet its goal of starting trial loan modifications for about half a million borrowers by November 1. The program is part of the $75 billion initiative to control the spread of foreclosures across the country.
![[Valid RSS feed]](http://www.realestateproarticles.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites