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Bank of America to Extinguish up to 150,000 Second Liens

HOUSINGWIRE, By Kerri Ann Panchuk

Bank of America mailed 150,000 letters to pre-qualified homeowners who are eligible to have their Bank of America second-lien mortgages eliminated.

Borrowers receiving the letter will have second liens on collateral property completely removed unless the customer decides to opt out of the automatic relief by sending a response within 30 days of receiving the letter.

The offer takes care of the entire unpaid principal balance on second liens. Only second liens owned and serviced by BofA that meet certain delinquency and property value guidelines are qualified for the program.

Second lien mortgages associated with a severly delinquent first lien mortgage also qualify as long as the second-lien is serviced or fully owned by BofA. Ownership of the first lien mortgage does not matter as long as BofA has control of the subordinate lien.

Mailings to eligible customers began in July. Only customers who receive pre-qualified letters will be able to use the program today.

The bank points out that eliminating a second lien does not resolve issues with the first. If a first lien mortgage is delinquent or in foreclosure, the borrower still has to work with the servicer to resolve those issues. The extinguishment of the second debt is an attempt to limit other financial concerns, but it cannot resolve issues with the first lien.

"The elimination of the second lien mortgage is completely separate from any actions being taken regarding the first mortgage," BofA said in a statement. "If the first mortgage is in foreclosure, those foreclosure activities may continue."

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