""Bank of America"":https://www.bankofamerica.com/ announced it's on track to fulfill consumer relief requirements as part of the ""national mortgage settlement"":http://nationalmortgagesettlement.com/ within the first year of the three-year agreement.
[IMAGE]So far, the bank has completed or approved $15.8 billion in consumer relief for about 164,000 homeowners as of September 30.
The bank is required to offer more than $7.6 billion in relief through first and second lien modifications and foreclosure avoidance solutions, but 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 BofA 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, BofA 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.
[COLUMN_BREAK]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.
""We always are evaluating to make sure we have a win-win…that both parties benefit,"" Telljohann said, further stating it is BofA's belief that ""by providing this payment relief, we are preventing a foreclosure from happening.""
However, Chris Katopis, AMI's executive director, views the settlement as being harmful to investors.
""Many of us expected a settlement to hold servicers responsible for their misconduct; not a bank bailout settling with other people's money,"" he said in an emailed statement.
In addition to principal reductions, the bank announced it has provided 62,000 borrowers with short sales or deeds-in-lieu of foreclosure.
Interest rate relief is another option offered by the bank. As of September 30, about 1,000 interest rate reductions have been completed. Rates are reduced to 4.25 percent and are offered at no cost for eligible borrowers who are current, but have a loan-to-value ratio above 80 percent.
In addition, the bank has offered more than $2.4 billion in assistance to second lien holders through equity debt elimination and extinguishment of the lien. So far, about 43,000 customers received second lien forgiveness, which averaged to about $56,000 in relief.
Under the settlement terms, BofA was required to implement more than 300 servicing standards. The bank announced it is in compliance with those servicing standards.