New York to get $800M in Bank of America deal

ALBANY – New York will get $800 million as part of a national $16 billion settlement with Bank of America over mortgage schemes, the latest windfall for the state's coffers.

Attorney General Eric Schneiderman announced Thursday that New York's $800 million cut will include $300 million in cash and $500 million for consumer relief.

The settlement with Bank of America is the largest in U.S. history with a single institution and latest to boost New York's fiscal picture.

On Tuesday, Standard Chartered Bank agreed to pay New York $300 million to settle a money-laundering investigation by the state Department of Financial Services.

"This historic settlement builds upon our work bringing relief to families around the country and across New York who were hurt by the housing crisis, and is exactly what our working group was created to do," Schneiderman, who co-chairs the national mortgage working group, said in a statement.

Schneiderman's office said the state's agreement with Bank of America includes language that the $300 million must be used by the state "to the maximum extent possible, for purposes of redeveloping and revitalizing housing and home ownership and rebuilding communities."

New York was already in the process of receiving $4.2 billion in bank settlements over the last year – a far cry from budget deficits that had plagued the state in recent years. The money will largely go into the state's $137 billion general fund, which pays for state programs and services.

Gov. Andrew Cuomo's office indicated in budget documents this month that it was developing a plan to spend the money, particularly "one-time capital expenses" — such as a new Tappan Zee Bridge in the Hudson Valley.

Bank of America has agreed to the national settlement amid state and federal allegations that it sold risky, mortgage-backed securities to investors that helped fuel the financial crisis in 2008 and 2009.

Bank of America acknowledged as part of the settlement that it made serious misrepresentations to the public and investors through its company, as well as Countrywide Financial and Merrill Lynch, institutions that Bank of America acquired in 2008, Schneiderman said.

In New York, Bank of America must provide $125 million in credits to create and preserve hundreds of units of affordable rental housing, Schneiderman said.

Schneiderman said Bank of America will also provide a minimum of $60 million in principal mortgage reductions in New York and at least $20 million to help vacant and abandoned properties end up with land banks.

The company must also provide at least $35 million in credits for making cash donations to legal-service providers, housing-counseling agencies, land banks and other community development nonprofits.

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