One of my clients this past week owns a house worth about $350,000. He has a first mortgage with a $375,00 balance and a second mortgage owed to Bank of America with a balance of $200,000. The client has not paid either his first or second mortgage in over 20 months, and the first mortgage has just recently sued him for foreclosure.
Bank of America’s second mortgage is mostly secured by the value of the house. Nevertheless, the client received an unsolicited letter from BOA offering to satisfy the second mortgage and forgive personal liability under the promissory note. The bank is not requiring any payment or any other consideration. It’s a gift.
I have heard about other homeowners who have received BOA forgiveness letters, but this is the first client whose mortgage was mostly secured by house value. The client still has to deal with his first mortgage foreclosure in order to save his house and benefit from the BOA forgiveness.