BofA will reduce debt on underwater loans

WASHINGTON – Bank of America Corp. said Friday it would reduce the amount owed by as many as 200,000 underwater homeowners as part of the recently announced government foreclosure settlement with top mortgage servicers.

The bank made the commitment as part of a $1 billion side deal to the $25 billion foreclosure settlement, said bank spokesman Richard Simon.

The principal reductions could eliminate the entire underwater portion of some mortgages that the bank services, with the average reduction expected to be more than $100,000, he said.

By cutting the amount owed on the mortgages, Bank of America could reduce the $3.25 billion in penalties it faces from the foreclosure settlement by $850 million.

Underwater homeowners are eligible if they have a loan serviced by Bank of America and were at least 60 days delinquent on their mortgages as of Jan. 31.

Fannie, Freddie execs’ pay to be cut sharply

WASHINGTON – Pay for the top 15 executives at Fannie Mae and Freddie Mac will be cut by 24 percent this year, led by plans to slash the total annual compensation for new chief executives of the housing finance giants from $6 million to $500,000, federal regulators said Friday.

The announcement came after congressional outrage over salaries and bonuses at Fannie Mae and Freddie Mac, which were seized by the government in 2008 and have received about $183 billion in taxpayer money to cover huge losses in their mortgage portfolios.

Edward J. DeMarco, acting director of the Federal Housing Finance Agency, said the new compensation plan, which also eliminated bonuses, reduces compensation for top executives by 74 percent from its levels before the government took over the companies.

But the huge CEO pay cuts won’t be applied to the current holders of those jobs, who have announced their plans to step down when replacements are hired.