CALABASAS, Calif.--(BUSINESS WIRE)--Bank of America completed or approved a total of $15.8 billion in consumer relief for about 164,000 homeowners as of September 30 through programs established under the National Mortgage Settlement. Quarterly progress reports from all five banks involved in the agreement with federal and state governments will be filed today with participating state attorneys general and the federal program monitor.
Bank of America’s performance across all programs reflects significant gains during the third quarter, and the bank reinforced that it is on track to meeting its total financial obligations within the first year of the three-year agreement. Progress across consumer relief programs through September 30 includes:
- First-Lien Principal Forgiveness - 30,000 customers were approved or had completed first-lien modifications providing $4.75 billion in principal reduction. Additionally, $230 million in pre-settlement forbearance has now been completely forgiven.
- Home Equity Relief - Nearly 45,000 customers had received a qualifying modification or complete extinguishment of a home equity loan or line of credit, totaling $2.5 billion in relief.
- Other Programs - More than 62,000 customers have completed qualifying short sales or deeds-in-lieu of foreclosure, providing a total of $7.4 billion in relief from unpaid principal balances on the loans. In addition, the bank provided an additional $617 million combined in enhanced relocation assistance and pre-settlement deficiency waivers.
- Interest Rate Relief – In implementing the settlement programs, Bank of America’s priority was to establish traction with first-lien and home equity forgiveness programs to assist customers at greatest risk of foreclosure. With momentum now built in these programs, the bank is quickly ramping up activity on its interest rate reduction program for borrowers who are making on-time payments but have limited or no equity in their homes. As of October 31, 23,000 homeowners – more than half of the bank’s estimated eligible population - have been offered this assistance. The majority of this activity has occurred since the end of September and, as a result, will be reflected in completed rate reductions in future quarterly reports. Through September 30, approximately 1,000 rate reductions were completed, providing interest rate relief on loans representing nearly $250 million in unpaid balances.
Bank of America customers in all 50 states have received assistance from the settlement programs, with the largest numbers of customers benefiting to date residing in California, Florida, New York, New Jersey, Illinois, Maryland, Arizona and Nevada.
Principal reductions on first liens
Of the 30,000 homeowners approved for offers of first-lien principal reduction, nearly 5,800 had completed their required three monthly trial payments and converted to a completed modification as of September 30. About 85 percent of those approved for trial plans are successfully completing the process.
The program is resulting in an average of nearly $150,000 in reduced principal balance and 35 percent reduction in monthly payments.
Bank of America is offering principal reductions on loans it owns and services, as well as loans it services for other mortgage investors under delegated authority agreements. Fannie Mae, Freddie Mac, FHA, VA are not participating in the principal reduction program.
Second-lien extinguishments and modifications
The overwhelming majority of assistance to second-lien holders – more than $2.4 billion of the $2.5 billion total in home equity relief through September 30 – has been provided through home equity debt elimination and extinguishment of the lien, releasing any claim to the mortgaged property. The average financial relief provided through lien extinguishment to about 43,000 customers is more than $56,000.
About 1,400 additional loans that did not meet the parameters of the extinguishment program have been modified, reducing the balances owed by a total of $100 million.
The second-lien extinguishment and modification programs are intended to place the homeowners in an improved financial situation by reducing their monthly debt obligations and, potentially, help them regain equity in their property. Only loans that are both owned and serviced by Bank of America qualify for these programs under the settlement.
Interest rate reductions
Bank of America is providing interest rate reductions at no cost to qualified customers who have remained current on their first-lien mortgage payments but owe more than 80 percent of the value of their home today.
The bank’s process features rate reduction with no associated fees or costs and allows eligible homeowners to benefit from an expedited approval process with significantly reduced documentation requirements.
Currently, Bank of America is reducing the interest rate on qualifying loans to 4.25 percent. The individual modified rate will be offered on the basis of market rates in effect at the time the homeowner’s eligibility is confirmed. Bank of America estimates that eligible customers will realize nearly a 2 percent average reduction in rate, which may provide hundreds of dollars in savings on their monthly mortgage payments, depending on their principal balance and loan terms. The interest rate reduction program is available on loans that are both owned and serviced by Bank of America and meet certain other criteria.
Short sales and deeds-in-lieu
While Bank of America’s first goal is to keep customers in their homes, transition becomes the inevitable or chosen route for some customers. In these cases, Bank of America encourages consideration of a short sale or deed-in-lieu as alternatives to foreclosure because they are less disruptive for the borrower, have less negative impact on credit reporting and can benefit local housing market conditions.
Borrowers completing short sales or deeds-in-lieu may receive additional relief under the settlement through enhanced relocation assistance payments above $1,500 and permanent waivers of the deficiency amount.
More than 300 servicing standards were established in the settlement, covering loss mitigation, foreclosure and bankruptcy documentation and processes; third-party vendor oversight; restrictions on dual-tracking, and requiring a single point of contact, among other categories. Bank of America is in compliance with the requirements of all of the servicing standards.
Bank of America
Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving more than 55 million consumer and small business relationships with approximately 5,500 retail banking offices and approximately 16,300 ATMs and award-winning online banking with 30 million active users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to more than 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.
For more Bank of America news, visit the Bank of America newsroom.