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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.

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Comments [3]

suki

Alex - my thoughts EXACTLY. And let's get rid of the 421-a tax break while we're at it.

Aug. 22 2014 08:00 PM
Billy6 from Hudson Valley NY

The "too big to fail" concept is difficult to swallow, but has financial validity. However, the individuals involved in the shady dealings should be brought to justice.

I understand that the BOA deal with the Feds does not insulate individuals from criminal complaint. That would be welcome--although it is unfortunately very unlikely. In the end, criminal behavior is just treated like a poor business decision.

Aug. 22 2014 09:37 AM
alex

Developers do not need below market loans. People need below market mortgages. Again the rich commit the crimes and the rich get benefits from their crimes. The bankers and developers are in bed together. How could de Blasio and Schneiderman do this? de Blasio should be firm and say if you want to develop in NYC then X percentage must be affordable housing. Period. No incentives. NYC is a lucrative market. Developers are doing just fine without the incentives. Giving any part of the settlement to the wealthy developers makes them laugh all the way to the bank.

Aug. 21 2014 06:02 PM

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