BofA promises new mortgage aid

Mortgage stamped paid

The federal government has planted a money tree in the backyards of Americans who are struggling to pay their mortgages -- and then promptly fenced the tree off.

The money tree is the Hardest Hit Fund, the multi-billion dollar targeted mortgage aid program created in 2010, and the fence is all the rules you have to follow to get into the program.

Bank of America announced last week it’s going to participate in the Keep Your Home California's Principal Reduction Program (, which has $2 billion in Hardest Hit funding for cash-strapped home owners.

It's already begun work with similar programs in a number of other states (Go to to see if your state is receiving money from the Hardest Hit Fund.).

Like the other mortgage servicers in the California program, BofA is using the money to reduce the outstanding principal (what you owe on your mortgage) by up to $50,000 for homeowners who owe more than their home is worth.

BofA then matches the amount the government contributes.

For example, if you owe $300,000 on your mortgage and your home is worth $250,000 in today’s market, you’re $50,000 underwater.

Keep Your Home California would pay off $25,000 of your mortgage and BofA would forgive $25,000.

Sounds great, right?

The catch is that you have to fall within very specific guidelines to qualify for the money.

You can’t have a Fannie Mae or Freddie Mac mortgage. If your loan was packaged into a security (and chances are it was), the investors in that security can nix the deal. If you took out a piggyback second loan when you bought your home, or you later got a home equity line or second mortgage, that lender has to cooperate, too.

The key to qualifying for this, and other programs like it, is to get professional help as soon as you know you’re in trouble.

You went to a professional to get your loan, so it makes sense that you need to visit a professional to get problems with that loan worked out.

The best place to seek that help is from HOPE NOW ( or
888-995-HOPE), which will hook you up with a HUD-approved counselor.

The second key to qualifying is to do what the mortgage servicer asks.

Just like when you got your loan, you must send every scrap of paper and proof the servicer asks for or you’re not going to make it to closing.

Doing both those things -- calling for professional help and delivering the paperwork you’re asked to come up with -- won’t guarantee you can pick cash off the money tree, because the rules are very specific and complicated, but they will give you the best shot possible of keeping your home.

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