What rate of return per month did the bank make on the


In an effort to avoid foreclosure proceedings on struggling mortgage customers, Bank of America proposed an allowance that a jobless customer make no payment on their mortgage for up to 9 months. If the customer did not find a job within that time period, they would have to sign over their house to the bank. The bank would give them $2000 for moving expenses. Assume John and his family had a mortgage payment of $2900 per month and he was not able to find a job within the 9-month period. If the bank saved $40,000 in foreclosure costs, what rate of return per month did the bank make on the allowance? Assume the first payment that was skipped was due at the end of month 1 and the $40,000 foreclosure savings and $2000 moving expense occurred at the end of the 9-month forbearance period.

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