Banks Agree to Finance Low-Income Apartments as Part of Settlement
New York Attorney General Eric Schneiderman recently announced a settlement deal with Bank of America and Citigroup in which the banks will provide $75 million to build or rehabilitate 2,300 rental units in the city and 1,500 elsewhere in the state. The money, which would be used to fund low-interest loans, will count as “consumer relief” that the banks pledged to provide under multibillion-dollar national settlements last year. These settlements were consequences of mortgage-bond practices that led to the 2008 financial crisis.
Bank of America and Citigroup reached $16.7 billion and $7 billion settlements, respectively, last year to resolve federal and state probes into mortgage-backed securities practices in the lead-up to the crisis. New York was allocated almost $1 billion from the accords, including about $600 million in promised consumer relief.
According to Schneiderman, the plan is aimed at those “hardest hit” by the 2008 housing crash, people who lost their homes to foreclosure and moved into rentals.