Greg LammStaff Writer- Puget Sound Business JournalEmail | Twitter
A total of 4,466 Washington state borrowers have benefited so far from Bank of America’s national mortgage relief settlement.
That’s part of the overall $15.8 billion in mortgage relief Bank of America says it has extended to struggling borrowers in the U.S. That sum includes $4.75 billion in principal reduction for 30,000 customers.
Through Sept. 30, Bank of America says it has provided $373.7 million in relief to 4,466 borrowers in Washington.
According to research by Seattle-based real estate site Zillow, 34.2 percent of Seattle homeowners are underwater on their mortgages and owe more money than their homes are worth, a mark that is improving but remains high.
Bank of America (NYSE: BAC) is assisting struggling home mortgage customers in a variety of ways that include reducing the principals, forgiving second liens, allowing borrowers to conduct short sales to avoid foreclosure and cutting loan interest rates.
In February, five of the nation’s largest banks — including Bank of America, Wells Fargo (NYSE: WFC) and JPMorgan Chase & Co. (NYSE: JPM) — struck a deal with federal regulators and 49 state attorneys general. The deal included a $25 billion settlement in response to charges that the banks engaged in robo-signing and other fraudulent activities related to originating and servicing mortgages.
Washington state’s share of the landmark $25 billion agreement involving the nation’s biggest mortgage lenders will be about $648 million.
Much of Bank of America’s problems in this area can be traced back to 2008, when North Carolina-based Bank of America acquired troubled lender Countrywide Financial, making it the owner of Countrywide’s troubled mortgage portfolio.
Despite BofA’s national settlement aimed at assisting borrowers, legal fallout from the Countrywide deal persists.
In October, Seattle’s Washington Federal sued Countrywide Home Loans and Bank of America over a bundle of home mortgages worth millions that the Seattle bank says are riddled with problems, including a lack of documents verifying borrowers’ income.
In the lawsuit, filed in federal court in Seattle, Washington Federal (NASDAQ: WAFD) said it would not have purchased the loans from Countrywide if it had known they were troubled.
Greg Lamm covers banking & finance and law for the Puget Sound Business Journal.