Mortgage Lender to Aid Struggling Military Personnel
Under the Bank of America program to launch April 1, the nation's largest lender will offer service members two primary forms of assistance: partial home loan forgiveness and reduced mortgage interest rates.
Loan forgiveness will be provided to certain military borrowers whose homes are under water – meaning they owe more on the homes than those properties are worth. In a statement, Bank of America said it would consider reducing those home loan balances to the current market value of the properties.
Additionally, Charlotte-based Bank of America said it will lower to 4 percent the interest rates on home loans for some military personnel. That's an even better deal than the 6 percent interest rate provided by the Service Members Civil Relief Act.
Both active duty members and those leaving active duty are eligible for the bank's new program. But not all loans qualify; only those loans that are still held in Bank of America's portfolio – and that haven't been sold in the secondary market to investors.
"Our new Military Loan Modification Program builds on our long-standing commitment to the United States military forces and will help address the heavy burden of financial matters at home that can weigh on those who are protecting our freedoms," said Terry Laughlin, executive vice president for Bank of America.
"Military men and women face extraordinary circumstances, and they make unique sacrifices for all of us. For these reasons, we want this combination of tools to address their needs and help them when they need it most."
Indeed, observers say efforts like these - and other financial-help programs – are badly needed to help America's service members stay in their homes and avoid foreclosure.
Despite the 18 percent decline in the number of homeless veterans reported by the Veterans Adminstration, affordable housing is a big challenge for ex-military members.
"Over the course of a year, 200,000 veterans are homeless," says Christine Truhe, founder and Bonds of Courage, a Summit, N.J.-based nonprofit that provides educational, career and financial services to post 9/11 troops, veterans and their families.
Consequently, other groups are marshaling resources to also supply housing-related financial assistance and other economic aid to military personnel.
One such major effort, which will also launch in April, is the Yellow Ribbon Registry Network being spearheaded by a Florida-based non-profit agency called VeteransPlus.
Currently, when military members face financial difficulty – such as being behind on a house payment – they are frequently referred to databases such as the National Resource Directory, an online list of non-profits and other agencies who are there to assist military personnel with a range of issues.
The problem with such directories, however, is that they tend to be more like yellow-page or white-page listings of thousands of organizations.
So when a service member – or his or her spouse at home – hits an economic rough patch, they will often go online to apply for aid at one of these programs listed in the National Resource Directory and encounter a very time-consuming, labor-intensive process.
Individual applications – complete with a slew of identification forms, military orders, discharge notices, and other paperwork have to be emailed or faxed over and over again for each submission. Even more frustrating, after the process is completely, military personnel are often told that they don't qualify for a given program for one reason or another.
The Yellow Ribbon Network hopes to change all that.
Rather than serve as an just an aggregator, or listing of non-profits and other sources that offer housing and financial aid to military personnel, the Network will operate as a centralized source and clearinghouse where military members can fill out just one request for help and have their application quickly submitted to numerous entities. The result is a streamlined process that helps more readily connect those in need with programs offering support. Even individual citizens will be able to provide donations through the Network.
Col. David Sutherland, of the Joint Chiefs of Staff, sizing up the issue in a white paper called "The Sea of Goodwill: Matching the Donor to the Need," said the problem for so long hasn't been getting dollars to help military members. The problem is that up until now no one group has stepped up to efficiently coordinate the flow of these dollars to America's service members.
No doubt that financial need – especially for coordinated housing assistance – is particularly great.
There are roughly 60,000 non-profits nationwide that help active duty members and veterans. Nearly 50% of the dollars provided to those members of the military – via emergency assistance funds – are for mortgage issues, VeteransPlus officials say.
The growing housing and economic needs of military members help explain, in part, why VeteransPlus in 2010 serviced over 28,000 service members at 260 financial education seminars, workshops and events in 26 states, according to John Pickens III, Executive Director of VeteransPlus.
During those 260 events, "a lot of questions come up about mortgage issues" says Pickens, adding that "there are lots of credit challenges in the military community.
Credit and financial readiness is a sensitive issue in the military, Pickens explained, because: "If you have credit issues, you could be pulled from an assignment. You're also not promotable. And ultimately, you could be discharged."
For questions about Bank of America's soon-to-launch mortgage relief program contact the bank's customer service unit at 888-325-5357.
For more information about the upcoming debut of the Yellow Ribbon Registry, either to get financial and housing assistance or to register a nonprofit group's resources in the network, contact VeteransPlus at 888-488-8767.
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