This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Bank of America Settlement Will Again Bypass Hardest Hit States

Stocks in this article: BACJPMC

NEW YORK (TheStreet) -- Bank of America's (BAC) much-anticipated settlement for more than $16 billion with state and federal authorities will be announced next week at the earliest, with states including New York, Illinois and California again getting cash payments to settle individual claims as they did in earlier deals with Citigroup (C) last month and JPMorgan Chase (JPM) in November, say at least two sources with knowledge of the negotiations.


WATCH: More market update videos on TheStreet TV

Two other states received cash payouts settling individual claims they brought against Citigroup and JPMorgan: Delaware and Massachusetts. It was unclear at the time of publication whether either will see payouts in the Bank of America settlement. At least two other states that did not get payouts in either the Citigroup or JPMorgan settlements will receive cash to settle claims they brought against Bank of America, according to one source.

New York, Illinois and California will receive cash settlements from Bank of America assuming the settlement is finalized. Sources say the list of other states receiving cash will not include either Florida or Nevada, by many measures the states hardest hit by the mortgage crisis. Representatives from the attorneys general offices in those states did not respond to requests for comment on the Bank of America settlement, but they previously told TheStreet they have fewer legal tools to bring mortgage securities fraud cases against the banks than other states, particularly New York, with its powerful Martin Act.

Read More: Florida, Nevada Can't Win for Losing on Mortgage Crisis 

As The Wall Street Journal first reported Wednesday and has been confirmed to TheStreet, the Bank of America deal will include $9 billion in cash, with the remaining $7 billion to $8 billion in consumer relief. Much of the consumer relief portion will be in the form of credits the bank will receive for modifying mortgages. For example, a $50,000 principal write-down would result in a $50,000 credit for Bank of America toward its consumer relief obligation.

Negotiations are still ongoing over certain details, such as how the consumer relief will be divided, says one source. The Citigroup settlement, for example, was different from the JPMorgan agreement in that it required the bank to make "donations to organizations assisting communities in redevelopment and affordable rental housing for low-income families in high-cost areas," according to a U.S. Justice Department press release. Those donations do not appear to have been cash donations.

The leading candidates among states that may be settling individual claims against Bank of America next week, aside from the five mentioned previously, are Maryland, Connecticut, Kentucky, West Virginia, New Jersey and Missouri. Those states' names appeared on a document indicating the are all members of the Residential Mortgage Backed Securities (RMBS) Working Group, which is negotiating with Bank of America on behalf of the government.

The RMBS Working Group was established by President Obama in 2012 as a collaboration between numerous state and federal authorities. Led by the U.S. Justice Department, the group is working on at least a dozen other cases including the potential Bank of America settlement. Morgan Stanley (MS) and Goldman Sachs  (GS) have both disclosed they are being investigated by the group.

Read More: $25 Billion Deal and JPMorgan Stumble to Aid of Bronx Homeowner



Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,677.90 +216.58 1.32%
S&P 500 1,950.82 +23.71 1.23%
NASDAQ 4,452.7920 +69.9450 1.60%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs