Eligible Florida homeowners will begin getting notices this week about a Bank of America push to reduce their loan balances, and the discounts have been doozies.
The average nationwide price cut for an initial group of 5,000 approved homeowners was about $145,000 per borrower.
The plan, part of a $25 billion settlement among lenders and state attorneys general, is targeting 200,000 underwater homeowners nationwide, with the highest concentrations in California and Florida.
While Bank of America officials caution that not every homeowner should expect a loan reduction of $145,000, they predict an average savings of 30 percent on monthly mortgage payments.
Still, the idea of having a loan reduced by more than $100,000 was a surprise to Florida International University real estate economist Ken Johnson. But he said it could make sense in South Florida, where home values have plummeted from the peak of the market.
“I’m really shocked and don’t quite know what to make of that number,” Johnson said of the $145,000 figure. “If they are trying to get balances so they are no longer underwater, that sounds very much like Fort Lauderdale and Palm Beach, where we lost 50 percent value.”
Read : “Bank offers 6-figure loan discounts” an article by The Palm Beach Post