Bank of America reaches $16.5 billion settlement for bad loans - WDRB 41 Louisville News

Bank of America reaches $16.5 billion settlement for bad loans

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LOUISVILLE, Ky. (WDRB) -- Bank of America has reached settlement of $16.5 billion for bad loans -- and it means a big payout for Kentucky. 

The settlement is by far the largest levied against a single financial institution as a result of shoddy and illegal mortgage practices that led to the economic crisis in 2008. 

Kentucky Attorney General Jack Conway stood side-by-side with U.S. Attorney General Eric Holder as the announcement was made Thursday morning. The Commonwealth will see $23 million from the settlement going directly back to the state's pension fund. 

Kentucky's retirement system, like so many other states, had invested in these bad securities and lost money. 

Part of the settlement, $7 billion dollars nationally, is direct relief for struggling home owners, borrowers, and communities affected by the bank's conduct. If you are facing foreclosure or upside-down in a Bank of America or Countrywide loan, hundreds of thousands of dollars could be coming your way. Call (877) 488-7814 to apply for aid.

"This is a bold step for Kentucky, historically," said Conway in a phone interview. "The Commonwealth of Kentucky and its Office of the Attorney General has not been one of the lead states in one of these financial fraud cases. Had we not gotten involved here we would be looking at nothing or pennies on the dollar."

"Everyone who is under water will not be granted relief," said Christie McCravy, the housing director for the Louisville Urban League. "I can definitely say that because it hasn't happened with any other settlement that we've seen."

"It won't solve every problem or cure every ill created by the financial crisis, but it will do something very important. It will offer hope," said Tony West, Associate U.S. Attorney General.

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