The Monitor of Bank of America’s mortgage settlement with the U.S. Department of Justice and six states announced that $1,007,536 will go to the Delaware Bar Foundation to provide legal help in foreclosure prevention and community redevelopment.
The Bar Foundation, headquartered in Wilmington, is one of 56 state-based legal-assistance organizations receiving funds under the settlement, which over legal claims arising from mortgage-related activities by Bank of America and its subsidiaries.
The distributions – totaling more than $490 million nationwide – were triggered in December by President Obama’s signing into law an act extending federal tax relief through 2016 to homeowners who otherwise would have incurred income-tax liability from mortgage debt forgiveness they received under consumer-relief provisions of the settlement.
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.
With the signing of the legislation, the tax-relief fund became surplus. Under the terms of the settlement, the independent monitor is required to distribute 75 percent ($367.62 million) of the fund to eligible legal assistance organizations in each state and the remaining 25 percent ($122.54 million) to NeighborWorks America.
As specified in the settlement, these recipients are state-based Interest on Lawyers Trust Account (IOLTA) organizations or other state bar association affiliated intermediaries that fund legal aid organizations in their jurisdictions.
Signers of the agreement, in addition to the bank and the Department of Justice, were the Attorneys General of the States of California, Delaware, Illinois, Maryland and New York, and the Commonwealth of Kentucky.
Other settlement funds went to the states, with Delaware legislators taking the controversial step of using a portion of the funds to plug a hole in the state budget.
Attorney General Matt Denn has proposed tapping the remainder of the fund for improving lower communities that were affected by the mortgage crisis.
That plan has run into some opposition with some critics claiming that some programs have only an indirect relationship with housing.
