Bank of America settlement yields almost $1.4 million for foreclosure-related legal assistance in Florida

MAITLAND, Fla. — The Florida Bar Foundation has been advised by Bank of America that $1,395,699.84 will be coming to Florida as part of its settlement with the U.S. Department of Justice. The funds are required to be used for foreclosure prevention legal services and community redevelopment legal assistance.

The Florida Bar Foundation is among the Interest on Lawyers’ Trust Account programs around the country receiving a portion of the proceeds from the $17 billion settlement the U.S. Department of Justice entered into in August with Bank of America.

The Foundation’s legal aid grantees have been notified of the settlement amount, and the Foundation is working with the Project Directors Association, which consists of the leadership of its legal aid grantees, to develop a process for the grant application, funding distribution, and outcomes reporting processes once the funds are received at the Foundation.

Two other provisions of the settlement have the potential to provide more funding to IOLTA programs in years to come. If by Dec. 31, 2018, there are settlement funds that have not been distributed from $7 billion designated for consumer relief, those “liquidated damages” will be distributed with 75 percent going to IOLTA programs based on poverty population for purposes also restricted to foreclosure and community redevelopment legal services. The other 25 percent would go to NeighborWorks America, which creates affordable housing opportunities.

A provision in another portion of the settlement sets aside $490 million for a tax relief fund for those borrowers who, due to their mortgage debt being eliminated, have added tax liability. Federal legislation that lapsed at the end of 2013, the Mortgage Forgiveness Debt Relief Act, waived this tax liability, but Congress may enact retroactive legislation to restore the tax waiver. Whatever is left in this fund will be allocated according to the same formula as the provision related to liquidated damages.

It remains unknown what additional amount these two provisions could yield for Florida’s Interest on Trust Accounts (IOTA) Program, which is administered by The Florida Bar Foundation.

The Florida Bar Foundation and its grantees continue to suffer from significant reductions in IOTA revenue as a result of the near-zero bank interest rates that have been in place since the Great Recession, with IOTA revenue having fallen from more than $43 million annually in the five years prior to the recession to about $5.5 million annually in the last five years.

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