NEW YORK ( TheStreet) -- Bank of America ( BAC) said Wednesday it has offered $15.8 billion in mortgage relief to customers as part of its obligation under the National Mortgage Settlement. The relief comes in the form of principal reductions, second lien forgiveness, short sales and interest rate relief, among other things. As of Sept 30, the bank had approved 30,000 homeowners for first lien principal reductions totaling $4.75 billion. About 5,800 had successfully completed their three-month trial and converted to permanent modifications. The program resulted in an average reduction of $150,000 in principal and 35% reduction in monthly payments. The bank is reducing principal on loans it owns and services as well as those it services for others. Fannie Mae, Freddie Mac, FHA and VA loans are not participating in the reduction. The bank has also extinguished second-liens for 43,000 customers, with the average financial relief amounting to $56,000. About 1,400 additional loans have been modified, reducing the balances owed by a total of $100 million. Bank of America is also reducing interest rate at no cost to qualified borrowers who are current on their payments but owe more than 80% of their property value. Rates on qualifying loans are currently being reduced to 4.25%. The bank estimates customers are on an average receiving a 2 percentage point interest rate reduction. As of October 31, 23,000 homeowners - more than half of the bank's estimated eligible population - have been offered this assistance, the bank said. The bank is also required to offer foreclosure alternatives under the agreement. More than 62,000 customers have completed qualifying short sales or deeds-in-lieu of foreclosure, providing a total of $7.4 billion in relief from unpaid principal balances on the loans. Federal regulators across 49 states, earlier this year, entered into a $25 billion settlement with the nation's biggest mortgage servicers including Bank of America, JPMorgan Chase ( JPM), Wells Fargo ( WFC), Citigroup ( C) and Ally Financial after banks were found to have improperly foreclosed upon borrowers. Bank of America is required to provide $8.58 billion in mortgage relief in the form of principal writedowns, refinancing and other programs. Servicers will receive only partial credit for every dollar spent on some of the required activities
The bank is racing to meet its obligation under the settlement and says it is on track to meeting its total commitment within the first year of the three-year agreement. All banks are required to submit their quarterly report to the Settlement monitor on Wednesday. --Written by Shanthi Bharatwaj in New York >To contact the writer of this article, click here: Shanthi Bharatwaj. >To follow the writer on Twitter, go to http://twitter.com/shavenk. >To submit a news tip, send an email to: email@example.com.