Arkansas will receive $39.4 million as part of a $25 billion settlement 49 states have reached with the country’s five largest mortgage lenders, according to Arkansas Attorney General Dustin McDaniel.
Only Oklahoma, the deal’s lone holdout, will not receive money in the settlement, which covers foreclosure abuses that took place after the housing bubble burst.
The mortgage lenders — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — will have three years to fulfill the terms of the landmark deal announced Thursday, according to The Associated Press.
"This settlement will provide tangible benefits to struggling Arkansas homeowners in the form of principal write-downs and refinancing opportunities," McDaniel said. "This is an important means for holding the banks accountable for their bad behavior during the mortgage crisis."
McDaniel’s office said that of Arkansas’ share of the settlement, the lenders will dedicate about $11.8 million toward first- and second-lien principal reduction and other forms of loan modification relief in Arkansas.
Another $5.7 million will be set aside for refinancing loans to underwater borrowers. And Arkansans who lost their homes to foreclosure from Jan. 1, 2008, to Dec. 31, 2011, and "suffered servicing abuse" would be entitled to a share of about $8.5 million.
McDaniel said $13.4 million of the settlement will be directed to government agencies that offer housing assistance and legal help to low- and middle-income Arkansans.
Of those funds, McDaniel said he would direct $9 million to the Arkansas Development Finance Authority in support of ADFA’s programs that provide "down payment assistance to homebuyers, foreclosure counseling to existing homeowners and financial literacy programs" and other programs "related to housing and economic development in the state."
Other entities receiving funds include $2 million to the Arkansas Access to Justice Commission and $500,000 each to support legal aid clinics at the University of Arkansas School of Law in Fayetteville and the University of Arkansas at Little Rock Bowen School of Law in Little Rock.
About $1.4 million will got to the state treasury for "costs and fees associated with the settlement agreement."
The settlement also ends a separate investigation into Bank of America and Countrywide for inflating appraisals of loans from 2003 through most of 2009. Bank of America will pay $1 billion to settle that federal probe.
(The Associated Press contributed to this report.)
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