Bank of America , one of the five banks participating in a $25 billion settlement with the U.S. government relating to questionable foreclosure practices, will provide larger write-downs on customers’ mortgage balances as a quid pro quo for reduced penalties, the Wall Street Journal reports.
This side deal will enable Bank of America to reduce its penalties by almost $850 million while the mortgage dues of more than 200,000 debt-heavy borrowers could be significantly cut. Homeowners could now see their underwater mortgages at least achieve parity with current market values.
The write-downs would primarily address loans inherited by Bank of America from its acquisition Countrywide Financial Corp. The Bank suffered the most from the housing debacle, and is also saddled with paying the largest chunk of the $25 billion settlement — $11 billion.
Other banks participating in this settlement are Wells Fargo , JPMorgan Chase , Citigroup and Ally Financial Inc.
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