Bank of America in $10 billion-plus mortgage settlement
Posted: January 7, 2013 at 8:28 a.m.
CHARLOTTE, N.C. Bank of America says it will spend more than $10 billion to settle mortgage claims resulting from the housing meltdown.
Under the deal announced Monday, the bank will pay $3.6 billion to the Federal National Mortgage Association, known as Fannie Mae, and buy back $6.75 billion in loans that the North Carolina-based bank and its Countrywide banking unit sold to the government agency from Jan. 1, 2000, through Dec. 31, 2008. That includes about 30,000 loans.
Chief Executive Officer Brian Moynihan said the agreements were “a significant step” in resolving the bank’s remaining legacy mortgage issues while streamlining the company and reducing future expenses.
Bank of America bought Countrywide Financial Corp. in July 2008, just before the financial crisis. Countrywide was a giant in mortgage lending, but was also known for approving risky loans.
Fannie Mae and the Federal Home Loan Mortgage Corp., known as Freddie Mac, which packaged loans into securities and sold them to investors, were effectively nationalized in 2008 when they nearly collapsed under the weight of their mortgage losses.