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Bank of America has conditionally fulfilled 97 percent of its obligation to provide $7 billion worth of consumer relief under its August 2014 settlement with the U.S. Department of Justice (DOJ) and six states, Eric D. Green, independent Monitor of the agreement, has reported.
Professor Green, in his seventh report on Bank of America's performance under the agreement, said that he and his professional staff conditionally approved an additional $449,827,010 of consumer-relief credit in the most recent reporting period, covering requests for credit that the bank submitted in July and August of 2016.
Together with previous submissions, the amount of credit conditionally validated totals $6,803,934,697, or 97 percent of the $7 billion obligation. The validation is subject, at the close of the bank's consumer-relief activities, to the Monitor's final determination and certification that the bank's efforts comply with all requirements of the settlement agreement.
"Based on credit testing that is underway, it appears that Bank of America is on target to fulfill its obligations under the settlement agreement this year, well ahead of the four-year deadline," Professor Green said.
The consumer relief appears to be going where the settling parties intended, Professor Green said. About 53 percent of all loan modifications to date have been in Hardest Hit Areas, with a large number of them directed at VA- or FHA-guaranteed loans. Hardest Hit Areas are census tracts identified by the U.S. Department of Housing and Urban Development as having high concentrations of distressed properties and foreclosure activities. Loan modifications and new loans have been directed to every state and the District of Columbia, and to 116,895 census blocks. More than 5,000 affordable rental housing units–68 percent for Critical Need Family Housing–are supported by 44 subordinated loans made at a loss to the bank.
According to Professor Green, the data show that modifications for first-lien principal reductions–the largest category of intended consumer relief–are significantly reducing the financial burden on recipients. The average principal reduction on modifications to date is more than 50 percent, the average loan-to-value ratio has dropped from 176 percent to 75 percent, the average interest rate has been slashed from 5.38 percent to 2.10 percent, and, critically, the average monthly payment has been reduced by $599 a month—more than 37 percent.
"This relief directly and materially assists homeowners struggling to afford to stay in their homes," Professor Green said.