Bank of America (BAC) claims it will provide all $8.5 billion in robo-signing settlement relief within one year of signing it.
"The agreement term is 36 months, yet within the first year, we believe we will reach or exceed all program targets under the agreement," a bank spokesman said.
BofA committed to providing $7.6 billion in relief through modifications, short sales, forbearance and other options. The bank must refinance another $948 million in mortgages for eligible borrowers.
The first report from the complete $25 billion settlement with the 49 state attorneys general showed BofA did a majority of the short sales completed under the settlement so far, but it had completed no principal write-downs as of June 30.
But the bank completed 3,823 modifications that included some principal reduction in the last two months for a total of $596 million in write-downs, according to data last updated August 21 the bank made available to HousingWire.
Another 15,878 principal reduction workouts are in the trial stage.
BofA so far prefers short sales, which requires the bank to waive the difference between what the home sells for and the unpaid principal balance on the loan.
If the servicers don't meet all the relief targets within 36 months, there will be additional penalties from the Federal Reserve and the Office of the Comptroller of the Currency. These regulators tied $1 billion in fines from consent orders signed with the same servicers in April 2011 to any relief not provided under the wider settlement within three years.
There's added incentive to complete the relief within the first year. For every dollar of principal reduced, an extra 25 cents of credit is granted toward the promised amount.
So, the $596 million in reductions so far could be equal to, at most, $745 million in credit.
But this is assuming all reductions are done on BofA portfolio mortgages, which remains in the dark. Write downs on loans bundled into private securities would get 70 cents (45 cents plus the 25 cent bonus in the first year) credited toward the promised relief.