California to Recover $300-Million for Pension Funds in Bank of America Settlement

August 23, 2014 18:00 pm · 13 comments

California will recover $300 million in damages from Bank of America as part of a $16.65 billion settlement over the bank’s handling of mortgage-backed securities prior to 2009, officials said today.

The money will reimburse the state’s pension funds for money it lost investing in mortgage-backed securities through Bank of America and its affiliates, according to California Attorney General Kamala Harris’ office.

The settlement comes as a result of claims made by the U.S. Department of Justice and state partners, Harris’ office said.

California residents will also get at least $500 million in consumer relief credits, such as loan forgiveness for homeowners who are underwater on their mortgages and financing of affordable rental housing, according to Harris’ office.

“Bank of America profited by misleading investors about the risky nature of the mortgage-backed securities it sold,” Harris said. “This settlement makes our pension funds whole for the financial losses caused by these misrepresentations and brings help to hard-pressed homeowners and communities in California.”

The settlement does not absolve Bank of America or its employees from facing criminal charges, Harris’ office said. As part of the settlement,

Bank of America acknowledged it misrepresented the mortgage loans it securitized to investors.

Bank of America customers can call (877) 488-7814 for more information.

1 Julio August 23, 2014 at 6:43 PM

That money won’t go as far as they are trying to tell us it will. They shouldn’t bail out any under water homes. I kept my house and didn’t refi or make all the stupid mistakes those people did. I don’t see anyone helping those of us who were smart enough not to lose our homes.

2 @ Julio August 23, 2014 at 7:15 PM

Sorry buddy, hard work and smart decisions are not the way to go anymore. I feel ya’, though. Just as frustrated.

3 SKS August 23, 2014 at 8:00 PM

DOJ funded bailout.

The article above doesn’t tell the whole story. Basically the government put a gun to B of A’s head to take over Merrill-Lynch and Countrywide whose failures would have been even more disastrous that what was experienced. Then the DOJ put the screws to B of A for the others’ (the “affiliates” cited above) screw ups. Countrywide was probably the most guilty of representing crappy loans based on crappy borrowers.

I didn’t speculate on housing prices as others did. Where is my bailout for being a financially responsible borrower?

4 frank August 23, 2014 at 8:03 PM

In 2002 my jobless neighbor refinanced his home to open a restaurant – the bank gave him half a mil. Most of you really liked his restaurant but when the economy tanked he lost customers, then employees and finally closed. In 2009 the bank tossed him and sold his home for approximately what he owned them.

I guess he’s an idiot. He should never have taken the bank up on the offer to refinance to the tune of half a mil. Right Julio?

5 Cautiously Informed August 23, 2014 at 9:28 PM

A big part of it was the government forcing the big banks to make loans to unworthy borrowers. Then, when those borrowers didn’t fulfill their contract obligations, the government bails them out with consumer loan credits, loan forgiveness and so.

6 financial simpleton August 23, 2014 at 9:46 PM

I don’t own property. I don’t think I ever will, because I’m just about out of time. But I’m still curious about something that maybe someone who understands mortgages can answer.

Say you buy a house at 500K, and the market collapses and now it’s only valued at 250K. You’re “underwater”. You owe more than it’s worth. I understand that. I understand that it might make arithmatic sense to do the dishonorable thing and violate your loan agreement and let the bank kick you out.

A couple things I don’t understand are: You’re underwater – so what? Just because your house isn’t worth 500K to somebody else, apparently it was worth 500K to you or you wouldn’t have signed the note. You need a place to live, so live there until it’s market value recuperates.

Secondly, if it’s ok for you to break the contract because you don’t like the house’s new appraised value, shouldn’t it be ok for the bank to break the contract if the value goes UP too much? I’m sure the bank is feeling stupid if you’re only paying off a 500K loan on a house that is worth 750K. Shouldn’t they be able to kick you out, even return your equity, and sell it to someone else for more money? After all, isn’t their loan “underwater” if they’re only getting peanuts on a much more valuable home?

7 martinezdad August 23, 2014 at 9:54 PM

Calpers paid out 16 billion to its members last year. 300 million will cover about 18% of a single years payments

8 SKS August 23, 2014 at 10:09 PM

Real estate appreciation is not an entitlement – contrary to what many borrowers were led to believe by unscrupulous and unethical real estate agents who said “it can only go up”. It is speculative and subject to market forces. PERIOD.

Many people were and still are ignorant about personal finance, economics, finances, financing, and mortgage products. They bought for what they thought it was worth at the time… their own decision.

But alas, few take responsibility for their bad decisions. Take the election and re-election of Obama for example. Those were big mistakes…. high unemployment, Obamacare, the rise of ISIS terrorists, violations of the US Constitution, de facto amnesty for illegal immigrants, use of the IRS to target its own citizens, gun running (Fast & Furious), the lack of leadership on the world stage, attempting to negotiate with terrorists like Hamas, NSA spying, the failure of the DOJ to turn over subpoenaed documents, emails mysteriously disappearing,,,,, the list goes on.

9 anon August 23, 2014 at 11:24 PM

Banksters of America

sks, thanks for the additional info. i like the readers digest version.

10 Me August 23, 2014 at 11:38 PM

The “Great Recession” was caused by:

Greedy bankers
Inept government agencies
Entitled consumers

Those of us who didn’t drink the kool-aid are all paying for those that did.

11 Beast August 24, 2014 at 1:05 AM

ARM f^cked most. Market dumped and mortgages skyrocketed. Nothing wrong with paying off an under water house to whoever asked but with this type if adjustable rate mortgage u can’t even make that choice

12 Anon August 24, 2014 at 2:07 AM

AG Harris is a racist, and still no bankers have been charged. Lastly $300M is nothing to BofA.

13 Fact Pointer Outer August 25, 2014 at 9:58 AM

the real outrage isn’t the size of the settlement against BofA, its that the State AG decided to give all the money coming to this state to the public employee unions and their pension funds!!!

What about all the people who lost their savings when their home values crashed, all the people who lost their homes, all the people who lost their jobs?

Oh yeah,…they don’t matter because they don’t write big checks to politicians, and the unions do.

SHAME!

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