BofA will reduce loans for 200,000 underwater mortgages

Updated 2d 18h ago
NEW YORK (AP) – Bank of America is providing mortgage relief to about 200,000 homeowners whose home values have fallen below what they owe on their mortgages.
Bank of America will reduce the amount owed by the homeowners as much as $100,000 in some cases. Only mortgages currently owned by Bank of America will qualify. Those owned by government entities Fannie Mae and Freddie Mac, or backed by the Federal Housing Administration will not be eligible.
The move will help the bank reduce the amount of penalties it owes to the government's Housing & Urban Development agency by $850 million.
Those penalties were ntry to resolve investigations into abusive home lending and fraudulent foreclosure practices.
About 11 million American households are "underwater" on their mortgages, meaning they owe more than their homes are worth. The settlement with five mortgage lenders is expected reduce loans for only about 1 million of those homeowners and send checks to others who were improperly foreclosed upon.
Of the five major lenders, Bank of America's penalties were the highest: $11.8 billion.
The settlement closed one painful chapter of the financial crisis, when home values sank and millions edged toward foreclosure. Lender abuses exacerbated the crisis. Many companies processed foreclosures without verifying documents. Some employees signed papers they hadn't read or used fake signatures to speed foreclosures, a practice known as robo-signing.
In the fall of 2010, Bank of America along with other large lenders temporarily halted foreclosures because of the furor over robo-signed documents.
Details of Bank of America's and other mortgage lenders' plans to help homeowners as part of the settlement will be contained in court documents expected to be filed Friday.
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