Bank of America takes bold principal forgiveness step

Right behind yesterday’s story that the Federal government is pursuing steps to induce more banks to lower the principal balance on mortgages for underwater homeowners, the Wall Street Journal reports that Bank of America is going to begin doing just that:

Bank of America Corp. said it would offer more borrowers reductions in their mortgage-loan balances in the latest twist on efforts to avert foreclosures.

The plan is the mortgage industry’s boldest move yet to address the plight of the millions of U.S. homeowners who are “underwater,” owing more than the current values of their homes…. Reductions of as much as 30% in loan principal will be offered to struggling borrowers…

Hat tip to Kathy Dipp for pointing us to the story.

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