Bank of America is the loan servicer for millions of mortgagees, including the many who had loans with Countrywide Home Loans before that company was acquired. This means Bank of America holds the mortgages of a sizable percentage of the homeowners who find themselves in trouble as a result of the current economic climate. Given these numbers, Bank of America is likely to be at the forefront when it comes to making loan modifications for mortgage holders who are behind on payments.

Bank of America will be working with a lot of homeowners through President Obama’s federal loan modification plan. Under this plan, the federal government offers incentives to banks if they restructure loans for homeowners who are having financial problems.

It is a win-win situation because the homeowner avoids foreclosure while the bank receives a bonus and gets to keep a loan customer. If you qualify for a loan modification, you will have a chance to lower your payments and possibly transfer your past due payments to the end of your loan period so your loan is brought current. There may also be an opportunity for you to change your interest rate. This is particularly beneficial if you have an adjustable rate or obtained your mortgage at a sub-prime rate.

Bank of American has requirements you will have to meet in order to qualify for a loan modification. The loan must be for your primary residence. The loan origination date must be before January 1st of 2009. The maximum amount of the loan balance should be less than $729,750. Since the idea of the new federal loan modification program is to lower the monthly payment below 31% of gross monthly income, in order to qualify your current payment must be 31% or above. You will have to provide documentation proving each of these aspects of your financial situation. In addition, you will have to provide documentation of your income showing that you can afford the new modified payment amount.

Once you have gathered all of your tax returns, pay stubs, bank statements and other financial paperwork you will be ready to approach the Bank of America loan officer about a modification. Although it may seem as if qualification is a very involved process, it can be worth taking the steps to see if you are eligible. If you do qualify, the loan modification may save your credit and your home.