Bank of America reaches side mortgage deal

Bank of America has reached a side agreement with US authorities that could reduce the mortgages of some 200,000 borrowers in order to avoid fines of up to $850 million, the Wall Street Journal said. The financial newspaper reported late Thursday that the bank had reached the separate agreement as part of a recent $25 billion settlement related to alleged foreclosure abuses. Last month five of the country's top banks, the federal government and 49 states -- all except Oklahoma -- agreed to help homeowners cut their mortgage debt, avoid default or get compensation for unfair home repossessions. Under the deal with Bank of America, qualifying borrowers would be able to reduce their mortgage balances to their homes' current value, the Journal said. The wider settlement had required the banks to reduce mortgages to no more than 120 percent of their market value. The Bank of America borrowers are expected to receive reductions averaging more than $100,000, the Journal cited a Bank of America spokesman as saying. Bank of America could not immediately be reached for comment. The agreements are expected to provide a glimmer of hope for four million families who lost their homes during the financial crisis and millions more who saw their home values drop below the value of their boom-era mortgages. The questionable loans were issued during the housing boom to individuals of doubtful means, while traders overdosed on complex mortgage-backed securities that began collapsing when the housing bubble burst in 2008. The housing meltdown was at the heart of the economic crisis that struck that year, the worst the country had seen since the Great Depression.