Bank of America reduces mortgages by $155.6 million in Nevada, $4.5 billion in U.S.

Bank of America Corp. has provided some $15.8 billion in mortgage relief to 164,000 customers under a landmark settlement with state and federal officials that took effect in February, a bank official said Wednesday.

Bank of America, which acquired troubled lender Countrywide Financial in 2008, owes the most out of the five banks that agreed to a $25 billion deal to assist struggling homeowners and fraudulent mortgage servicing activities in Nevada and nationwide.

In Nevada, the bank through September has completed or approved $155.6 million in principal reduction offers on first mortgages. More than 850 Nevada homeowners have been approved for trial modifications or converted to permanent modifications in the principal reductions.

"We are cautiously optimistic with Bank of America's progress on the settlement," said Nevada Attorney General Catherine Cortez Masto.

The settlement with Bank of America and four other large banks - Ally Financial Inc., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo Co. - resolved state and federal investigations related to questionable foreclosure practices.

In a statement, J.P. Morgan Chase said it has approved or completed $3 billion in first lien modifications for nearly 30,000 homeowners. Those modifications have reduced customers' principal balance by an average of $97,000.

Chase's share of the settlement is $5.3 billion, of which the bank paid $1.1 billion in cash.

The three other banks did not release quarterly reports on Wednesday.

Through September, the nation's second-largest 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 foreclosures.

It provided $847 million additional relief through other programs, the bank said.

"We have really strong momentum in what we delivered in the September report," Eric Telljohann, senior vice president with Charlotte, N.C.-based Bank of America, said in a conference call with reporters. "That momentum is not slowing down, in fact it's accelerating."

Telljohann said the bank is on track to meet its obligations within the first year of the three-year agreement. He said under the first-lien mortgage modification program, 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.

Telljohann said providing payment relief "benefits both parties."

The National Mortgage Settlement credits banks for principal reduction, short sales, and other consumer relief, but the credits are not dollar for dollar. That's why Bank of America's $15.8 billion in relief so far is only about half of its required $7.6 billion under the settlement.

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 complete modification, the bank said.

Bank of America has shown less progress in reducing interest rates for borrowers who have been making on-time payments but have limited or no equity in their homes, saying its priority was to focus on "customers at greatest risk of foreclosure."

Through September, the bank has assisted 1,000 customers with $250 million in unpaid balances through the rate relief program.

The five banks filed quarterly report on Wednesday to the settlement's monitor, former North Carolina state banking Commissioner Joseph Smith, who will file a report compiling the data.

Contact reporter Chris Sieroty at
csieroty@reviewjournal.com or 702-477-3893.
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