Bank of America is offering to slash mortgage-loan balances by up to 30% for thousands of delinquent borrowers who owe more than their homes are worth. The plan—part of an agreement to settle a lending-abuse suit—is one of the most ambitious moves yet to ease the foreclosure crisis, and is expected to serve as a model for other lenders, the Wall Street Journal reports.
The offer to erase principal debt will be made to some 45,000 adjustable-mortage holders nationwide. Holders of "underwater mortgages" have been highly reluctant to accept loan modifications that don't involve principal reduction, said a bank official. "The whole purpose of the program is to get more customers to return phone calls," she added.