Bank of America announced that they want to help homeowners who are unemployed with their mortgages. They are proposing to allow homeowners who are collecting unemployment to go without paying a mortgage payment for nine months. The catch is at the end of the nine months if they have not found a job, they must sign over their house to bank avoiding foreclosure procedures. Regulatory approval is still needed. This is a good for everyone. Investors will now have more opportunity to help these distressed homeowners as well by negotiating short sales with Bank of America. B of A has also indicated their willingness to participate in the government’s HAFA program. Mortgage modifications have certainly not been the answer to most distressed homeowner’s problems because they default again 6 months later.
It’s a good investment strategy to target B of A distressed homeowners because Bank of America has shown that they are willing to work with all parties to prevent foreclosure. You can pick up some good bargains, and hopefully you won’t have to wait as long to get an answer from Bank of America as other lenders that are not following the HAFA guidelines. Under HAFA guidelines, the bank is required to response within 10 days whether or not they are accepting the offer to purchase. That is quite a difference from the 3-6 month up to a year that it has been taking lenders to approve short sales. There is a good chance that other lenders will follow in Bank of America’s footsteps.