Bank of America (BofA) says it has provided almost half of the relief it is required to give stressed borrowers under the national mortgage settlement and expects to provide 100 percent within the first year of the three-year settlement.
BofA, which got off to a slow start complying with the settlement, is now rushing to finish by the end of February – in part because banks get more credit toward their customer-assistance obligation for relief given in the first year, spokesman Dan Frahm tells the San Francisco Chronicle
Also, the law that waives income tax on certain types of debt forgiven on a primary residence expires at the end of this year, and there is no guarantee it will be extended. Borrowers who get principal reductions under the settlement before year-end will be certain to get the waiver if they qualify.
Under the settlement, the nation’s five largest mortgage servicers must provide a total of $20 billion in borrower, but When the monitor, Joseph Smith, issued his first report in August for the quarter that ended June 30, the banks as a group had made little progress; they had reduced only $750 million in first-mortgage principal.
BofA, which has the largest obligation, had done zero principal reductions.