Bank of America initiated a policy of sending letters to thousands of homeowners in the United States, offering to forgive some on the principal balance for their mortgages by about $150,000 each.

The reduction for qualifying homeowners could total monthly savings of up to 35 % on mortgage payments, Bank of America said in the news release on Monday evening.

The main reduction offers from Bank of America Home Loans are the result of $25 billion settlement agreement trapped on tape with 49 state attorneys general and also federal authorities who had been investigating allegations of abuses over the handling of foreclosures.

“To the extent principal reduction along with modification tools allow us to turn mortgages headed for possible foreclosure into long-term performing loans, it will be positive for homeowners, mortgage investors and communities,” Ron Sturzenegger, a legacy asset servicing executive, said within the statement.

The lender said it planned to contact a lot more than 200,000 homeowners who might be candidates for the offers, sending letters to a greater part of them through the third quarter in this year.

Being qualified for the key reductions, however, homeowners should meet certain criteria, including: having a loan owned or serviced by Bank of America; owing read more about the mortgage than their residence will be worth; and staying at least Sixty days behind on payments as of no more January.

Inside statement, the bank said hello had started making such offers in March with a narrower group of homeowners – individuals who were already along the way of seeking mortgage modification. The bank estimated that this earlier wave of trial reduction proposes to about 5,000 people could add up to more than $700 million in forgiven principal. But homeowners must carry out at the least three timely payments for the reductions to become permanent.