Last August Bank of America agreed to a record $16.7 billion settlement with the Justice Department over their past mortgage practices. Part of the settlement also requires Bank of America to provide $7 billion in consumer relief over the next four years.
As this landmark settlement has faded from headlines questions regarding the payout of consumer relief have surfaced. Bank of America has told a number of borrowers that it intends to ‘forgive’ some loans that have been discharged in borrowers’ bankruptcies. But that debt has already been forgiven.
Our own Chip Parker, has been interviewed by The New York Times and had this to say on the issue: “Releasing a debt that has already been discharged is not in the spirit of the settlement. My concern is that the bank will use these cases to avoid having to give true principal reductions to people who need it.”
To date, seven of Chip’s own clients have received letters from Bank of American offering a total of $731,000 in forgiveness on loans involving bankruptcy.
Eric D. Green is the independent monitor charged with overseeing Bank of America’s performance under the settlement. He is responsible for validating the bank’s claims for credit under the consumer assistance part of the agreement.
According to the article by The New York Times Mr. Green, who has served as a court-appointed mediator and special master in hundreds of cases, said the bank had not yet submitted claims for credit under the settlement.
“We are working out the definitions and methodology of checking the credits the bank seeks, Mr. Green said. Loans that have been discharged in bankruptcy will not be acceptable for credit, he said.”
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