Bank of America (BAC) is nearing the halfway point in delivering on its $7 billion promise of consumer relief required as part of its $16.65 billion settlement with the U.S. Department of Justice, certain federal agencies and six states 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.
According to a report from Eric Green, the independent monitor of the settlement agreement, Green conditionally approved $2,148,067,798 worth of credit for consumer relief in the second quarter of 2015.
Added to the credit validated earlier, the amount of credit conditionally approved equals $3,338,407,184, or 48% of the required $7 billion.
Bank of America began delivering its required consumer relief earlier this year, and is required to complete the delivery of the $7 billion in relief by Aug. 31, 2018.
According to Green, Bank of America is well on its way to substantially beating that deadline.
“With what is in the pipeline for the next quarter, I expect to be able to report that Bank of America should be nearing the homestretch, well ahead of the four-year deadline for completion,” Green said.
According to Green’s report, more than $1.7 billion of the credit approved in the second quarter was for modifications of 9,671 loans.
Another $186 million was for extending 16,231 new home loans to low- and moderate-income borrowers, borrowers in Hardest Hit Areas – as designated by the Department of Housing and Urban Development – and borrowers who lost their homes to foreclosure or short sales.
More than $116 million of the approved credit was for 123 donations to funds for community development and legal assistance and to HUD-approved housing counseling agencies. More than $133 million was for 14 subordinated loans to facilitate construction of affordable low-income rental housing.
Green said the relief appears to be reaching its targets and making a difference.
According to Green’s report, principal forgiveness granted under the first-lien loan modifications – the largest category of intended consumer relief – has reduced the average loan-to-value ratio to 76% from 180%; more than halved the average interest rate to 2.14% from 5.47%; and cut the average monthly payment by 38%.
Of the 2,300 affordable rental housing units supported by the subordinated loans, 71% are for HUD-designated Critical Needs Family Housing.
More than 56% of the loan modifications to date are in Hardest Hit Areas, Green’s report showed.
“The point of the consumer relief obligations under the settlement agreement is to make it easier for homeowners to build equity and stay in their homes and to make it less of a struggle for low-income families to find affordable housing,” Green said. “On both those counts, the relief is having an impact.”