Bank of America, the country’s largest bank, has reportedly reached a settlement with the Department of Housing and Urban Development over failing to provide alternatives to foreclosure on about 57,000 government-insured mortgages.

In reporting on the agreement, which is still in draft form, American Banker says HUD has agreed to release Bank of America from any liability if the bank waives “a minimum of $10 million in unpaid mortgage payments and vet each of the 57,000 delinquent borrowers for a possible loan modification, short sale, or other foreclosure alternative.”

Bank of America spokesman Dan Frahm told American Banker that this will help “ensure these customers have every opportunity to stay in their homes.” The 57,000 borrowers affected are one to two years delinquent on their mortgages.

The settlement serves as HUD’s first in settling claims against a servicer for failing to offer loss mitigation to borrowers. 

Source: “BofA Signs HUD Pact Over Mortgage Abuse,” American Banker (Aug. 5, 2011)