BOSTON, March 17, 2017 /PRNewswire/ -- Independent Monitor Eric D. Green reported today that Bank of America, nearly two years ahead of schedule, has completed its obligation to provide $7 billion worth of consumer relief under its historic August 2014 settlement with the U.S. Department of Justice and six states.
In his eighth and final report on Bank of America's performance under the settlement agreement, Professor Green approved an additional $37.8 million of credit for consumer relief in the third quarter of 2016. That amount, together with $163.6 million of credit earned by the Bank for reaching certain incentive milestones built into the settlement, put Bank of America over the finish line with a total of $7,005,373,353 of credit earned.
Certifying Bank of America's successful completion of its settlement agreement obligations, Professor Green said, "We can't turn back the clock or pretend that the financial crisis didn't wreak havoc on millions of American homeowners, but it appears that the Bank's consumer relief did further the settlement agreement's principle goal of helping struggling homeowners remain in their homes and communities still reeling from the effects of multiple foreclosures and abandoned homes."
Professor Green also reported that implementation of the settlement was successful in directing most of the Consumer Relief to those who needed it most. He reported that "the bulk of the consumer relief – accounting for more than $5.3 billion in credit – came in the form of mortgage loan modifications, including forgiveness of principal, reduction of interest rates and outright extinguishment of debt." Moreover, Professor Green reported, "Over 53 percent of the loan modifications were in Hardest Hit Areas, or areas identified by the U.S. Department of Housing and Urban Development as part of Distressed Census Tracts."
The final credit total was attributable to 134,990 creditable actions, such as modifying mortgage loans to make them more affordable, making new loans to low-and-moderate income first-time homebuyers, and financing construction of new affordable multi-family housing projects.
Loan modifications and new loans were directed broadly across the country, to every state and the District of Columbia, and to 117,989 census blocks. In addition, 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.
Most importantly, according to Professor Green, the data indicate that modifications for first-lien principal reductions - the largest piece of consumer relief - had their intended effect. The average principal reduction was more than 50 percent, the average loan-to-value ratio was reduced from 176 percent to 75 percent, the average interest rate was cut from 5.4 percent to 2.1 percent, and, critically, the average mortgage payment was reduced by almost $600 a month – more than 37 percent.
Recognizing that more was required than financial assistance to individuals and affordable housing developments, the settlement agreement also provided for resources to be directed to local organizations and legal assistance programs to help stabilize neighborhoods and provide foreclosure-prevention assistance and other housing-counseling activities. Though representing only a small portion of the total consumer relief – well under 1 percent of the total settlement – these funds helped to remedy the effects of the mortgage crisis felt by communities as a whole, including residents who are not Bank of America borrowers.
In a more detailed analysis of where the assistance went, Professor Green looked in particular at such major metropolitan areas as Atlanta, Ga., and Las Vegas, Nev., identified as especially hard hit by the mortgage crisis. As of 2014, 35 percent of homes in Atlanta and Las Vegas remained "underwater," meaning that people owed more on their mortgages than the market value of their homes. Professor Green found that the consumer relief – $128 million worth of loan modifications to Atlanta and $97 million to Las Vegas – "provided substantial assistance to communities and homeowners that were still hurting."
To ensure that the relief was delivered as the participating parties intended, Professor Green and his team of legal and finance professionals devised a technically complex review process to "score" Bank of America's credit claims against the criteria set out in the settlement agreement.
In certifying Bank of America's completion of its Consumer Relief obligations under the settlement, Professor Green said, "We have been detailed, diligent, and exacting in ensuring that the Bank only received credit strictly for which it was entitled. My professionals and I have determined that Bank of America's submissions and calculations for its consumer-relief credit are correct, and that the Bank has complied with all the terms of the Settlement Agreement."
The Monitor's March 17 Final Report and an interactive map showing exactly where the consumer relief was directed, are available on the Monitor's website at: http://bankofamerica.mortgagesettlementmonitor.com/. The website provides further details about the settlement, contact information for Bank of America, the DOJ, the attorneys general of the six participating states, HUD, Fannie Mae, Freddie Mac and the Financial Fraud Enforcement Task Force, plus information for homeowners who want assistance but do not know where to get it or cannot afford it.
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