Bank of America Announce Plans To Forgive Mortgage Loan Principal

Bank of America (NYSE:BAC) announced plans to start forgiving mortgage loan principal for troubled homeowners that owe more than 120% of their home's value or for those who are battling "negative amortization" loans, according to a Reuters report.

The bank pledged to offer an "earned principal forgiveness" of up to 30% in two stages.

Bank of America will first offer an interest-free forbearance of principal that the homeowner can turn into forgiven principal annually over five years. It will allow a homeowner to bring the loan value back down to 100% of the home's value over five years.

A spokesperson for the bank declined to comment on the matter.