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Bank of America Reaches Record $17 Billion Mortgage Settlement, Will Help with Loan Modifications an

Bank of America Settlement

The settlement will provide a penalty to be paid to the government, as well as financial relief to homeowners with troubled mortgages. The penalty will be $9.65 billion, and approximately $7 billion more will be provided to help consumers with mortgage issues. Homeowners are expected to be provided with loan modifications or principal reductions. Bank of America will also provide funding to raze dangerous or abandoned foreclosed properties.

Although no criminal charges have been filed against Bank of America executives — a source of criticism against government prosecutors —  the settlement does not preclude further criminal action against bank leaders. In fact, criminal charges are reportedly being brought against the founder of now-defunct Countrywide, Angelo Mozilo, who has become a representative of the wild-west style lending that went on during the early 2000’s before Countrywide was bought by Bank of America.

The settlement is dwarfed by the amount that Bank of America has paid in legal fees related to bad mortgages it handles, as it has reportedly paid over $70 billion in legal fees to its attorneys.

The mortgage settlement is the largest that the Department of Justice has ever reached with a single entity.

In a public statement, the government said that it hopes to benefit “hundreds of thousands of Americans” with mortgage problems, such as people who are trying to obtain mortgage loan modifications. This could include modification programs like the Home Affordable Modification Program (HAMP), other in-house loan modifications, or principal reductions.

Here is the press release from the Department of Justice.

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