May 23, 2009

BofA: Mortgage holders get $823M in relief

Troubled U.S. homeowners could save up to $823 million from a predatory lending settlement reached this week with Bank of America, state officials say.

Under the terms of the deal, Bank of America neither admitted nor denied wrongdoing but agreed to modify the terms of 390,000 subprime and option ARM mortgages originated by Countrywide Financial Corp., which was acquired by BofA last year, The Wall Street Journal reported.

The bank has so far modified 50,000 of the mortgages, a report provided to state attorneys general in California, Florida, Illinois and elsewhere this week indicated. They had sued BofA saying Countrywide's marketing and sale of such risky mortgages constituted predatory lending, the Journal said.

Subprime and option ARM mortgage holders with modified plans are saving an average of $195 per month in principal and interest payments, with biggest savings reportedly going to option ARM holders at $311 per month, Bank of America says.

The Journal said BofA has reported that 11,000 borrowers and tenants living in foreclosed buildings who didn't qualify for its loan modification efforts have collected $22.4 million in relocation assistance.