By Brian Honea, The M Report, August 31, 2016
Having just passed the two-year anniversary of a then-record $16.65 billion settlement with the U.S. Department of Justice and six states over the sales of toxic mortgage-backed securities before the crisis, Bank of America is about 91 percent of the way toward fulfilling its consumer relief obligation under the terms of the settlement.
Professor Eric D. Green, Independent Monitor of the August 20, 2014 settlement, has conditionally approved an additional $1.93 billion in consumer relief credit during the first quarter of 2016, bringing the total of relief provided by Bank of America up to approximately $6.37 billion—about 91 percent of the $7 billion in consumer relief the bank agreed to provide.
The bank is on pace to fulfill the entire obligation well before the August 2018 deadline, according to Green.
“If Bank of America maintains its current pace in providing consumer relief, it will fulfill its obligations under the Settlement Agreement this year, well ahead of the four-year deadline,” Green said.
The majority of the consumer relief provided by Bank of America to date, $5.27 billion (about 83 percent) has gone toward home loan modifications to increase affordability. About $442 million (6.9 percent) of the relief has been in the form of loss-making loans to support affordable low-income rental housing; about $346 million (5.4 percent) has been in the form of new home loans to low- and moderate-income borrowers; and about $308 million (4.8 percent) has been in the form of donations to municipalities and non-profits to promote community reinvestment and neighborhood stabilization.
“If Bank of America maintains its current pace in providing consumer relief, it will fulfill its obligations under the Settlement Agreement this year, well ahead of the four-year deadline,” Professor Green said.
Green said about 53 percent of the loan modifications reviewed to date have been in the areas designated as Hardest Hit Areas by the government, indicating that the consumer relief appears to be going where the settling parties intended. A large number of those modifications have been on loans guaranteed by the FHA or VA. Additionally, more than 5,000 affordable rental housing units (68 percent for Critical Need Family Housing) are supported by 44 subordinated loans made at a loss to the bank, according to Green.
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