R.I. Bar Foundation to receive $1.2M from Bank of America settlement

CRANSTON – The Rhode Island Bar Foundation will receive $1.2 million from Bank of America from a 2014 settlement between the financial giant, six states and the U.S. Department of Justice.
It will use the money to provide legal assistance in foreclosure prevention and community redevelopment.
The settlement, the largest of its kind, is costing Bank of America about $17 billion and stems from allegations that the financial institution and its subsidiaries misled investors about bad mortgage-backed securities leading up to the 2008 financial crisis.
The Rhode Island Bar Foundation is one of 56 state-based, legal-assistance organizations receiving more than $490 million under the settlement, according to a press release. The organizations settled legal claims arising from mortgage-related activities by Bank of America and its subsidiaries, the release said.

In addition, six states settled with the bank directly, California, Delaware, Illinois, Maryland, New York and Kentucky.
The distributions were triggered in December by President Barack H. Obama’s signing into law an act to extend federal tax relief throughout the year for homeowners, “who otherwise would have incurred income-tax liability from mortgage debt forgiveness they received under consumer-relief provisions of the settlement,” according to the release.
“The money being distributed to the nonprofit organizations is from a fund established under the settlement to provide federal tax assistance to homeowners in case Congress failed to extend the tax-relief legislation,” according to the release.
Bank of America distributed 75 percent of the funds to the eligible legal-assistance organizations in each state, including the Rhode Island Bar Foundation, and gave the rest to NeighborWorks America, a national, publicly-chartered nonprofit focused at community-based redevelopment programs.
Bank of America’s agreed-upon penalty surpassed comparable settlements made at the time with other financial entities, including with Citigroup Inc., $7 billion, and JPMorgan Chase & Co., $13 billion.

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