New York Gets Creative With Its Slice of Bank Settlement
Thursday, August 21, 2014
Bank of America has reached a record-setting $16.6 billion civil settlement with the government over mortgage abuses that led to the financial crisis. The agreement includes $800 million for New York State. The money will be applied in some new and unusual ways.
For example, Bank of America is pledging to help with one of Mayor Bill de Blasio's goals — creating more affordable rental housing. The bank will make below-market-rate loans to developers of these homes, worth $125 million.
Bank of America is also pledging to donate abandoned properties to New York's recently-created land banks — which will either demolish or rehab them.
The settlement includes a minimum of $60 million in principal mortgage reduction for troubled homeowners, and for the first time, people with Federal Housing Agency-backed loans are eligible. According to State Attorney General Eric Schneiderman, nearly one in four distressed loans in New York is FHA-backed.
Schneiderman helped negotiate the settlement. It includes $500 million in targeted aid to homeowners and neighborhoods. About $300 million will go directly into state coffers.