B of A Reaches $15.8B in Mortgage Relief Under Settlement Terms
The FHA Condos Approval Company, Inc.
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Bank of America announced it’s on track to fulfill consumer relief requirements as part of the national mortgage settlement within the first year of the three-year agreement.
So far, the bank has completed or approved $15.8 billion in consumer relief for about 164,000 homeowners as of September 30.
While the bank is required to offer more than $7.6 billion in consumer relief, the credit is not given dollar-to-dollar. Thus, the actual gross amount of relief would be much higher than the actual amount credited, the bank explained during a conference call Wednesday.
One form of consumer relief offered through the settlement is first-lien principal forgiveness, which B of A has offered to 30,000 customers, leading to $4.75 billion in principal reductions.
On average, nearly $150,000 in principal balance is reduced through the program and monthly mortgage payments are lowered by about 35 percent.
During the call, Eric Telljohann, B of A SVP, revealed roughly 60 percent of the first-lien reductions were applied to investor portfolios, while 40 percent went to the bank’s own portfolio.
When determining who qualified for the principal reduction program, Telljohann says the bank took all borrowers who were eligible in the bank’s portfolio as of January 31, 2012, and added, “it was a matter of delegated authority from the investor.”
Since the borrowers who receive a principal reduction are delinquent and underwater, Telljohann explained the modifications are both good for the borrower and the investor.
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B of A Reaches $15.8B in Mortgage Relief