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BofA settlement: What’s in it for you?

By Polyana da Costa · Bankrate.com
Thursday, August 21, 2014
Posted: 3 pm ET

Bank of America has reached a $17 billion agreement with federal and state regulators to settle investigations over faulty mortgage-backed securities sold before the 2008 financial crisis.

About $7 billion in the settlement will go to consumers "harmed by the financial crisis precipitated by the unlawful conduct of Bank of America, Merrill Lynch and Countrywide," according to the Department of Justice.

The relief will be delivered as principal reductions and loan modifications for homeowners who are underwater on their mortgages. It will also include new loans to borrowers struggling to get a loan and financing for affordable rental housing.

Who gets what and when?

Mortgages serviced by Bank of America but owned by Fannie Mae and Freddie Mac will not be eligible for assistance. Only loans held in Bank of America's portfolio will be considered.

The bank plans to determine eligibility and identify the customers in the coming weeks, says Dan Frahm, a spokesman for Bank of America.

"We will begin to contact customers proactively in the fourth quarter of the year," he says.

The consumer portion of the settlement will be subject to oversight by an independent monitor. Bank of America has until August 2018 to complete this part of the settlement.

Frahm says additional information about eligibility is not available now, but consumers who have questions about the settlement and their loans can call Bank of America at (877) 488-7814.

What's in it for regulators and investors?

The cash portion of the settlement, about $9.65 billion, will be paid to settle federal and state civil claims related to residential mortgage-backed securities.

“Bank of America failed to make accurate and complete disclosure to investors and its illegal conduct kept investors in the dark,” said Rhea Kemble Dignam, regional director of the SEC’s Atlanta office.  “Requiring an admission of wrongdoing as part of Bank of America’s agreement to resolve the SEC charges filed today provides an additional level of accountability for its violation of the federal securities laws.”

The Department of Justice claims this is the largest settlement the department has reached with a single company.

But is this settlement enough?

Not according to Bartlett Naylor, financial policy advocate at Public Citizen’s Congress Watch division.

"Bank of America managers are at the center of the mortgage fraud, but the Justice Department penalty will essentially fall on shareholders who certainly were not conspirators," Nayolor says.  "The corrupt culture of Wall Street won’t be reformed until perpetrators are held accountable.”

 

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20 Comments
Marie
August 22, 2014 at 1:32 pm

Bank of American sold my home while it was in modification

Sold4mths Ago
August 22, 2014 at 1:17 pm

SO, BOA you knew what was going down when you sold our loan 4 months ago, after reviewing (dumping our docs)our modification packet for 2+ years and 7+ submissions of the same documents (updated pay statements). As my grandbaby would say "NOT NICE"!

Ann
August 22, 2014 at 1:16 pm

What I do think is the innocent people who lost their mortgage companies due to the banks failures and are now in bankruptcy and lost everything, should at least have their tax woes dissolved. They are the ones who paid for all this mess, and have been paying for it for many years. They should receive the benefit of at least having that weight taken from them.

W. C. Brown
August 22, 2014 at 1:08 pm

My wife and I originally had a "Home loan" with "Countrywide Bank" which caused a lot of grief us financially. And we have since discovered that this type of loan would be considered a predatory loan due to the high and fluctuation of interest rates.

We were forced to refinance to get out of that situation and save our home, with the one bank at that time that would refinance us "Bank of America"!!

Now we find out that we got out of the frying pan only to wind up in the fire!

Is there any relief or help for people like us who have gotten this type of predatory loan from two different companies or sources? Which as it appears now, they were working together as a tag team after all?

W. C. Brown
August 22, 2014 at 1:06 pm

My wife and I originally had a "Home loan" with "Countrywide Bank" which caused a lot of grief us financially. And we have since discovered that this type of loan would be considered a predatory loan due to the high and fluctuation of interest rates.

We were forced to refinance to get out of that situation and save our home, with the one bank at that time that would refinance us "Bank of America"!!

Now we find out that we got out of the frying pan only to wind up in the fire!

Is there any relief or help for people like us who have gotten this type of predatory loan from two different companies or sources. Which as it appears now, were working together as a tag team after all?

RichP
August 22, 2014 at 12:19 pm

What about consumers who had their mortgages "sold" by BOA to underhanded mortgage companies? Do you have any idea how many of these predatory loans they got rid of? Really? The consumer gets it again!

2cents Worth
August 22, 2014 at 11:58 am

The (877)488-7814 # is automated & can only help those who still have a mortgage with BOA. Try (800)285-6000 ask for CustService to ask questions if you paid your mortgage off. The standard response you'll be told is that the Bank will be contacting everyone with-in 90 days of settlement who had a mortgage with them prior to 2008 whether it was paid off or not. Don't hold your breath. Take action today by consulting your attorney & senator's office.

CONFEY MALDONADO
August 22, 2014 at 11:52 am

BANK OF AMERICA DID THIS TO ME WITH A LOAN FOR ME TO GO TO TRUCK SCHOOL THEY SOLD MY LOAD TO ANOTHER BANK AND JUST ABOUT A THREE YR. AGO THEY SOLD MY MORTGAE TO M&T BANK,THAT HOW THEY ARE ...........LATER IN THE WIND ..........

Russell
August 22, 2014 at 11:49 am

Another B of A manipulation.

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