Banking
Personal Finance Exclusive
Bank of America begins principal-forgiveness program

About 2 lakh homeowners from the US could save as much as 30% of their monthly payments under the program

ConsumerAffairs.com, in a report said that Bank of America (BoA) has begun contacting some of its mortgage customers who may be eligible for a mortgage balance reduction. The bank is committed to forgiving some principal for underwater borrowers, as part of a settlement with 49 states and the US government.

In the first wave of letters, Bank of America said it is targeting more than 2 lakh mortgage-holders who could potentially save as much as 30% of their monthly payments under the program.

"Building on home retention and payment assistance programs already in place, we are meeting our obligation to deliver this additional relief to our customers following the completion of the recent global mortgage settlement," said Ron Sturzenegger, Legacy Asset Servicing executive. "To the extent principal reduction and other modification tools help us turn mortgages headed for possible foreclosure into long-term performing loans, it will be positive for homeowners, mortgage investors and communities."

Complaints
Unfortunately Bank of America, as most other mortgage lenders, has drawn complaints from struggling homeowners who have been trying to modify their mortgages.

"We have a BOA loan and we cannot get them to do anything to help," Cat, of Mulberry, Tenn., wrote in a ConsumerAffairs post. We get the run-around, we send documents and never get replies other than being told to send documents again. We were told we were getting a modification over a year ago and now we are not getting it."

"For the past 18 months I have been trying to get a loan modification from Bank of America," wrote Carolyn, of San Diego, Calif. "My house is now in foreclosure."

Bank of America's new principal forgiveness program will target many customers already in the modification process, so it remains to be seen if this resolves the issues that have plagued the process so far. Bank of America has expressed confidence the program will help, noting that it actually began it back in March.

Early start
"So far under this early initiative, about 5,000 trial modification offers have been mailed, providing a potential total of more than $700 million in forgiven principal," the company said in a statement. "Homeowners are required to make at least three timely payments before the modification can become permanent."

Bank of America says the wave of mailings beginning this week will reach a broader base of customers who may be eligible for this principal reduction program. The letters provide each homeowner with a description of the program and an invitation to provide financial information to begin the review process.

To be eligible for this program, a homeowner must meet certain criteria, including:

  • Owes more on the mortgage than the property is worth today.

        Was at least 60 days behind on payments on 31 January 2012.

  •   Has a contractual monthly payment for principal, interest, property taxes, hazard insurance and any applicable homeowner association fees totalling more than 25% of gross household income.
  • Has a loan that is owned and serviced by Bank of America, or serviced for another investor that has given the bank delegated authority to do such modifications.

Fannie Mae, Freddie Mac and FHA/VA are not participating in the principal reduction program, but Bank of America says other modification programs which may provide comparable reductions in monthly payments are available on those loans.

Courtesy: ConsumerAffairs.com/Mark Huffman)
Read the original report here

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Government launches smart card scheme in Madurai district

The new scheme with smart cards has been introduced to avoid middlemen and would help the beneficiaries to draw from the bank whatever amount they needed

Madurai: Smart Card scheme that would enable beneficiaries of various social welfare schemes such as old age and destitute pension to draw the money from banks was launched in the district, reports PTI.

The objective of the scheme was to implement welfare schemes in the 'best possible way' and avoid middlemen, district collector U Sagayam said launching it at Shivarakottai near Tirumangalam, about 30 km from here.

Hitherto, old age pension was sent through Money Order and the beneficiaries had to shell out some money for receiving their pension from the postman.

The new scheme had been introduced to avoid middlemen and would help the beneficiaries to draw from the bank whatever amount they needed.

It was being introduced in villages with more than 2000 population, where bank facility was not available. The scheme would be initially launched in 22 villages and extended to all 160 villages where the population was more than 2000, the collector said.

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'Received info on money held in overseas bank accounts'

The government received a number of cases of information relating to remittances, payments and money held in foreign bank accounts

New Delhi: The government has received a number of cases of information relating to money held in foreign bank accounts, Minister of State for Finance SS Palanimanickam said, reports PTI.

"The government has received a number of cases of information relating to remittances, payments and money held in foreign bank accounts under the provisions of the Double Taxation Avoidance Agreements (DTAA) and Tax Information Exchange Agreements (TIEA)," Mr Palanimanickam said in a written reply to the Rajya Sabha.

He was responding to a question on whether government has received details regarding 9,900 persons who have deposited black money in foreign banks and whether the government is investigating those persons.

Every reliable information, including information received from outside the country, Palanimanickam said "is verified according to the provision of Direct Tax laws and action is taken to being undisclosed amounts to taxation".

He said the tax department levies penalty in cases of concealment and in appropriate cases, initiates prosecution proceedings.

To another question on the amount of black money confiscated during the last two years, Mr Palanimanickam said the Income Tax department has seized assets worth Rs905.61 crore and Rs774.98 crore in the 2011-12 and 2010-11 fiscal, respectively.

"The Income Tax department takes constant action against tax evasion including tax scrutiny, surveys, search and seizure under the Direct Tax laws," Mr Palanimanickam said.

India currently has DTAA with 82 countries and TIEA with 17 jurisdictions.

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