BOA forks over $111 million for servicing error

by Ryan Smith30 Apr 2014
Bank of America is forking over $111.4 million to mortgage bond trusts after cutting the balances on home loans more than allowed.

The bank slashed home loan balances more than permitted under the terms of an $8.5 billion settlement with bondholder groups including Blackrock Inc. and Pacific Investment Management Co., according to a Bloomberg report.

The settlement was over claims that the lender’s Countrywide unit bungled servicing and didn’t repurchase shoddy mortgages, Bloomberg reported. Under the terms of the deal, loan modifications shouldn’t allow balances to fall below the value of the properties.

However, Bank of America completed more than 10,700 loan modifications “using valuation tools different from those prescribed” by the deal, according to a notice from trustee Bank of New York Mellon Corp.

With the Bank’s payment, a large number of Countrywide mortgage bonds recouped some of their loss, according to Bloomberg. Bank of America spokesman Rick Simon told Bloomberg that the issue “had been resolved to the trustees’ satisfaction.”
 

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