TALLAHASSEE, Fla. – Aug. 22, 2014 – Nearly 17,000 Floridians will receive more than $1 billion in relief as part of a record-setting national settlement with Bank of America, the Florida Attorney General’s Office announced Thursday.
Bank of America Corp. agreed to pay $16.65 billion to end federal, Florida and other state investigations into the sale of toxic mortgage securities during the subprime housing boom. The settlement includes $9.65 billion in fines and $7 billion in aid to communities and homeowners hit hard by the housing market crash that triggered the Great Recession.
“This historic resolution – the largest such settlement on record – goes far beyond ‘the cost of doing business,'” Attorney General Eric H. Holder Jr. said in describing what he called “pervasive schemes to defraud financial institutions and other investors.”
Details are still being worked out on who in Florida will receive the aid and how much, said Attorney General spokesman Whitney Ray. “Programs are being set up to inform eligible borrowers,” he said.
The consumer relief will include principal reduction and forgiveness, loan modifications and new loans to credit-worthy borrowers struggling to get a loan, Ray said. There also will be financing for affordable rental housing and donations given to help communities still recovering from the financial crisis, he added.
Overall, Florida will receive about a seventh of the settlement’s $7 billion in aid to communities and homeowners hit hard by the housing market crash, estimated Jana J. Litsey, Bank of America deputy general counsel, in a letter to Florida Attorney General Pam Bondi.
Most of the toxic loans that backed the securities came from firms BofA acquired in 2008, including Countrywide Financial Corp. of Calabasas and Wall Street investment bank Merrill Lynch & Co.
BofA already had incurred about $60 billion in losses and legal settlements from the purchase of Countrywide, which was one of the nation’s biggest subprime mortgage lenders during the housing boom of the mid 2000s.
Copyright © 2014 the Sun Sentinel (Fort Lauderdale, Fla.), Donna Gehrke-White. Distributed by MCT Information Services.