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Lending

Florida homeowners get huge chunk of BofA settlement

Nearly 17,000 consumers helped

Florida
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Nearly 17,000 Floridians will receive an excess of $1 billion in relief from the Bank of America (BAC) record settlement with the Department of Justice, which is almost 14% of the total $7 billion that was allotted to consumer relief, according to the office of Florida Attorney General Pam Bondi.

Those eligible will receive relief in the form of first and second lien principle reductions and loan forgiveness.  

"Our office worked closely with Bank of America to ensure that Florida homeowners would be treated fairly in any settlement, and I’m pleased that Floridians will be receiving one-seventh of the overall consumer relief," Bondi said.  

The $16.65 billion settlement with the U.S. Department of Justice, certain federal agencies and six states was to resolve claims over toxic residential mortgage-backed securities, collateralized debt obligations and an origination release on residential mortgage loans sold to Fannie Mae and Freddie Mac.

The BofA settlement is also notable because it includes an admission of guilt by the bank. In many similar judgements, the banks neither admit nor deny the claims being settled.

However, homeowner advocacy groups complain that similar settlements do little to benefit those actually harmed by the subprime crisis.

In one such announcement today, from The Home Defenders League, the recent boom in the transfer of mortgage servicing rights came into play:

"Organizations representing struggling and “underwater” homeowners say that help from [the] $13 billion settlement with JPMorgan Chase has yet to arrive. And housing counselors and homeowners have not noticed any new waive of modifications. Rather, they say, Chase and other major banks seem to be seeking to get such loans off their hands by transferring servicing rights to newer mortgage companies not covered by major mortgage settlements."

To be sure, this has not gone unnoticed by the Consumer Financial Protection Bureau, which just this week expressed “heightened” concern over the “continuing high volume” of mortgage servicing transfers.

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