NEW YORK – Attorney General Eric T. Schneiderman published an op-ed on The Huffington Post on yesterday’s historic settlement with Bank of America, which includes $800 million in cash and consumer relief for struggling New York homeowners and distressed communities. The following are excerpts from the op-ed:
ON FIGHTING FOR EQUAL JUSTICE UNDER LAW: As the state’s chief law enforcement officer — and as co-chair of President Obama’s Residential Mortgage-Backed Securities Working Group — my guiding principle is equal justice under law. There must be one set of rules for everybody, and everybody must play by the same set of rules. What Bank of America did was bend the rules for its own financial gain. Millions of Americans paid the price for that greed.
ON THE ROLE OF B OF A IN THE 2008 FINANCIAL CRISIS: B of A, Merrill and Countrywide securitized and sold residential mortgage-backed securities with underlying mortgage loans that they knew were defective, misrepresenting the quality of those loans to investors. That misconduct, and similar misconduct by other major banks, caused the financial crisis.
ON SECURING $60B FROM THE BANKS THAT CAUSED THE FINANCIAL CRISIS: When I took office in 2011, the federal government and other state attorneys general were about to sign an agreement releasing the banks – including Bank of America – from much of their liability. I refused to sign, and less than one year later, the President formed the working group and named me co-chair. Since then, we have continued to investigate those banks and have negotiated deals totaling about $37 billion – roughly $2 billion of which has gone to help struggling New York families. If you include the 2012 National Mortgage Settlement, the total is more than $60 billion — and New York has gotten more than $4 billion.
ON PROVIDING PRINCIPAL REDUCTION TO FHA-INSURED BORROWERS: The $16.65 billion Bank of America deal will funnel $800 million to New York — $300 million in cash and at least $500 million in creditable consumer relief. That includes, for the first time, principal reductions on mortgages insured by the Federal Housing Administration. About 23 percent of all the distressed home loans in the state are FHA-insured, and these represent the largest portion of Bank of America’s remaining distressed loan portfolio in New York.
ON SUPPORTING LAND BANKS, HOUSING COUNSELING & LEGAL SERVICES: The bank will also transfer $20 million worth of distressed mortgages and abandoned properties to nonprofits and land banks, which help communities buy derelict homes, rehab them and put them back in the housing market. This includes $20,000 per property to assist with revitalization costs. And, Bank of America will provide at least $17 million to land banks, housing counseling agencies and legal service providers, so these front-line agencies can expand their vital services.
ON SENDING A STRONG MESSAGE: This settlement sends a strong message that banks that prey on customers and investors will be held accountable. I will continue to investigate financial institutions that bend the rules for their own benefit, and pursue equal justice for all New York families.
The full op-ed by Attorney General Schneiderman can be read here.