Banking

BofA has provided nearly 20% of the consumer relief required by 2018

Charlotte-based Bank of America is ‘off to a good start’ as it seeks to provide $7 billion in consumer relief to comply with a $16.65 billion settlement it reached with the U.S. government last year, the watchdog over the consumer relief portion of the accord says in a report out Friday. But it’s too early to draw firm conclusions about how the bank might dole out future aid, the watchdog said.
Charlotte-based Bank of America is ‘off to a good start’ as it seeks to provide $7 billion in consumer relief to comply with a $16.65 billion settlement it reached with the U.S. government last year, the watchdog over the consumer relief portion of the accord says in a report out Friday. But it’s too early to draw firm conclusions about how the bank might dole out future aid, the watchdog said. Bloomberg

Bank of America is nearly one-fifth of the way toward providing $7 billion in consumer relief required under a landmark settlement it reached last year over soured mortgages, a report Friday says.

The watchdog overseeing the Charlotte-based bank’s consumer relief efforts says he has given conditional approval to $1.18 billion reported by the lender during the first three months of this year. The findings were disclosed in the watchdog’s first quarterly report on the bank’s compliance with the consumer relief requirements.

In an interview with the Observer, the watchdog, Eric Green, a Boston-based mediator and former professor at Boston University School of Law, said Bank of America is “off to a good start” in providing the relief.

But, he cautioned, it’s too early to draw firm conclusions about how the bank might dole out future aid as it continues complying with the settlement, which was announced in August.

“I think the next two quarters will tell us a lot more,” he said.

During the first three months of this year, the bulk – or $1.08 billion – of the consumer relief reported by the bank came from forgiving a portion of balances on 2,938 home loans. The bank was also awarded credit for loans it made for affordable rental housing, as well as donations it made to community development, legal assistance and housing-counseling agencies.

In a statement, bank spokesman Dan Frahm said the watchdog’s report shows the bank is “extending meaningful relief to homeowners who, despite the economic recovery most Americans have felt, have continued to struggle financially.”

To date, the bank has been given credit for 3,038 mortgage modifications made nationwide, when factoring in 100 modified loans it submitted for credit last year to test whether the lender was properly seeking credit.

Of the total loans modified, 101 have been for North Carolina borrowers, the 10th-highest amount among states. In Mecklenburg County, modifications have been made on 21 loans. Friday’s report only names two other North Carolina counties receiving modifications – Cumberland, with 13, and Guilford, with 10 – for privacy purposes.

The largest amount of modifications, 620, have gone to Florida, which was among the states hit hardest by the housing crisis.

Although Bank of America forgave $412 million owed on the 3,038 loans, it was awarded the higher credit for meeting certain criteria. For example, the settlement’s terms allow the bank to be given extra credit for principal forgiveness made before Aug. 31.

The consumer relief is part of a $16.65 billion accord Bank of America agreed to last year to resolve government claims over toxic mortgage bonds sold in the run-up to the financial crisis. In reaching the settlement, the bank admitted that it, Countrywide Financial and Merrill Lynch took part in faulty mortgage-backed securities practices.

The bank has until Aug. 31, 2018, to provide all the consumer relief, which can take a variety of forms, from wiping up home equity lines of credit to making new home loans to low- and moderate-income borrowers.

For now, any approval of the bank’s compliance efforts is conditional, until the lender demonstrates it has fulfilled all of the settlement’s requirements, Green said.

  Comments