Bank of America approved more than $4.75 billion in principal reduction offers on first mortgages under terms of the National Mortgage Settlement within the first five months of the new settlement.
30,000 homeowners were approved for trial modifications or made the required three monthly payments during that trail period, and converted to permanent modifications under the principal reduction program, as of September 30th.
Bank of America said their progress to date puts itself already in a good position in meeting its total obligations within the first year of the three-year agreement. Within the first year alone, Bank of America expects to have reached out to around 200,000 customers who are eligible to apply for a first lien principal reduction with letters requesting the limited documentation necessary to determine the permanent eligibility.
Initial results are in line with their expectations including more than 85% of borrowers successfully completed the trial process and qualified for permanent modification, monthly mortgage payments dropped by an average of 35% for customers who qualified for the program, and the average reduction in principal balance was more than $150,000 for customers who qualified for the program.
The bank has agreed to provide more than $7.6 billion in consumer relief through modifications of first and second liens and foreclosure avoidance solutions, such as short sales in order to meet the terms of the national settlement. However, under the agreement, the banks will not receive full dollar-for-dollar credit for all of the assistance provided to customers, therefore this does not tie in directly to the $4.75 billion mentioned above.