About $15.8 billion in mortgage relief is making its way to 164,000 Bank of America Corp (BAC.N) customers under a landmark settlement with state and federal officials, the bank said on Wednesday.
Bank of America, which acquired troubled lender Countywide Financial in 2008, owes the most out of five banks that agreed in February to a $25 billion deal to help struggling borrowers to settle accusations they pursued faulty foreclosures and misled borrowers who sought loan modifications.
The five banks are filing quarterly reports on Wednesday to the settlement's monitor, former North Carolina state banking commissioner Joseph Smith, who will later file a report compiling the data.
Smith's first report in August showed Bank of America lagging rivals in reducing loan balances for first-lien mortgage customers. It owes $11.8 billion in consumer relief and other payments.
Through September, the No. 2 U.S. bank by assets said it had approved or completed $4.75 billion in principal reduction for first-lien mortgage customers, provided $2.5 billion in home-equity loan relief and completed $7.4 billion in short sales or deeds-in-lieu of foreclosure. It provided $847 million more in relief through other programs.
Of the 30,000 homeowners who have been approved for first-lien modifications, about 5,800 have made their required three monthly trial payments and have converted to a completed modification, the bank said.
The Charlotte, North Carolina-based bank showed less progress in reducing interest rates for customers who are making on-time payments but have little or no equity in their homes, saying it focused first on customers more at risk of foreclosure.
Through September, the bank has assisted 1,000 customers with $250 million in unpaid balances through this program, but said it has ramped up activity in the program since then.
Banks only get partial credit for some types of relief such as short sales, so Bank of America has not yet fulfilled its requirements. On a conference call with reporters, Bank of America Senior Vice President Eric Telljohann said the bank is on track to meet the terms of the three-year agreement within the first year.
Under the first-lien mortgage modification program, Telljohann said about 40 percent of the loans came from the bank's own portfolio, while the rest were owned by investors who had given the bank permission to modify their loans.
The other banks in the settlement are JPMorgan Chase & Co (JPM.N), Wells Fargo & Co (WFC.N), Citigroup Inc (C.N) and Ally Financial Inc.
(Reporting By Rick Rothacker in Charlotte, North Carolina; Editing by Grant McCool)