Homeowners need to have missed at least two payments and owe at least 120 percent of their home's value. People who qualify could get 30 percent of their loans thrown out.
The program will first forgive mortgage principal and then reduce interest rates for people who qualify. While some experts are saying it could encourage other banks to do the same thing, others are more skeptical. But struggling homeowners are optimistic.
Mark Murphy lost his job as a building contractor and was unemployed for nearly a year. He's missed mortgage payments and is struggling to stay in his College Park home. Now his lender, Bank of America, announced a new program that could reduce his loan balance by as much as 30 percent.
"I am having a hard time. The banks are having a hard time. It would be a fair compromise," Murphy said.
Bank of America's plan is one of the boldest moves yet to help homeowners who are under water, owing more on their homes than they're worth.
"I'm very positive about it. Very encouraged," he said. "Right now we need to move forward and get out of this slump."
The Bank of America plan is limited to specific troubled borrowers. They must have missed at least two payments and be severely underwater to qualify. It's also limited to borrowers with certain types of risky loans, including sub-prime mortgages or other loans with a two-year adjustable rate.
"It does sound really good, but Bank of America has a horrible track record of modifying mortgages," attorney Matt Englett said.
Englett has helped hundreds of Central Floridians facing foreclosure and he calls the program a publicity stunt to improve Bank of America's image.
"Just based on their track record, I am extremely skeptical about whether or not they are actually going to do it," he said.
Murphy is also skeptical, but remains hopeful this program will keep him in his home.
"You have to try. If there is hope, you have to try," Murphy said.
The program goes into effect in May and Bank of America says 45,000 homeowners will qualify. A spokesperson could not tell WFTV how many of those homeowners are in Central Florida.