By DAVID STREITFELD and LOUISE STORY

Bank of America, under pressure to keep distressed borrowers from losing their homes, said Wednesday that it would begin forgiving some of their mortgage debt.

While limited in scope and by invitation-only, the program is a significant shift in efforts to assist the four million homeowners who are facing foreclosure. It comes as banks and the Treasury Department are under growing pressure from the Obama administration, lawmakers and community groups to stem the foreclosure tide.

With the housing market entering another period of stress, worries about foreclosure are compounded. As the volume of sales drops, prices start to slide as well. When the gap keeps increasing between the size of a mortgage and the value that the home could fetch from a buyer, owners tend to give up.

“Banks are willing to take some losses now to avoid much greater losses later if the housing market continues to spiral, and that’s a sea change from where they were a year ago,” said Howard Glaser, a housing consultant in Washington and a former H.U.D. official.

The Bank of America program is intended for owners who received loans from Countrywide Financial, the biggest and one of the most aggressive lenders during the housing boom. Bank of America bought Countrywide in 2008.

Bank of America executives said the program would work this way: A borrower owes $250,000 on a house now worth $200,000. Fifty thousand dollars of that balance would be moved into a special interest-free account.

As long as the owner continued to make payments on the $200,000, every year $10,000 in the special account would be forgiven until either the balance was zero or the housing market recovered and the borrower once again had positive equity.

“The time has come to test this sort of program,” Jack W. Schakett, who heads credit loss mitigation strategies at Bank of America, said in a briefing. “Modifications are better than foreclosure.”

That was the original notion behind the government’s modification program, which was originally touted as helping millions of borrowers but has resulted in permanently improved loans for less than 200,000. The program, which stresses reductions in interest rates, was criticized Wednesday by the special inspector general for the Troubled Asset Relief Program for over-promising and under-delivering.

By Brittany Dunn 

Preventloanscams.org was recently launched by HUD in partnership with the Loan Modification Scam Prevention Network, a national coalition of public and private enterprises led by the Lawyers’ Committee for Civil Rights Under Law. The Web site was created to provide homeowners with a single destination to report alleged scammers.

“Homeowners at risk of foreclosure can be easy prey for home loan modification scammers,” said John Trasviña, HUD assistant secretary for fair housing and equal oppportunity.

Trasviña said dishonest individuals often lure vulnerable homeowners into foreclosure rescue scams by making false promises, frequently claiming they can lower mortgage payments or stop the foreclosure process. Instead of receiving help, these troubled homeowners lose time and money, he explained.

Through Preventloanscams.org, complaints filed online are added to a national complaint database and are forwarded to the appropriate law enforcement center for review. In addition, HUD has directed its local fair housing and housing counseling grantees to begin reporting alleged loan modification scams via the Web site.

Before the launch of Preventloanscams.org, federal, state, and local government agencies could not share complaint data with nonprofit organizations. However, the new system allows for better analysis of trends across jurisdictional lines, which HUD says will likely lead to an increase in private enforcement action filings.

The network estimates that this online tool will assist approximately 50,000 homeowners affected by loan modification scams. Clearly, the creation of this national complaint database is a major step in the fight against loan modification scams.