New York state will get $800 million as its share of a national $16.65 billion settlement with Bank of America over its role in the sale of mortgage-backed securities in the run-up to the financial crisis, New York Attorney General Eric Schneiderman announced Thursday.
The nation's second largest bank has agreed to pay the state $300 million in cash and $500 million in the form of direct relief to consumers, including mortgage modifications, new loans, donations to communities and financing for affordable rental housing.
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"Today's result is a major victory in the fight to hold those who caused the financial crisis accountable," Schneiderman said Thursday. The Democrat was a co-chairman of the state and federal working group that negotiated the national settlement.
The deal is the largest reached so far over the 2008 mortgage meltdown, and the biggest the U.S. Justice Department has ever reached with a single entity.
The settlement also covers Bank of America subsidiaries Countrywide Financial Corp. and Merrill Lynch.
As part of the agreement, Bank of America acknowledges that it and its subsidiaries made "serious misrepresentations" to the public about mortgages and mortgage-backed securities, Schneiderman said. He said the bank also mischaracterized the quality of its loans to the federal government.
The bank has agreed to contribute at least $20 million in cash and property to local governments and nonprofits. Schneiderman's office said that contribution should allow the state to take over as many as 300 properties that were left vacant by their previous occupants once foreclosure proceedings began.
Another $125 million will go toward affordable rental housing, and $35 million will go to groups that provide legal, housing and community development programs.
New York City Mayor Bill de Blasio said in a statement the settlement will "make a real difference for families struggling across the city and state."