Bank of America has completed its legal settlement obligation with the Department of Justice to provide $7 billion in consumer relief nearly two years ahead of schedule.
The bank was credited with providing $37.8 million of consumer relief in the third quarter. Plus it received an additional $163.6 million of credit for reaching certain incentives to reach the target amount established in a 2014 settlement with the DOJ and six states. B of A needed to meet the terms of the settlement by August 2018.
Of the third quarter total, $36.1 million went for 3,606 loans to low and moderate income first-time homebuyers, borrowers in areas hardest hit by the housing crisis or borrowers who lost their homes to foreclosure or short sales.
More than three-quarters of the total relief provided was for loan modifications, at more than $5.3 billion. This included forgiveness of principal, reduction of interest rates and outright extinguishment of debt, Eric Green, the independent monitor for the settlement, said in a press release.
"Over 53% 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," he added.
Through these modifications, the average principal reduction was more than 50%, the average loan-to-value ratio was reduced from 176% to 75%, the average interest rate was cut from 5.4% to 2.1%, and the average mortgage payment was reduced by almost $600 a month or more than 37%.
"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," Mr. Green said.